Relationships between broadcasters and their cherished ad agencies, media buyers and advertisers have been sailing some rough Cs lately. The Indian Broadcasting Foundation (IBF), which represents TV broadcasters, recently said it would slap a surcharge on ad rates spurred by rising input costs, etc. Many ad men said this was tantamount to “cartelization”, and advertisers considered legal recourse. They would have considered ad rate hikes, some said, but abhorred the fact that a levy was charged by a private body. As is known, the levy has been rolled back, but is expected to come into effect later for new contracts.
Media observers say that IBF’s C (cartelization) was actually a riposte to another C that has been operating in the media-buying domain for long. It is called “consolidation”. Media buying companies, which are under the same global communications holding group, have been merging in recent years and control huge chunks of the total ad market in India. It’s felt that power in the media buying-selling equation often rests with these powerful media specialists. They have huge scale on their side and pedigreed advertisers on their rosters. Many of these merged buying engines usually control huge budgets and buy media in aggregate. End result: sheer buying muscle allows many merged media-buying brands to hammer down channels’ ad rates, complain various broadcasters. The weaker the channel, the more the room for negotiation usually, they add, though buyers refute this.
So, could a levy, rather than a rate hike, allow channels to get better ad rates without taking on the all-powerful buyer individually? Well, some people seem to think so.
Such industry-body initiatives are, however, like umbrellas with holes—they don’t afford total protection to smaller members or channels which fear spoiling relationships with the people who give them ads. Little wonder that some channels have been wanting to not be part of any surcharge effort. It doesn’t help either that TV has been invaded by many newcomers. The viewership of the medium is fragmenting, and returns on ad spends are under the advertiser’s microscope. Meanwhile, there have been noises that advertisers and ad men could fight what they see as cartelization with their own association-led efforts. My take: cartels, in any quarter, for whatever reason, can’t work in a field where so much rides on individual relationships.
Marion Arathoon is Mint’s advertising editor. Your feedback is welcome at firstname.lastname@example.org.