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Principles of Media Buying in Pakistan In the mutual long-term interest of PAA member agencies, advertisers and media and to provide a clear, transparent and equitable method for all member agencies to follow in their dealings with their clients the General Body of PAA proposes the following:
Membership of PAA is based on the basic principle that members are full-fledged advertising agencies that offer integrated services such as strategic planning, creative development and execution, media planning and buying etc, to their clients. PAA members are not expected to act only as strategic consultants, or only as creative studios, of only as film producers, of only as media buying houses, as per PAA rules.
Historically, some clients who work with more than one agency, have for the purposes of better centralized co-ordination and greater efficiencies, been entrusting their total media buying and releases to one of their club agencies. In such cases where an advertiser has multiple brands being handled by different agencies, it could be in the interest of the advertiser to entrust the media planning / buying / releases to one of its club agencies for the following possible reasons:
Over the last few years, a few member agencies were offering ‘media only’ s ervices.
After examining the implications of this recent development with respect to its impact on the advertising agency business as a whole, and also as to whether it is in the interests of advertisers and media in the long term, the PAA came to the conclusion that this development was not in the long term interests of advertising agencies, advertising and media, for the following reasons:
The reason of creating of an advertising agency is to add value to a client’s business by harnessing and orchestrating internal and external resources on a continuous basis, thereby providing an integrated solution strategic planning, creative development and media planning are individually interlinked. Without the development of a strategic plan, it would be impossible to go ahead with creative execution.Without knowing the size of an ad, its placement, its frequency of release, etc. it would be improper to go ahead with creative development, and vice versa. Therefore, the offering of a media only’ service by an agency, who is otherwise, not involved with any of the other client’s brands, will dilute the value that advertising agencies are expected to provide to their clients.
The advertiser is not likely to benefit by separating the media function from all the other functions that an agency is expected to perform, for the simple reason that the principle of single accountability is totally violated. Great strategic thinking and great creativity can be nullified by poor media planning and execution. And vice versa. The advertising agency is expected to be fully responsible for its strategic inputs, creative execution and media planning breaking up these interlinked functions would lead to dilution of responsibility and accountability
It is in the long term interests of advertisers that media offer transparent rated based on the individual advertiser’s spend in respective publications/ channel, etc. Larger the advertiser spend in a medium, larger the savings.
It is equally in the interest of media that rate negotiations be on the basis of individual advertiser spend, rather than that on the basis of agency spend. Over and above, worldwide experience had shown that left to operate freely, just a few large media independents survive. These, by their very size , tend to become monopolies or cartels who dictate rates to advertisers and to media. Free market operations thereby get curtailed. Neither the advertiser gets maximum cost efficiencies., nor do the media get its justifiable revenues.
Rules Governing Media Buying / Agency of Record (AOR)
The definition of Agency of Record (AOR) is as follows:
The AOR of an advertiser is one of the advertising agencies of the advertiser, who offers full advertising services including account planning, creative and media for at least one brand of the advertiser ( brand means and includes any business segment of an advertiser either in part full) and
Is entrusted by the advertiser to handle media buying and media releases for some or all of the advertiser’s brand. An advertising agency can act as an AOR for an advertiser only upon fulfillment of all the following conditions:
The agency has been appointed by the advertisier as a full service agency for one of its brands, and has actually created and released advertising for such brand.
For an advertising agency who has been a full service agency of the advertiser for less than one year, the media billings of the brand/s handled by the agency during the six months after its appointment as AOR for the advertiser, shall not be less than 10% of the advertiser’s total spend, of Rs. 50 lakhs, whichever is less, during that period.
For an advertising agency who had been a full service agency of the advertiser for more than one year, the media billings of the brand/s handled by the agency during the previous financial year, prior to its appointment as an AOR for the advertiser, shall not be less than 10% of the advertiser’s total media spend, or Rs. 1 Crore, which ever is less, in the previous financial year.
The advertising agency may continue to act as an AOR in subsequent years only if the media billings of the brand/s handled by it on a full service basis are not less than 10% of the advertiser’s total media spend, or Rs. 1 Crore, whichever is less, in the previous financial year.
The remuneration principle for an AOR is as follows:
For the services rendered in the areas of media buying and media releases, the AOR will earn 2.5% media commission / trade discount on releases made by it for brands which are handled by other advertising agencies of the advertiser. The other advertising agencies will earn 12.5% commission / trade discount.
The AOR will be responsible for raising media bills, collection of media dues from the advertiser and payment to media.
The AOR will provide not later than the end of the following month to the other advertising agencies, a statement which clearly indicates the other advertising agencies’ commission trade discount entitlement for the preceding month for various brands. In case an advertising agency operates on the basis of a fee system, the basis of remuneration shall be as follows:
In the event that the agency is responsible for acting as full service agency, including media buying and releases, such fees should not amount to less than 15%
In the event that media releases are undertaken by another agency acting as an AOR, such fees shall not be less than 15% including that paid to AOR.
Agencies operating on a fee bases will raise supplementary debit / credit notes at the end of each financial year to ensure that their earning from media equals 15%.
Agencies operating on a fee basis with any of their clients, will inform the PAA of the sme along with a declaration that they adhere to the principle of 15%.
The Executive Committee of the PAA is authorized to take disciplinary action against any member for violation of these rules, including recommending expulsion to the General Body, if it deems fit.
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