Sursa foto: Mediafax foto/ AFP
An Emergency Ordinance (OUG) published on Friday night messed up completely the advertising industry: although put in juridical terms, an idea is clear. Rebate, the money that went back from TV to advertising agencies, is outlawed. In the same time, advertising services are invoiced directly to the client, not towards the agency.
OUG was published before the weekend and the advertisers are already accusing the fact that the ordinance was passed by the Romanian Executive without consulting the representatives of the industry.
Why is rebate so important? What is rebate?
Rebate consists in the money that return to agencies and clients and became one (if not the main) of the reasons to divide advertising during last couple years.
How does it work?
From a contract between an advertising agency and a TV station, some of the money (important percentages) are given back to the advertising agency.
What do the involved parties say, namely publishers and agencies?
PRO. AGENCIES’ ARGUMENTS: The agencies are motivating the rebate with a need to compansate small comissions they receive from the client, as the small commision wouldn’t cover their operational costs.
On the other han, advertising agencies’ specialist say that, for a small station with moderate audience, a big rebate would be a solid argument to attract advertising.
In the same time, a too big rebate applied to small stations would compensate the work of agencies’ people, when they have a media plan to put together.
Agencies say that they devide the rebate with the clients and those actually know
its value.
Rebate practice sharpened agencies-providers relationship. Publishers claimed, especially during last couple years, that rebate affected the market and put pressure on prices.
AGAINST. PROVIDERS’ ARGUMENTS. Rebate
