TVNZ Media Commission Plans

TVNZ’s planned reduction in media commission has given us all something else to focus on after the months of angst around challenging times, shrinking marketing budgets and how to best leverage the resulting soft demand media environment for client competitive advantage.

The reduction in commission is a serious issue for advertisers and their agency partners. No official statement or commitment about corresponding rate changes has been issued yet. There have been several verbal platitudes that of course rates will be adjusted accordingly and that this move is not driven out of a desire to increase costs to advertisers. Frankly this is not believable. The only reason for a media company to drive such an initiative is to increase yield off inventory. Therefore the plan has to be, at the time the reduced commission comes into effect, to manage the rate position to deliver some level of revenue increase.

Carat is diametrically opposed to any move that could see media costs to our client partners inappropriately inflated and will be ever vigilant for hidden rate increase as this plays out.

As the new Sales Director at TVNZ I learnt very quickly, after being left to defend an outrageous rate increase dropped on the market during another historically soft media market period by my predecessor that just because you put up the rates doesn’t mean the money automatically follows. This is a demand driven market and the power of the advertiser is that you can speak with your dollar.

This move could also easily push some advertisers out of the medium further exacerbating the soft demand cycle and minimizing any benefit TVNZ hopes to gain for itself. I can’t help thinking that at some point in the future some other TVNZ CEO or Sales Director will look back and go “what was the point”!

The fact that TVNZ positioned this review as being in response to demands from agencies and clients further heightens our chagrin around this move. A self serving and cynical approach. Yes it may be timely for discussion around fee models between some clients and advertisers. In many cases a link to commission for agency remuneration isn’t appropriate anymore and fees for specific service deliveries are more relevant. It is unfortunate that these discussions, best held within a context of productive partnership, are now to be driven within the “muddy waters” of TVNZ’s agenda.