The agreement is understood as a code of conduct for advertising agencies and mass media on financial transactions, according to Bharat Lal Nyachhyon, executive director at AAN Secretariat. [break]
However, majority of advertising agencies say the outcomes of the agreement have been far from satisfactory. As of now, not even a single complaint has been filed in the Joint Commission (JC), the deciding body envisaged by the agreement and consisting 11 members, comprising executive members of NMS and AAN.
The agreement bars advertising agency to offer agency commission discount in its invoice. If an agency, which is not the member of AAN, gives such a discount, AAN can file a complaint against that agency in JC.
According to the agreement, JC can prohibit its advertisement of that agency from being published or broadcast if it is found guilty after investigation. The agreement also states that advertisers must obtain a ´No Objection´ letter from advertising agencies before switching over to the next agency.
Likewise, if ads of advertisers or agencies having outstanding dues to any agency are published or broadcast, NMS will stop publishing or broadcasting those advertisements upon getting official notification from AAN.
The biggest shortcoming in the agreement is that it cannot directly penalize the advertisers. Some advertising agencies say all these bad practices are taking place because media partners are not supportive to advertising agencies in their fight against faulty advertisers. Not only the advertisers, there also are some agencies that offer discount in agency commission to get more business.
The agreement also bars media houses from indulging in activities that undermine the role of advertising agencies and vice versa. As far as the provision of credit is concerned, an agency reserves the right to collect its total amount within 45 days of the date mentioned in bill. The agency is required to pay all amounts it owns to media house within 60 days of the broadcast or publishing of the advertisement.
“It was difficult for this agreement to be implemented because the business environment has not been conducive, which means there are limited big advertisers and many advertising agencies and media partners,” said Nirmal Raj Paudel, president of AAN.
“We at AAN are planning for the effective implementation of this agreement from July, after we are done with the Crity Awards and few other projects,” he said. Paudel further added that they would make the agreement more relevant as they have received good response from established media houses.
Advertisers not paying agencies on time, changing agencies without clearing balance with previous agency, bypassing agency and dealing directly with media, and agencies defaulting payment to media houses are some of the bad practices in advertising industry.
The biggest shortcoming in the agreement is that it cannot directly penalize the advertisers. Some advertising agencies say all these bad practices are taking place because media partners are not supportive to advertising agencies in their fight against faulty advertisers. Not only the advertisers, there also are some agencies that offer discount in agency commission to lure more business.
There are some agencies that have more than Rs 15 million in credit to advertisers and they are not being able to recover it.
"Advertisers are not very forthcoming when it comes to payment, but we have to pay the media on time because we have to deal with them for our other clients as well," said a professional associated with an advertising agency.
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