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Tag: AAAI

  • AAAI comes out in support of TAM

    AAAI comes out in support of TAM

    MUMBAI: The Advertising Agencies Association of India (AAAI) has come out strongly in support of TAM and stated that discontinuing its ratings service as the broadcasters have been wanting to do is not a good step.

    “Ratings are absolutely central to conducting advertising business with TV channels. Their absence will lead to chaos in the short term and to a decline in TV advertising in the medium term,” says AAAI president Arvind Sharma.

    AAAI president Arvind Sharma TAM should continue; BARC is sometime away

    Sharma points out that through the last three decades and across media, clients have preferred to invest in media where there is reliable measurement. “It is therefore in the best interests of broadcaster, agencies and advertisers not to disrupt the current system until the alternative BARC system starts bringing out data. I would urge the constituents to continue to support the current system until then,” he reiterates.

    Media observers have lauded Sharma‘s and AAAI‘s support. But old-timers pointed out to indiantelevision.com, that a stronger response is needed to a very strong IBF.

    To read the official release: Click here

  • TAM Media offers possible solution to broadcasters’ ratings woes

    TAM Media offers possible solution to broadcasters’ ratings woes

    MUMBAI: Even as the broadcast community gets ready to put the lights out on India‘s TV ratings, TAM Media CEO LV Krishnan has suggested that he is open to another conversation with the industry. He says that he is open to pulling out the people meters from LC1 markets and deploying them elsewhere where they are needed.

    TAM Media CEO LV Krishnan would like to sort out any confusion about the ratings.

    Krishnan agrees that reportage of the LC1 markets is pulling down the average TV ratings for broadcasters, but the broadcasters should have seen that coming before the data started emerging. He, however, says TAM is open to stepping back even if it is a retrograde step.

    “Let us all come to the table and sort out any confusion that has arisen,” says Krishnan. “If everyone wants TAM to pull out of LC1 markets – that is the IBF, the ISA and the AAAI – we will do whatsoever is in the interests of the industry and ratings. But someone has to answer the government which has been insisting that we expand our footprint.”

    Will the IBF, ISA and AAAI take up his offer?

  • Industry reacts to move to net billing

    Industry reacts to move to net billing

    MUMBAI: After nearly three weeks of speculation, debate and discussions, the advertising agencies, represented by the Advertisng Agencies‘ Association of India (AAAI), and the broadcasters, represented by the Indian Broadcasting Foundation (IBF), the bodies have come to a consensus about shifting to net billing.

    The decision came as a relief to both agencies and broadcasters as the latter had stopped airing ads on their respective networks. Clients were yelling blue murder at the agencies for not being able to promote their products to TV viewers. Indiantelevision.com spoke to some of the network officials to get their views on what they thought about the settlement between the two:

    Says MCCS CEO Ashok Venkatramani, “I welcome it completely. It‘s the right thing and I am very glad that the issue is resolved and I think we have done the right thing moving to net billing. It should have happened earlier, but it‘s better late than never.”

    AXN Networks India business head Sunil Punjabi feels that the new net billing system is not going to affect broadcasters. “It doesn‘t make a difference from a channel‘s perspective. It is just that things will be more transparent. From a tax perspective things will be clearer.” He however adds that from an agency’s perspective there could be an impact pertaining to commission. “Earlier on a bill of Rs 100 we were paid Rs 85. The rest was the agency‘s commission. Now we will charge Rs 85 and get paid that.”

    Venkatramani adds that the industry was “just hanging to the system which is completely outdated and nobody was gaining. It was just a paper number, paper figure or you can say paper transaction and it doesn‘t make much difference to their (agencies‘) life. They just need to sit with their clients and renegotiate their actual fees.”

    Taking a slightly milder tone, Colors CEO Raj Nayak said, “I am glad that both the IBF & the AAAI have been able to come to a mutually agreeable solution on the net v/s gross billing issue. This is an industry issue and we have to address it together keeping the interests of all stakeholders in mind.”

    NDTV group CEO Narayan Rao is in complete agreement and adds, “We were part of that decision and we fully supported it. I am glad that the IBF leadership and also some of the CEOs of our broadcasting channels have been able to achieve this conclusion.”

    Helios Media CEO Divya Radhakrishnan feels that the standoff between the two stakeholders of the industry served little more than proving a point one way or another. She said, “Broadcasters and agencies are working in the same space of providing communication solutions for brands. Hence there can be no reason for working at cross purposes. An amicable solution works for all concerned. Such stand offs serve no purpose other than wanting to prove a point. Lastly, if a stance has to be taken then it cannot be selective.”

  • IBF-AAAI resolve net billing issue

    IBF-AAAI resolve net billing issue

    MUMBAI: The stalemate between the Indian Broadcasting Foundation (IBF) and the Advertising Agencies Association of India (AAAI) on the net billing issue has been resolved and the blackout by the former on accepting TV ads has been lifted.

    According to IBF board member and Star India CEO Uday Shankar: “We have an agreement to do net billing. But we have also created a mechanism in the invoice and contract to enable agencies to charge the fees separately from advertisers effective 1 May.”

    An IBF board meeting is scheduled for later today, revealed Shankar, in order to communicate to broadcasters to resume ads.

    As per the solution hammered out by the two: the invoices that broadcasters raise to agencies will have a rider below which states that the advertiser and agency are free to have a compensation relationship which is as per accepted industry practice. The agencies will then charge clients their commissions on top of that in the bills they present to them.

    “Basically, what this means is that the broadcaster can bill the agency Rs 85 for a Rs 100 value TV spot,” says an industry veteran. “The agency can then bill the client for an amount not exceeding 1.1765 of the net value of the bill.”

    TV commercials are expected to begin airing on channels from today.

  • AAAI version of net billing resolution with IBF

    AAAI version of net billing resolution with IBF

    MUMBAI: Broadcasters, facing tax liabilities on account of non-deduction of TDS on agency commission, had stopped airing ads. This was because advertising agencies did not agree to their proposal to move to net billing. AAAI continues to maintain that the tax demands made on some broadcasters are bad in law. It has committed that it will attempt to get a circular from CBDT.

    A circular that clarifies that broadcasters like other media are not required to deduct TDS from agency commission since broadcasters do not pay the agency commission.

    In a meeting that lasted over seven hours, representatives from IBF and AAAI last night arrived at an elegant solution that meets the needs of broadcasters and at the same time assures agencies of their legitimate earnings.

    As a result, advertisers‘ ads will be back on air starting May 3rd.

    Says Arvind Sharma, President AAAI, “We are happy that we have resolved the impasse. Advertisers‘ spots will be back on air starting today. We ensured that both broadcasters‘ and agencies‘ business interests are protected. We are happy that the solution we have found will meet the needs of our member agencies in terms of their transactions with their clients.”

  • Broadcasters to send off net bills; AAAI reluctant to accept

    MUMBAI: The curtains are slated to go down on a very long-standing practice in the media industry tonight. Sources in the broadcasting fraternity reveal that net bills will be dispatched to media agencies for television commercials carried on channels. These will replace the gross bills which used to be the norm.

    This move comes following an Indian Broadcasting Foundation (IBF) decision on the matter. A month or so back, certain broadcasters received notices from the income tax department on gross bills not having a deduction of TDS on agency commissions. The IBF then decided to move over to the net billing system from the first billing cycle of April, something which the Advertising Agencies Association of India (AAAI) opposed. The IBF then told its members to defer the dispatch for another week to allow the IBF, the AAAI and the Indian Society of Advertisers (ISA) to hammer out a solution. Somehow, the three could not meet last week.

    And the IBF sent out another circular on Friday (19 April), advising its members to send out net bills on 22 April.

    “IBF‘s circulars are always in advisory form. After consultation with some more tax experts, the IBF has told us to dispatch the net bills tonight,” said the chief financial officer of a leading broadcast company.

    While broadcasters have already decided to go ahead with the issuance of net bills on 22 April, AAAI appeared to be oblivious to this development when Indiantelevision.com telephoned its president and Leo Burnett chairman & CEO Indian subcontinent Arvind Sharma. He pointed out that there has been no communication from the IBF that broadcaster members would be dispatching net bills tonight. “I hope it is not true. If they were to dispatch the net bills tonight, we will be constrained to send them back,” he said.

    “We at AAAI as well as our clients represented by ISA understand the challenges faced by the broadcasters and that is why we had proposed a joint association meeting on 23 April. The IBF, however informed us that it would not be possible to have it on that day. We still believe that if the three associations put their heads together along with some expert tax consultants, a win-win answer for all can be formed. We would urge IBF to come for such a joint meeting,” Sharma added.

    Obviously, the industry has not seen the last of the net vs gross billing issue.

  • IBF tells members to postpone net billing dispatch to agencies by a week

    MUMBAI: Advertising and media agencies in India have got a breather on the net billing issue. Even as the Indian Broadcasting Foundation (IBF) announced that its members would move towards net billing for advertising carried on TV channels from the first billing cycle in April, it followed it up with another circular dated 15 April asking them to “delay the generation and dispatch of bills on a net basis by a week in order to facilitate the discussion between the sub group of the IBF and the Advertising Agencies Association of India (AAAI) which is seeking to find a solution to the issue.”

    Members of the IBF are grappling with notices served on them by the income tax authorities for non-payment of TDS on the 15 per cent agency commission, which shows up in the gross bills they present to media agencies. The IBF had therefore decided to move to a net billing system without the agency commission being displayed in the bills.

    With another week in the bag, the IBF, AAAI and Indian Society of Advertisers (ISA) are planning to have a joint meeting in the coming days to plan their course of action and come up with solutions which work for all the three bodies.

    One of the measures being considered is a joint representation to the finance ministry on the issue once a common strategy is developed. KPMG and E&Y have been roped in to give their opinion and on the way forward.

  • Trai seeks industry’s views on TV ratings system

    MUMBAI: In an effort to create a reliable television rating system, the Telecom Regulatory Authority of India (Trai) today issued a paper to deal with issues of establishing an accreditation mechanism for the rating agency and methodology of audience measurement.

    The consultation paper titled “Guidelines/Accreditation Mechanism for Television Rating Agencies in India” also seeks to get the views of stakeholders on sample size, secrecy of sample homes, cross holding between rating agencies and their users, complaint redressal, sale and use of ratings, disclosure and reporting requirement, competition in rating services, and audit.

    The consultation paper aims to lay down comprehensive guidelines/accreditation mechanism for TRP (television rating points) rating agencies in India to ensure transparency and accountability in the rating system. Written comments have been invited by 9 May with any cross-comments by 16 May.

    The Consultation paper has been issued at the behest of the Information & Broadcasting ministry, which had earlier received a report from the Amit Mitra Committee on the matter.

    The Indian Broadcasting Foundation (IBF) has since been working with the Advertising Agencies Association of India (AAAI) and the Indian Society of Advertisers (ISA) to set up the Broadcasting Audience Rating Council (BARC) as an alternative to TAM.

    “Incorrect ratings will lead to production of content which may not be really popular while good content and programmes may be left out. Therefore, there is a need to have an accurate measurement and representative television ratings for the programmes,” the Trai says.

    Seeking to ensure “fair competition, better standard and quality of services”, the government had asked the Trai to draft recommendations on comprehensive guidelines and accreditation mechanism for agencies involved in measuring television rating points.

    The consultation paper also outlines suggestions on the eligibility criteria for ratings agencies. Some of the suggested criteria include –
    a. The rating agency should be set up and registered as a company under the Companies Act, 1956.

    b. The Rating Agency should have, in its Memorandum of Association, specified rating activity as one of its main objects.

    c. The rating agency should have a minimum net worth (say rupees five crore).

    d. The rating agency should have professional competence, financial soundness and general reputation of fairness and integrity in business transactions, to the satisfaction of the Government;

    e. Rating agency should meet the prescribed cross holding requirements.

    Another key area that the consultation paper touches upon is the issue of cross holding between a ratings agency and its user. It has asked stakeholders to comment/suggest on the guidelines of cross holding of ratings agency which may include:

    a. There should be no cross holding between the rating agencies and broadcasters, advertisers, media agencies and advertising agencies.

    b. This cross-holding restriction should also be applicable in respect of individual promoters besides being applicable to legal entities.

    c. No single company/ legal person, either directly or through its associates or inter-connected undertakings, shall have substantial equity holding in more than one rating agency. Similarly no single company/ legal person, either directly or through its associates or inter-connected undertakings, shall have substantial equity in both rating agencies and broadcasters/advertisers/ media agencies/advertising agencies. Substantial equity could be defined as certain percentage (say 10% or more) of paid equity

    d. A promoter company/ legal person/ directors of the rating agency cannot have stakes in any broadcaster, advertiser and advertising agency either directly or through its associates or inter-connected undertakings.

  • IBF-AAAI: Net or gross billings? Quo Vadis?

    MUMBAI: Come the end of the next advertising billing cycle, an age old practice is likely to come to an end in the Indian broadcasting industry, if TV channels have their way.

    Media agencies will start receiving bills net of agency commissions, rather than gross bills (with the 15 per cent agency commission deducted from the gross amount) for TV commercials and ad spots carried by television channels.

    The Indian Broadcasting Foundation (IBF) has communicated this to the Advertising Agencies Association of India (AAAI). So what has forced the IBF to attempt to do away with a long standing practice of gross bills?

    What happened is that quite a few broadcasters received notices from the income tax department towards end-March 2013 claiming unpaid TDS on the 15 per cent agency commissions that is mentioned in the gross bill amounts that broadcasters normally send to agencies.

    “They have asked for retrospective TDS from some broadcasters over the past three years on the 15 per cent agency commission,” says IBF president and Multi Screen Media (MSM) CEO Man Jit Singh. “We have not calculated the exact amount of money this would entail, but it is substantial and could cripple the industry and hence we have been advised to move to net billing.”

    Immediate past president of AAAI and Draftfcb Group chairman India Nagesh Alai says that “this incident cannot be used to rationalise or force any move to net billing. It will adversely impact the advertising industry and hence is not acceptable to AAAI. It‘s a well-established principle under income tax laws that the payer of monies has to deduct TDS. The clients pay the agencies after deducting the TDS and thereafter the agencies pay the media the net amount due to them. Hence, there is no obligation on the media to deduct any TDS from agencies. This is well established by a circular issued by the tax authorities in 1995, when AAAI had sought a clarification. Hence, the notices raised on the broadcasters by the tax authorities on the specious argument that broadcasters have not deducted TDS from agencies, is untenable and not maintainable under law. It has to be argued on merits.”

    Singh says that broadcasters are broadly in agreement with the AAAI and that they are going to go in appeal against the notices. “We are going to argue our point. But who is going to pay the 50 per cent or so of the claim amount that we will have to deposit with the tax authorities until the appeal is heard and judgment in our favour delivered? Our cash flow position is going to be hit hard.”

    Alai says that broadcasters “should not be panicking as a result of such wrong claims. As business partners, AAAI and IBF will be working together on this, as always. KPMG and E&Y have been roped in to address the issue on merits.”

    He adds that “as an aside, it‘s a matter of fact that such tax notices and claims, based on irrational disallowances, invariably emanate in February or March, driven by revenue targets of the tax department.”

    Singh once again says that he concurs with the AAAI stance “but our tax advisors have said there is no guarantee that even if our appeal is upheld this time, we will not be issued notices from the income tax department again. We can‘t be going in appeal again and again. Hence we are quite firm on our decision to go ahead with the net billings system from the next billing cycle.”

  • BARC to set the tone for single TV measurement system

    BARC to set the tone for single TV measurement system

    Developing a new television audience rating system is a long, arduous and costly process. It has required as a prerequisite that the three major stakeholders – IBF, AAAI and ISA come together under one umbrella (BARC) and agree on a process acceptable to all three parties to ensure this major initiative is accepted by all stakeholders. The industry expects to be well along in implementing this new measurement system by the end of 2013.

    The goal of BARC is to bring about transparency in the measurement system, greater accuracy while maintaining cost efficiencies and more checks and balances by separating responsibilities in the measurement process as well as countering fraud through rigorous ground monitoring. The industry recognises that no sampling technique can be 100 per cent accurate but seeks to reduce the sampling error and overcome to the extent possible the laws of small samples.

    The first step in the process is to create a transparent establishment study from which the universe can be projected that will be owned by BARC and available to all stakeholders. To this end, an RFI has been issued and based on the responses, an RFP will follow. Once a firm is selected, approximate 350,000 to 450,000 households on a nationwide basis will participate in an extensive survey that will take 6 – 8 months to complete.

    The establishment survey will form the base for the required number of measurement homes which are likely to exceed 25,000 nationwide. Once the number is finalised, new RFPs will be issued to select a vendor for the measurement system, and vendors for data collection and analysis and reporting. Breaking apart these tasks amongst different vendors is expected to bring greater accountability and transparency and build the most robust audience measurement system in the world. Ongoing ground monitoring will ensure that the system is not compromised over time.

    Given the expense of setting up the system, the time required and the fact that all stakeholders buy into ‘BARC’, the industry expects the BARC measurement system will become the single measurement system in India. This is typical of worldwide audience measurement where generally a given market has only one accepted measurement currency.