As originally published in Synergyzer Annual 2019
Ali Mandviwala, Chairman PAA
What is the role of the Pakistan Advertising Association (PAA) in specifically supporting the advertising sector of Pakistan?
PAA is the sole representative body for advertising agencies in Pakistan. Advertising professionals created the Pakistan Advertising Association (PAA) to give its member agencies a voice and to align all stakeholders when taking measures to tackle the challenges faced by agencies as an industry. It is similar to the All Pakistan Newspapers Society (APNS), which represents members of publications including newspapers and magazines; and the Pakistan Broadcasters Association (PBA), which represents the electronic media including TV channels and radio stations and (PAS) Pakistan Advertisers Society established by the advertisers / clients.
The PAA was established in 1973 and has a strong history; however it was inoperative for the past decade or so. Two years ago the agency fraternity got together and revived the Association.
With support from all members of PAA, it has been fully revived and is now present as a unanimous voice in most major discussions on policy-making and various trade-related forums in Pakistan affecting our industry. There is still however much more to be done and many new challenges to be handled.
The agencies usually face problems with regards to long overdue payments from the clients? Are there any steps the PAA plans to take to safeguard the interest of the agencies?
Being paid timely for services is one of the issues of course. It is not the only one, but it is a major one because it cripples an agency’s operational capacity. Payments or income earned forms the backbone for any agency or business to survive. The culture to delay payments to agencies has become habitual on the part of certain clients. Not all clients do this as a practice but there are an alarming number who do have such practices. They need to understand their obligations, as it is a two-way relationship. If they have obtained services, then they need to pay for them on time and if they have agreed to a credit period then that credit period cannot be extended to double or triple the duration. When a client pays an agency late for its services, the agency cannot pay the media or their business partners, which in turn affects their business. This has become a major problem and one, which is being repeatedly discussed and evaluated. This has to be resolved as a joint initiative along with Pakistan Advertisers Society (PAS) who represent many clients and advertisers. Once we are able to prepare certain guidelines and get endorsement from PAA, PBA, APNS and PAS then we can secure this as a joint measure. If advertising agencies can be penalized in different areas related to delays in payments on behalf of clients by APNS and PBA, the clients need to have similar penalties in place as mostly the reason for delay is because of certain clients who pay their dues late as a practice.
Individually these measures cannot work as it affects all the stakeholders so this has to be done as a joint industry measure.
What are some of the initiatives being taken by PAA to protect its members and what are the challenges being faced in the process?
We have tackled some collective industry issues that protect our members. I’ll quote just a couple of them.
The first is with regards to a change in clause, which was initiated by Federal Board of Revenue (FBR) last year that created a presumptive tax assessment on all agencies. We had to proceed to the High Court of Sindh at Karachi to obtain a stay order against the action of FBR. The PAA then went to the FBR and discussed the impact of this and put forward our viewpoint. After collective meetings with members of APNS and PBA, these corrective measures have been proposed and are expected to be rectified in the upcoming budget.
Things have also improved with how we deal with other trade bodies and stakeholders like APNS or PBA. We are now at a stage where we are discussing challenges at a strategic level and how efforts can be combined to benefit the industry as a whole rather than only protecting each other’s members in isolation.
The PAA is playing the role of bridging the information of agencies that normally would not be able to get attention from other stakeholders. Helping in fulfilling commitments from agencies towards the media is one of the key aspects where we feel PAA is playing a positive role and which our members and colleagues have also recognized. For it to work successfully, respect has to be mutually given to each other as key stakeholders of the fraternity.
According to the media policy being curated by the sitting government, agencies will have the minimum role in releasing government ads, while the survival of media houses is already at stake. Although APNS, PBA and PAA are currently on the same page in challenging the media policy, what are the chances that the government will align itself with the recommendations being put forward?
This issue has already been raised with the Government by all stakeholders and it seemed that the policy being introduced was misdirected in some areas since it did not have the input from the people who understand the business and even the challenges of implementing such a policy. The Government operates in a certain way which is managed by regulations and a process. The agencies play an important role of providing services who understand the challenges of that process. I feel if the Government seriously attempts to make their own processes more efficient, reinventing a whole new process is not even required.
What criteria are currently being used or should be used by companies in the selection of the media and advertising agencies for their clients?
There are a few parameters that clients focus on in selecting advertising agencies or media planning and buying agencies. These include a competent and experienced team, international affiliations, rates from media for publications as well as channels (TV or radio). However media rates sadly, have now become the biggest parameter we see being concentrated upon especially in our market.
Other important factors that clients should consider also include, strategic and planning capabilities, data insights, research capabilities (part of the skillset in itself) and the level of service it can provide to the clients in terms of driving performance and driving business.
How important are media rates and how important should they actually be?
Well, globally media rates are important, but not as important as they have become in Pakistan. Unfortunately, the rate game, so to say has become so apparent that it has given an unfair advantage to some players compared to others in terms of the actual rates that are issued to other players in the market. It is said that some are given preferential rates because of having a certain volume however; they gain the volume as a result of this unfair advantage at the outset.
We need to understand how it works. If an agency has a certain volume, rates can be negotiated with them and then one can find out what advantage can be passed on to a certain client. What is happening now and what has happened in the past few years, is that some agencies have been provided a blanket understanding that they will be given lower rates than the other companies competing against any business. Even though practically that is not true, but in terms of perception of the clients, it remains true because they have a bigger volume, so that is what they talk about.
Now for all the other agencies, this has become a major concern. This has actually resulted in reducing healthy competition, which is a negative sign for any market place and has been happening over a period of time contributing to a situation, which is now lopsided. Many agencies have lost media business as a result.
If media rates are kept so low then how does it impact the quality of the programming and TV content?
Yes, this is a big challenge. If you look at it from the channel’s perspective, they cannot improve and invest in content or in better programming if their income does not increase. This income comes from advertising revenue and if rates are not going to be increased, how are they supposed to survive, improve or expand? Similar is the challenge on the agency side. So unless and until there is a proper framework, which is put in place by the PBA, APNS and PAA along with PAS this problem is not going to go away. It’s only getting worse with time for the agencies and for the media. If these issues were being dealt with in terms of policy or a trade-based framework then channels and agencies would not be facing problems to a large extent today. The only way to survive long term for agencies and media is that they function as a proper business model rather than working on cutting pricing alone. This is one of the main causes of a decline in qualitative work that comes out as all are doing more work for less and less each year compromising on quality work.
The only concentration from the clients side seems to also be on how to reduce the price. Whether, multinationals or even private local entities, are always looking to cut cost of media and services. As a result, one’s quality is sure to be compromised. And it has been compromised. The same is apparent in the content degradation of many TV channels who have not been able to invest in good quality content. These are real challenges and until these issues are not addressed at relevant forums and talked about, this situation will not improve.
There is a great deal of negativity based on the lack of professionalism especially when it comes to making ATL media pitches. Usually even if an agency makes a bid the information gets leaked out. Larger agencies undercut with lower pricing and the business goes to the major players in the market. Do other players have a chance left to win media business in the current environment?
As I explained earlier, the current environment does not allow media planning and buying agencies to actually grow because the overall structure of media rates has been completely monopolized and not all can compete. Even companies that are 10, 20 or 30 years old are finding it difficult to cope. Right now, you rarely find any client going to other agencies for media buying other than the monopolies because of the low rates they offer.
Is the current situation affecting the talent from entering the industry?
Yes, totally. The present scenario affects the talent coming in. When they see a lack of scope for growth in the industry they will move out into other areas where they see expansion, growth and a commercial value that they can achieve.
There are four organizations; PBA, APNS, PAA and PAS who can work for the betterment of the industry. As the Chairman of PAA, how will you ensure that things change and become fairer?
PAA is the sole representative body of all advertising agencies. We represent all advertising agencies including certain media planning and buying agencies. It’s not possible for one entity to achieve everything. That’s why I mentioned that all stakeholders; PBA, APNS, PAA and PAS have to work together to tackle these challenges together above all personal interests.
So is the PAA now treated as an equal partner by APNS and PBA?
I would not go as far as to say that yet – that’s an idealistic view, but yes that is the ideal that we are working towards. We would like for the PAA to be considered an equal stakeholder of the industry, which it is. We have seen very positive changes from APNS and PBA, which show that they are open to taking serious measures, some of which are in process already.
What role do you think PAA PAS can play together?
PAS is the body that represents advertisers, meaning the clients in Pakistan. It is an absolutely important stakeholder and one that has played a positive role in the past years since it’s inception for taking many positive initiatives. The PAA has already engaged with PAS and is in the process of taking qualitative initiatives in terms of conducting joint workshops and preparing a broader plan of cooperating in areas of mutual interest.
What measures is PAA taking to expose its members to international forums and practices?
ADASIA is one of the biggest events in advertising under the Asian Federation for Advertising Associations (AFAA). The convincing bid was won in 2015 by Pakistan for it to be held here in 2019. The event will take place in Lahore after a hiatus of 30 years. The event is attended by a lot of international delegates.
The last time an international event of this magnitude took place was in 1989. It was also scheduled in 2009, but did not take place. Now in 2019, it is made possible because of certain individuals who remained connected with international agencies and Mr. Sarmad Ali, in particular, who is also the Chairman for the Organizing Committee for and Mr. Sohail Kisat, who is the Senior Vice Chairman of PAA.
What is the way forward in the current environment and challenges agencies and media alike are facing?
It is important for all four trade bodies to be aligned, including PAS as they represent the client side. PAS especially needs to educate clients with regards to industry practices. When we talk about following international standards then it has to be done across the board by all agencies. PAA also has a part to play and agencies also have to realize they cannot create a monopoly. For the media, things must go back to the basics, then only you will see investment coming back into research and expansion in the industry.