How ad agencies' discount tactics impact INS' pursuit of ethical print advertising

Following the Indian Newspaper Society’s (INS) call for advertising agencies and member publications to cease unauthorised discounts to clients on print inventories, industry players have emphasised that the practice of offering such discounts not only disrupts negotiations but also undermines media quality, ultimately jeopardising client outcomes.

The INS recently wrote a letter to advertising agencies and member publications to refrain from giving heavy discounts to clients on print inventories, on behalf of INS member publications without obtaining approvals from the publications concerned.

This practice, though commonplace, has drawn sharp criticism from industry players who argue that this trend not only raises questions about the agencies' strategic capabilities but also undermines the value and integrity of the media they represent.

This issue has been brewing within the industry for some time, according to sources.

Source said that this questionable practice has been an ongoing concern, with certain accounts becoming a focal point of the issue.

A significant concern highlighted by the media sources is that by relying on discounts, the clients might inadvertently miss out on reaching a larger segment of their target audience.

Satyajit Sengupta

Meanwhile, Satyajit Sengupta, Chief Corporate Sales and Marketing Officer of DB Corp, expounded on this viewpoint, asserting that agencies opting for discount-driven strategies reveal their “inability” to develop comprehensive communication solutions.

“This practice of agencies offering discounts on behalf of media without their knowledge just to win accounts is a trend that is eroding the credibility of such agencies. It's a completely wrong practice which just exposes the inability of agencies to work on strategies and solutions. This leads them to undercut rates as the only so-called value that they can deliver to the client,” Sengupta said.

This has happened with many large and small clients over the past few years and always leads to stalemates. Ultimately, while clients feel they are getting better value, they are usually worse off as strong publications which have a genuine circulation and reach are replaced by weaker publications which have scope for price reduction. Also, premium inventory is exchanged for inventory with less value, leading to compromises in impact and delivery, he added.

“In our view, rather than offering discounts to clients, agencies should work in partnership with publications to create solutions which deliver communication and marketing objectives,” Sengupta said.

“When used in a correct and effective manner, print remains the most effective medium to deliver reach, impact and also generate sales. It is the only medium that works across the funnel. We at Bhaskar have several successful case studies where brand KPIs have been met with a well-planned media solution. Agencies should realise that undercutting rates is a short-term game and is ultimately going to hurt the entire ecosystem. It is going to put their own existence at stake,” he added.

Ashish Tiwari

When queried about the practice of heavy discounts on print inventories and the origins of the issue, Ashish Tiwari, Chief Marketing Officer at Home Credit India, shed light on the matter explaining that in marketing and similar businesses, assessing a media vehicle's cost isn't isolated. It's about evaluating the cost per reach and the effective cost per reach.

He also emphasised that while initial impressions might suggest discounted assets, it's essential to consider evolving news consumption behaviour and its reflection in printing costs. The focus should be on cost per reach and effective cost per reach, rather than categorising it solely as discounted media.

"Discounts can span a range of X to Y%, contingent upon factors such as the media house involved and deal magnitude. Treating them uniformly is challenging due to the multitude of variables at play, including the media house's nature, the deal's specifics, geographical scope and sector-specific costs inherent in the media industry. The choice of sector for targeting also significantly influences these considerations, as does a nuanced grasp of the prevailing seasonality within the country,” Tiwari said.

“In today's age and time, when a lot of marketing is focused on delivering ROI, the end consumer is bombarded with multiple messages from different mediums. The mental memory map for a lot of brands is very limited. Hence, a lot of brands are kind of holding back on investment for the festive season for what you see as a discount,” he added.

In the letter, signed by its secretary general Mary Paul, INS wrote, “As you are aware that this is an unfair and unhealthy practice, which is in contravention of the provisions of the agreement executed by the agencies in terms of rules and regulations governing accreditation of advertising agencies and media services agencies.”

The letter further stated that society will take strong actions against the agencies if they don’t refrain from indulging in unfair business practices.

As the industry grapples with the INS's stringent stance and the ever-evolving dynamics of advertising, this issue signals a pivotal crossroads. While the immediate future may see agencies rethinking their discount-driven tactics, the larger issue remains: how can agencies and publications collaboratively steer the industry toward more strategic, impactful, and sustainable advertising practices? Only time will reveal the path this industry will ultimately tread.

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