Does the Industry Have the Courage to Say No?

If the report in the recent Advertising Age is true then the media and advertising industry needs to take a good hard look at itself. And frankly it’s going to need to get itself a set of “chicken nuggets” large enough to avoid being held to ransom.

In case you have not heard, some of the biggest advertisers in the market including GM and Budweiser owners Anheuser-Busch are insisting they be given 70 or even 120 days to pay bills related to advertising activities.

In an industry that is already reeling from reduced spending levels, such an attitude is effectively blackmailing any supplier who might be in the unfortunate position to have to rely on this business to survive. It’s a shifting of credit from banks (who know better than to subsidize these giants) to the small companies across the industry. It’s classic corporate bullying of the very worst kind.

This will result in only one thing – faster and more complete destruction of the industry. No agency can survive on 70 days credit – especially since that’s almost never the reality and payments almost always arrive later than the stipulated time. Even large media owners will suffer severe cash flow issues if enough giant advertisers pull the same stunt.

Obviously there are ways to reduce exposure to this. Firstly it is a refusal to accept these terms. If you have succeeded in being viewed as more than just another commodity, then many client contacts will fight tooth and nail to get you supported, as we oursleves have seen in many contract negotiations. Secondly it is possible to insist that the advertiser takes responsibility for paying media invoices directly (thus enabling the media owners to say no to the business or accept floating the campaign themselves). Thirdly it is to walk away from the business and look for more sustainable accounts elsewhere.

As someone who runs a small business and strives everyday to be honest with suppliers and staff, there’s something inherently despicable about companies that advertize brand attributes about positive behaviour, play on the heart strings of the American spirit and portray themselves as bringing positive influence into peoples lives when behind the scenes they are prepared to screw an entire segment of small companies. Survival at the expense of others should not be acceptable and they should be called on it (well done to Ad Age for publicizing this).

As you can see I’m not buying it…

Dick Reed
Just Media, Inc.

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