Genus under suspicion

 
Media business The media business has fallen into disrepute. But the evidence for any misconduct is (still) scant.  
In Germany, the trial surrounding the former CEO of Aegis Europe, Aleksander Ruzicka, is an ongoing issue that is keeping the advertising industry on tenterhooks. Ruzicka is alleged to have diverted well over 50 million euros from Aegis to his own companies. In this context, the discussion about discounts and special conditions in the media business has also intensified in Switzerland. But if you try to take a closer look at who the black sheep in the business are here in Switzerland, it becomes difficult. Although many of those involved believe that they know of specific examples, not everything is always above board. Individual media agencies, like wholesalers, would demand advantageous special conditions, which they would then invest in other interests, bypassing the client. But whether on the part of the media agencies themselves, marketers and intermediaries, advertising clients or industry associations - no one wants to name specific cases in order to meet the current demand for transparency in the media business.The genre is sufferingUnder the impression of the events in Germany, the Association of Swiss Advertising Clients (SWA), which has been campaigning for more transparency in the business with varying degrees of success for over six years, is currently benefiting. Specifically, a working group set up by the Swiss Advertising Association (SWA) and its president, CVP member of the Council of States Carlo Schmid, has been at work since April. And two weeks ago, as part of the two-day closed meeting of the publishers' association, industry representatives spent two hours at a round table in Vitznau discussing how competitiveness could be maintained. Because the genre is suffering. The high discounts and complicated special conditions are distorting the market, obscuring business and increasingly leading to price erosion.
Business should be controllableAt first glance, however, the inventory seems poor. The SWA is only aware of two documented cases that it can prove 100 percent. "Everything else we only know from hearsay," explains SWA Managing Director Jürg Siegrist. But neither he nor SWA President Gérard Stalder want to name names (see interview below). It was less than three years ago that the association, together with the BSW, the association of leading advertising and communication agencies in Switzerland, drew up far-reaching industry principles. However, the SWA sees an urgent need for action, apparently also due to the demonstrable cases. By the end of the summer, those responsible want to draw up a model contract document that can be used as a template for media planning. It will probably include the possibility of agreeing to the monitoring of business performance by independent third parties, which has long been known as auditing in the Anglo-Saxon world or in Germany, for example. The previous industry principles did not provide for such a control instrument. But auditing is not a commonplace solution, as industry experts know. On the one hand, analyzing the course of business is expensive, and on the other hand, there are cases abroad in which the auditor has been involved in the business, which significantly undermines his credibility.
Evidence needs to be put on the tableIn view of the somewhat slender evidence, the story appears to have been played up, especially for the media agencies. For Urs Schneider, CEO of Mediaschneider, one of the few independent media agencies in Switzerland, the matter is too closely linked to the German Ruzicka/Aegis scandal and has been overstated. "The media agencies in Switzerland are now being unfairly pilloried," says Schneider. He is therefore calling for the relevant evidence to be put on the table, which the SWA has probably not yet done in detail.
The fact remains that in the increasingly internationalized business with major global clients, local media agencies are left with nothing but crumbs and are unable to survive on fees of less than one percent. So they try to get advertising space from the media as cheaply as possible. The most effective are so-called share deals, preferably with free advertising time on television. As long as the customer is aware of such deals and they are also contractually regulated, Schneider sees no problems and, from a market economy perspective, no limits, because every remuneration model can also be contractually agreed in the interests of transparency. However, he is aware that a media agency must have 10 to 15 percent profit left at the bottom line, i.e. after deducting all wage and other fixed costs, "otherwise it can close down".
Massive shiftingThe SWA estimates the amount between gross and net sales in the Swiss advertising market at over one billion francs and assumes that two to three percent of this, i.e. 20 to 30 million francs, is smuggled past advertising clients through dark channels in the media business. However, experts in the media agency scene consider these figures to be too high.
Nevertheless, the gap between gross and net revenues is clearly widening. In the television sector in particular, the new RTVA has led to a greater range of advertising opportunities (interstitial advertising). Publisuisse Director Martin Schneider speaks of a massive shift in favor of the Swiss advertising windows of private, foreign TV broadcasters on the one hand and to the detriment of SRG broadcasters on the other.
It remains to be seen whether and how the various parties can reach an agreement on transparency in the media business.
   
René Worni