A tightening of fiscal screws, via delayed payments, during the coronavirus is part of a deeper issue in the advertising industry.
Advertising agencies have recently reported an outbreak of brands, citing the COVID-19 pandemic, demanding delayed payment terms with new contracts.
The Communications Council (TCC), a peak industry body, called the underlying trend to delay payments due to the coronavirus a "convenient" excuse and a "betrayal of trust.
And independent media agencies say they have had many clients ask for extended payment terms due to COVID-19 financial issues.
Independent Media Agencies of Australia (IMAA) says the common denominator with the clients is that they nearly all have an overseas head office that is driving the request.
“There is no doubt that CFOs and procurement have greater power in companies, possibly due to an increased focus on share prices,” says an IMAA spokesperson.
“This effectively takes precedence over a relationship that any CEO or marketing director may have on the ground in Australia.
“As procurement and finance departments are becoming more involved in appointing media agencies, it is not uncommon to see extended payment terms in their RFIs when pitching out business to the market.
“The IMAA certainly believes clients get the best out of their media agencies when there is a mutually respectful relationship where both parties concentrate on the expertise each brings to the table. Media agencies should not act as bankers.”
Industry insiders say agencies have been pushed by clients for late payment terms for at least two years but is happening more now during the coronavirus crisis.
It's largely driven by procurement departments, with some demanding extended payment terms of 90 days.
This means a media agency has to carry the debt of the media budget. The flow on effect then reaches publishers which are then asked by agencies to accept delayed payment .
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