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| `Q3 of this year would be crucial for ad agencies` | | Q&A: Madhukar Kamath, President, AAAI |
| Ruchita Saxena / Mumbai Aug 17, 2008, 04:22 IST |
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 The Advertising Agencies Association of India (AAAI) is an industry body that comprises 88 members, who together account for approximately 90 per cent of all the advertising business placed in India. Madhukar Kamath, who has been re-elected as the president of AAAI for 2008-09 recently, says the industry body would implement a 15-per cent commission model for agencies to earn revenues uniformly. In a chat with Ruchita Saxena, Kamath, who has more than 20 years experience in the industry, shares AAAI’s other agendas for the year and issues concerning the agencies in India.
What are the new initiatives that you have planned with AAAI?
We will discuss with the government and other regulatory bodies issues like negotiations on stamp duties and service tax rate levied on the agencies for print media. Participating in the implementation of a fairer media measurement system with the Telecom Regulatory Authority of India will be another agenda. We have already formed a joint industry body called the Broadcast Audience Research Council (BARC) to oversee and control the TV audience measurement system in India. The body is headed by Pradeep Guha of Indian Broadcasting Foundation (IBF).
What are the issues that would be discussed in the first executive committee meeting of the body this month?
We would look at various models to ensure just fees or compensation to ad agencies by the clients. Apart from that we would also discuss steps that AAAI can take to attract talent to the Indian ad industry, how can agencies establish better partnership roles with clients in building brands and how even smaller agencies can become part of AAAI.
We have formed a committee headed by Colvyn Harris, vice-president of AAAI and CEO, JWT, to address how the association can be more inclusive by involving many smaller agencies that do not yet have a representation with AAAI.
What are the models you are considering for better commission for ad agencies?
Among the possible models being considered now is to implement a standard 15 per cent commission model for agencies to earn revenues uniformly.
The other models being analysed are linking a part of compensation recieved by agencies to the growth of the brand or the brand equity index and rewarding agencies with equity in client companies for the same.
As an industry body, AAAI would attempt to establish a common ground on which all agencies could agree. The first step in that direction could be to have agencies agree on setting a standard 15 per cent commission for the agencies.
What are some of the breakthroughs achieved by AAAI in the last one year?
One of the main breakthroughs we could achieve was greater participation between Indian Society of Advertisers (ISA), IBF and AAAI for developing better television rating system.
Also the coming together of the Ad Club and Abby’s to hold the Goafest. The festival this year recieved much higher turnout then expected and we hope to make it better every year.
How is the advertising industry being impacted by the current environment of high inflation in the country?
Ad industry tends to have a lag effect. So far we have not witnessed any curtail in spends by the advertisers. However, the third quarter of this financial year would be crucial to see if the companies begin to cut ad spends to bring down costs.
The gloom and doom story of inflation could be over-hyped, we may not see an alarming shift in ad spends by advertisers.
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