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Ad blackout spat spells end of India’s commission system, says media agency boss

Ashutosh Srivastava

Ashutosh Srivastava

The latest dispute between advertisers and broadcasters in India is a sign that the days of the commission system are numbered in the populous emerging market, a regional media agency boss has said.

Last week, India’s Indian Broadcasting Federation and ad agency body the Advertising Agencies Association of India finally reached an agreement after a two-day ad black-out by broadcasters in protest against a system they say leaves them out of pocket with the tax man.

Mindshare Asia chairman and emerging markets CEO Ashutosh Srivastava, who used to run Mindshare India as CEO, told Mumbrella that it is mostly government advertisers and small clients that are still tied into the commission system, which has largely been phased out in other big ad markets.

Traditionally in India, an agency receives commission of 15 per cent from the media owner when they buy advertising for their clients. But the system is seen as anachronistic as agencies and clients gradually move to a fee-based remuneration model.

“It’s in everyone’s interest to see an end to the system. But there are still small factions of the market – the long tail – that operate like that,” he said.

“The commission system has been long dead for larger, multinational advertisers,” said Srivastava.

“When will we see the end of the commission system? It’s difficult to say. But it will definitely happen. It’s just a matter of time,” he said.

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