Toyota Drops Media Commission In Australia

28 May 2004

Car maker Toyota is scrapping media commission in Australia as a method of paying its agencies.

Chief marketing executive Scott Grant said that in the next two months the group would stop demanding media commission in return for placing advertising.

Many advertisers benefit from the scheme introduced by Rupert Murdoch three decades ago which they use to help offset the costs of their advertising and media agencies.

Toyota, according to Nielsen Media Research, is Australia's seventh biggest advertiser spending A$77 million ($55m; €45m; £30m) and in return receiving A$8m in legal kickbacks from the media.

Paradoxically, eight years ago Toyota successfully mounted a legal battle which forced the media to pay commission to all big advertisers as opposed to just agencies.

Grant, who maintained Toyota had been "vocal" about the need for change, admitted it had "taken a while" to implement the decision.

He denied that the move was a prelude to a general cost-cutting exercise after admitting the marketer had too many marketing and communications resources.

"Our focus is on growth but more efficient and measurable growth. We want to understand the costs, based on the scope of the work. It's about providing incremental margin opportunities for work done above and beyond the call of duty," he said.

Car makers spent A$685m on advertising last year, some of whom have abandoned media commission.

Data sourced from: Sydney Morning Herald; additional content by WARC staff