The decision by Google to cease payment of commission to British advertising agencies [WAMN: 05-Oct-05] has angered the Institute of Practitioners in Advertising - the body representing UK advertising, media and marketing communications agencies.
Google intends to replace the time-honoured commission system with its Best Practice Funding scheme - a volume rebate arrangement.
The move has created "deep concern" among members of the IPA's Digital Marketing Group, which on Wednesday condemned the US company's decision - reached unilaterally and without consultation with the affected parties.
The DMG argues that although the online commission system may not be practiced elsewhere in the world, in the UK it benefits all parties - the 'new' digital sector and the more traditional media alike - and not least media owners.
Continues the DMG: "The current system not only has the advantage of single invoice points, thereby avoiding the substantial administration costs of direct selling, but also the reassurance that in the UK, the agency is 'principal in law' … meaning it is liable for any debts incurred, regardless of whether it is paid by the client or not. UK agencies adopt this position in return for media owners' being prepared to offer them commission and credit facilities."
According to DMG vice-chairman Wayne Arnold: "Google's recent announcement has raised a number of unacceptable concerns for our members. At the heart of this is the move to "best practice funding" which creates a lack of remuneration transparency for our clients and has the potential to create an un-level playing field in the market.
"We are taking this issue extremely seriously and will be meeting with Google this week to discuss our concerns in more detail."
Data sourced from Institute of Practitioners in Advertising; additional content by WARC staff