The Institute of Practitioners in Advertising, representing the majority of UK advertising agencies, has filed a formal complaint with the Office of Fair Trading over the demands made by TV Eye, a consortium set-up by ITV and other commercial broadcasters to monitor agencies’ creditworthiness.
Pending completion of inquiries by the OFT, the IPA is saying nothing. Likewise the TV companies. But an earlier report [WAMN: 27-Jan-03] reveals that a sticking point between both sides is the demand made by TV Eye that agencies provide bank guarantees.
The media organisation also wants ‘recognised’ ad and media shops to have an equal debt to equity ratio, in order to minimise agencies’ exposure to charges triggered by the outbreak of US holding company accounting 'mishaps'.
The broadcasters’ sensitivity is further heightened because many of the UK agencies with which they deal are US-owned and subject to draconian cashflow restrictions imposed by their US parents.
TV Eye has accordingly demanded that agencies increase their credit insurance – a move the latter oppose as the IPA claims it will increase premiums to around £250,000 ($388,440; €361,262) annually.
The OFT, like the other parties, remains zip-lipped save to say it is considering whether the IPA complaint has sufficient substance to warrant a formal Section 25 investigation.
Data sourced from: IPA Online (UK); additional content by WARC staff