There’s a good reason why many people say politics and business don’t mix – it is simply because of bad debt!
Since 1994/5 and every four years since, advertising and media agencies are approached for the privilege of working on political campaigns. And, every election, mistakes of the past are repeated.
Maybe it’s partly the staff turnover in our business, maybe the promise of riches as a reward and, dare I say it, rubbing shoulders with the political ‘elite’ that cloud our judgement. And for this reason, many of the larger multinational media agencies refuse to accept any political advertising.
So what are the mistakes?
Political parties rely on collecting donor donations as they don’t have a steady income stream. This vulnerable financial model, coupled with the need to attract voters, often tempts parties to gamble and commit to larger advertising budgets than they can afford. When the final bill arrives at the political party headquarters, either the people who agreed to the budgets have moved on or there are simply no funds left. And certain political parties feel that the billing should be seen as an investment. So, when confronted about payment, they either suggest a solution that is too ‘creative’ to consider or suggest that they have influence that would make going legal costly. Usually what follows is a steady stream of commitments to pay and subsequent broken promises.
Many media owners, not the people who work for them I might add, have confused obligations. Commitments and fiduciary responsibilities seem to be quickly set aside for short-term political gain or the promise of political influence. Months down the road when debts are mounting and the heated debates happen in media owner board rooms, accountability seems fleeting. It’s a surprise to all. Who would have thought that the debt would not be settled… ummm, maybe history and common sense! Those media owners complaining the loudest will be the first to scramble for political advertising come 2014… even though debts are still outstanding.
Hypocrites, I say.
On another note, the recent bad debt experiences by media owners may prompt certain political parties to explore new media… the social/digital media. But be warned: this may not be motivated by an attempt to follow global trends but due to large media owners refusing to take political advertising without previous debts being settled or even being paid in cash upfront.
As an industry, we should unite to discourage unethical business practice… irrespective of where it comes from. I have a simple view when it comes to any advertiser that dodges its responsibility to settle a debt: it is wrong. Write-offs cost money and fuel inflation (which has to be shouldered by ethical advertisers) and ultimately this encourages others to do the same.
As media discounts move with the client between advertising and media agency, then so should bad debt. It’s inconceivable to me that any advertiser should be able to dodge bad debt by simply moving the account to another media agency.
Marketers and industry organisations should take a keener interest in political advertising if debts are being settled and timeously. The impact of political bad debt impacts directly on rates, discounts and ultimately on the financial viability of the media owner/supplier.
There is a view that discounts and added value are free. Let me clarify this: nothing is for free! Somebody always has to pay for discounts that are not deserved or earned.
So, my advice: Stick to your principles: debts must be settled. To avoid unpleasantness, keep it simple and insist on cash upfront. Complicated trade exchanges or, even scarier, media agencies withholding discounts or media owners retaining all or part of discounts to repay previous debt… will backfire on all involved. Plus those agencies previously responsible for the debt will be less than impressed and might seek a legal solution.
Media owners, remember your integrity and don’t consider writing off debt or giving silly deals just to collect some income from the debt. Firstly, it’s not fair to other political parties or advertisers plus it encourages repeated delinquent behaviour. All advertisers should be treated fairly. Remember the appetite to settle a debt diminishes over time from when the exposure is given.
Marketers, pay attention to political campaigns and be aware if your agency is involved with the upcoming elections as poor payment may compromise service levels. History has a habit of repeating itself.
Advertising and marketing are the cutting edge of free enterprise and capitalism. We thrive on producing great work, not propaganda. And while we certainly need income (billing), we still need profit (not votes) to sustain ourselves.
Democracy and free enterprise should be comfortable bed partners – but they’re not in our country when it comes to advertising.
This post was first published in the March 2014 issue of The Media magazine.
