SHANGHAI: Newly-formed media cartel Shanghai Media & Entertainment
Group (SMEG) has been accused of playing hard ball with advertisers as
it moves to tighten credit terms and reduce discounts for 2002.
Media agencies, who have been asked to sign contracts containing the new
terms by November 25, said they were surprised that SMEG would introduce
a blanket rate policy in a weak market. "They are being far less
flexible, which leaves negotiation to specific terms," said a media
agency director.
Agency sources said the new policy would result in media inflation of 10
to 20 per cent, depending on the package an agency had previously
secured for its client. SMEG has proposed granting discounts only on
volume - after an advertiser's booking has reached a minimum level,
possibly from Rmb20 million upwards. It has also proposed chopping
credit terms from 60 to 30 days next year.
However, not all agencies have been critical of the new policy. Derek
Kwok, general manager of Zenith, said the blanket policy would level the
playing field. "(Previously), if the advertiser is a friend of the media
owner, it would be given advantages." A SMEG spokesman said the company
unified the rate card as it valued smaller advertisers and believed the
policy would help it to attract more of them.
