Can Ad Agencies Compete With The Government of Pakistan?
In 1970s, Mr. Zulfikar Ali Bhutto imposed a wide ranging nationalization policy by taking over private businesses and industries that halted our exponential economic growth. The business of advertising also suffered greatly, and many global players went back after this brutal decision. Consequently, some local employees tried to manage the top agencies of that time, but they could not do much as state was the majority owner of these entities. By late 1990s most of the advertising industry was taken back by private sector once again. The last agency acquired back then by the private sector from Government of Pakistan was IAL by the EMG group for Rs. 5 million.
After the privatisation, the advertisement industry witnessed great boom with emergence of hundreds of new agencies, media buying houses, production houses, digital agencies, and many more such entities. This not only created thousands of jobs but also helped other businesses grow, thus ultimately boosting Pakistan’s overall economy. The ad industry also helped Pakistan emerge as a promising country at the international stage and often invested their resources in this effort.
Unfortunately, at present not a single government body has been able to emerge as a strong regulator for the advertising and media industry of Pakistan. Especially with respect to social media, there are many grey areas which presently none of the regulatory body addresses. For example, Pakistan Telecom Authority cannot even regularise advertising on any of the Internet based platforms/mediums except imposing a broad ban on any portal e.g. YouTube, Facebook. On the other hand, Press Information Department (PID) headed by Principal Information Officer (PIO), is all powerful with respect to government publicity as per the rules of business of Government of Pakistan. The lack of effectiveness of PID is evident from the very fact that it is not even able to regulate advertisements for ISPR or any other military entities despite having constitutional cover. Additionally, the department has been unable to even develop proper policies regarding content or procedure of government advertising, that could provide a guideline for placement of advertisements as well as payment of advertising bills.
Pakistan Electronic Media Regulatory Authority (PEMRA) did use some muscle in the past to ban “vulgar” advertisements on electronic media but in general failed to bring and impose any clear guidelines or policies for the electronic media/ad agencies. Another government department, Competition Commission of Pakistan (CCP) has done an appreciable job by exercising their legal powers to successfully control deceptive and misleading advertising in Pakistan, but CCP has a very limited role with respect to ad industry.
In the recent past, PID did step up and took some commendable initiatives, such as issuance of online PID Number System to increase transparency and regularised almost 90 % of government clients with APNS by holding rigorous competition. This helped client departments to appoint best of the best agencies on panel for two-year tenure, but also provided agencies a sustenance model to tailor their resources to clients’ needs and be more productive. This competition model for appointment of advertising agencies on panel of government departments, proved to be effective. Other than their routine and regular advertising designs, these government departments also received innovative ideas to improve their business operations without paying a single penny. As per the current practice ad agencies working for Government sector are not being paid for any creative work for print, electronic or any other medium of advertisement. They only get 15% commission, which is being paid to them by publications or TV channels that too after using their own cash flow on account of government departments for over 180 days at an average.
It is imperative to note that APNS and PBA only extend credit of 90-120 days to agencies and after that they can suspend any ad agency for any meager payment. Resultantly the ad agencies are in constant financial pressure. Since this is a competitive business, agencies are not able to suspend any client for recovery of their payment like telecom companies as they have higher stakes and personal reputation involved in it.
Ad Industry, which is already facing multiple challenges, is once again being sidelined. PID’s recent unfortunate attempt to threat ad agencies business is a reminder for us of Bhutto’s nationalization strategy. By issuance of a single notification, PID stopped flow of all classified advertisements ( the major chunk of government’s business) that include tender Notices/Job ads etc.; through ad agencies, thus depriving them of their main source of income from the Government Business i.e. 15% agency commission.
Curiosuly, PID simultaneously placed an advertisement for hiring advertising professionals to join the Cyber Wing of PID, offering lucrative salaries (as high as MP II scale). Apparently, through this device, PID aims to build their own resources to manage in-house designing of advertisements and digital campaigns, basically putting an extra burden on Government’s already limited budget and of course wasting taxpayers’ money. They are fully aware that agencies cannot offer similar pay scales even to its senior team members. Sadly, in this case a regulatory body is directly engaged in an act that is more of a hijacking attempt on the ad industry business. This makes many ponder, why would a government body bring itself in direct competition with a full fledged industry, which is a source of livelihood for millions of families. Is it not against the basic competition laws of Pakistan?, i.e. targeting of already cornered business segment which has been facing manifold challenges due to increased costs of business operations, dual taxation, higher rentals and retaining of good human resources.
The timing of the decision makes it even more controversial. PID knows well that presently the entire nation faces COVID-19 driven lockdown, so it might be the right time for them to take such arbitrary decisions since no one will note.
This unfair attack on advertising industry makes us wonder, what was the need for this? And why such a decision has been taken at this point of time when COVID-19 has resulted in closure of so many existing businesses. This policy by a department will result in making government pay for the services they were being offered free of cost. Can this be justified?
Prime Minister of Pakistan, Mr. Imran Khan is an honest leader. He has maintained that his biggest concern and fear with respect to COVID-19 crisis is that it will lead to massive loss of people’s livelihoods. But unfortunately, some of his team members are not working in line with PM’s vision. Rather their actions suggest that they might be working in an opposite direction.
Taking this opportunity, I would like to make a special appeal to the Prime Minister of Pakistan Mr. Imran Khan, to immediately intervene in this serious matter and uphold the competition and open merit culture. The entire ad industry’s eyes are on you Sir! Advertising professionals also have families whom they need to feed. We never expected any relief from Government, never asked for any plots in state developed housing societies. We are a responsible tax paying segment of this society.
All we want is a fair treatment and a conducive environment to continue our operations.
Sardar Zaheer is an advertising professional. He is the CEO, MarCom based in Islamabad.