The lure of the Government as an advertiser and the complexities that go with it.
“The All Pakistan Newspapers Society (APNS) expresses its gratitude to the Prime Minister of Pakistan, Mian Muhammad Nawaz Sharif, for approving a long overdue increase in government advertisement rates for newspapers after a period of six years.” This was the headline of the thank you advertisement published by the APNS on February 25, 2017, in the print media.
To appreciate the significance of this decision, it is important to understand the complex, and sometimes controversial, dynamics of government advertising in Pakistan.
The Ministry of Information, Broadcasting and National Heritage is responsible for devising the policies that oversee the development and release of government (federal and provincial) advertising in Pakistan. Under the umbrella of the Ministry, it is the Press Information Department (PID) which is responsible for ensuring that the legal framework regulating government advertising is followed, while also acting as the focal point of contact and collaboration between the various stakeholders involved.
Since the adoption of the 18th Amendment in 2011 that devolved seven ministries (Food and Agriculture, Environment, Health, Labour and Manpower, Minorities’ Affairs, Sports, and Women Development) from the federal to the provincial level, the role of provincial PIDs has become increasingly important. The Amendment shifted the responsibility of budget allocations and approvals, agency selection, campaign development and media planning and release (for the above-mentioned areas) to the concerned provincial PID. What has remained unchanged is the role of the PID. It continues to remain the centralised clearing house for federal and provincial government advertising, as well as performing the function of monitoring stakeholder interaction to prevent irregularities or discrepancies in the advertising process.
An overview of the cumbersome process of how government advertising is developed and released is perhaps the simplest way of understanding who the key stakeholders are in the quantum of government advertising.
Government advertising is primarily of two types: classified and display advertisements. Restricted only to print media, classified advertisements include tender notices for projects and contracts, vacancy announcements and Request for Proposals (RFPs) from vendors. Since their budgets are pre-approved by the relevant ministries, the development, media release and payment settlement process involved is relatively simple. However, the situation becomes tricky when display advertisements are involved.
The process is initiated by the client department (the department or ministry that wants to release a campaign) after obtaining the approval of the relevant Secretary of Information (each province has its own) in terms of the time of launch, content and overall budget. After this, agencies (only those accredited by the APNS and the Pakistan Broadcasters Association [PBA]) are invited to pitch for the project; the client department has complete discretion in selecting the agency to develop the creative for the campaign. Once an agency has been appointed, the campaign is created, approved by the concerned Director General Public Relations (DGPR) and the client department and then submitted to the PID so that a unique PID number can be assigned to it prior to publication.
The PID number is important because only those advertisements with a PID number can be charged at the Pure Government or Government Commercial Rate (See box on A question of rates.) Once the PID number has been assigned, the client department submits a Client Release Order (CRO) or an initial media plan to the PID for approval. Although the PID does not get involved in the development of the CRO, what it does ensure is that for every campaign that is released, 25% of the total media budget goes to regional publications as per the legal framework in place.
According to Shazia Siraj, Director Advertisement, PID, “the rationale for having this quota is to ensure that smaller, regional publications get a share of government advertising, which is essential in their being able to continue their operations. Regional publications are usually never included in the initial media plan submitted by client departments since their focus, understandably, is on publications with mass circulation.”
Once the new media plan (after the 25% regional quota inclusion) has been approved by the PID, a Department Release Order (DRO) is issued to the agency, which is now authorised to submit the Release Order (RO) to the publications in which the campaign will be released. The RO specifies the positioning, size, page number, etc. where the advertisement is required to be printed. Once the advertisements are printed, the newspapers generate a bill which is sent to the advertising agency which submits the bill, their own invoice along with tear sheets to the PID for payment.
Samina Farzin, Deputy Director General Advertisement, PID, points out that in actuality, the process does not remain as straightforward as it appears to be because the authority for sanctioning payments is centralised with the PID. In fact, it is the Press Information Officer (PIO), who must confirm that client departments can release payments to agencies after scrutiny of the billing documentation submitted. Here, it is important to note that the PID acts as an intermediary between the agencies, the publications and the client departments and there is no direct interaction between the three in terms of payments. Farzin adds “this is done primarily to ensure transparency, as it is the taxpayers’ money that is being paid and we are accountable for every rupee.”
Given that in the FY 2015-16, the Government of Pakistan was the fourth largest advertiser in the print media in terms of product categories (source: Aurora Fact File November-December 2016), the importance of the Government as a client for newspapers cannot be overestimated.
Traditionally, governments have always advertised heavily in the print media, particularly during the 80s and 90s. A major reason is that tender advertising, as per the Public Procurement Regulatory Authority (PPRA) rules must be published in print, and tenders constitute a considerable chunk of the total government advertising. However, since the late 90s, the share of government advertising in print has reduced considerably. According to Umer Mujib Shami, Secretary General, APNS, “the television-print break-up at one point used to be about 50-50; however, in recent years it has changed, with print’s share going down to 25 to 30%.”
There have been ongoing negotiations between the APNS and the Government to rectify this situation. Dr Tanvir A. Tahir, Executive Director, APNS, believes that the importance of newspapers as a medium cannot be ignored. This is particularly true when it comes to information dissemination and influencing opinions of key decision-makers in diplomatic and bureaucratic circles. It is on this basis that the APNS has asked that the Government increase the share of the pie by fixing its advertising spend at two percent of the cumulative development budget. Furthermore, the APNS has asked that the budget allocation between media should follow a 50-40-10 proportion, for electronic, print and digital respectively, as is done in other countries such as India. The APNS stance is that this will ensure that these policy changes will continue to allow the print media to play its role in informing, educating and influencing public opinion.
In addition to the APNS’ claim that governments have shown a preference for advertising on television at the expense of print, the other bone of contention has been the exponentially increasing gap between the print tariffs offered to private clients compared to those offered to government clients.
In Shami’s view, the 15% increase in print tariffs is nowhere close to what was promised to the APNS during the tenure of Yusuf Raza Gillani in 2012; the then Prime Minister had announced that print tariffs would increase by 10% annually (linked to the level of inflation), but the directive was not followed. While the APNS and the newspaper industry have generally welcomed this tariff increase, the consensus remains that print is still not receiving its due share from the Government.
Tahir explains the root cause of the print industry’s grievance with the Government. “Not only is TV being given a larger share of government advertising, but the rates offered by the channels to the Government are substantially higher than those offered to their private clients. It is the exact opposite to how government advertising works in print.”
However, Shakeel Masud Hussain, General Secretary, PBA, and CEO, DawnNews disagrees. He references the tariff rule (originally formulated for PTV), for electronic media to settle this dispute. “All government spots get a flat 30% discount on the printed tariff of any channel. Whenever a channel revises its tariff, it automatically affects the Government rates as well.”
He also points out that unlike print, under the PEMRA regulations, both TV and radio networks are legally bound to give 10% of their airtime free of cost for government public service campaigns. These expenditures are borne by the channels and is an important factor to consider when reviewing the higher tariffs that television enjoys.
For the print industry, the real problem is that government tariffs are not linked to their private commercial rates, as is the case for TV. It is the PID that has the sole discretion in fixing the tariffs for newspapers based on a market assessment of the value of the publication as well as the circulation figures quoted on the ABC Certificate. If a publication meets the criteria (see Table 1), it is added to the Central Media List (CML) and becomes eligible to receive government advertising.
The other front on which the APNS and the Government have still not reached a satisfactory compromise is the release of government campaigns to non-APNS and dummy publications. The publication of government advertisements in such publications cuts into the already declining share of newspapers, while also resulting in resource wastage for the Government, because these publications have an almost non-existent reader base. However, Mian Jahangir Iqbal, Director, Audit Bureau of Circulation (ABC), is optimistic that with the automation of the ABC audit, dummy publications will be eliminated from the CML and will no longer receive any share of government advertising.
While television and print continue to face off in this battle to attract more government advertising at higher rates, they share common ground when it comes to the recovery of government dues. The issue is that although the credit period allowed by the PBA and APNS to agencies for making payments to channels and publications ranges between 60 to 90 days, the reality is that it can take anywhere between four months to a year for government payments to come through. Since it is the advertising agencies that are liable to pay for the media they release, regardless of whether their government clients have paid them or not, they find themselves in a real financial fix.
In case agencies fail to settle their outstanding media dues within the credit period, it results in their suspension by the PBA and APNS. A suspension means that until the agency pays up, it is no longer allowed to release media for any of its clients, whether private or public.
According to Jawad Humayun, Senior Vice Chairman, Pakistan Advertising Association (PAA) and Chairman, Channel 7 Communications, “it is unfair to suspend only the agencies, when the blame lies with the client who fails to make payments within the timeframe allowed.”
The PAA has been advocating a revision of the clearance policies currently in place as well as for the outstanding dues of every agency to be calculated separately for public and private accounts. Discussions with agency heads doing business with the Government revealed that agencies are forced to pay from their own pocket to avoid suspension. Although APNS allows agencies to file complaints against clients who do not clear their dues, Humayun said that getting a government client blacklisted once by the APNS or PBA makes it almost certain that the agency that chose this course of action will never be selected for a government campaign again.
When the issue of delayed payments was raised at the PID, the response was that there are delays from the agencies, who despite being sent reminders, fail to submit the required paperwork for bill processing.
To be fair, several agencies agreed with the PID in this regard. Brigadier Zubair Rehman, CEO, Creative Junction, was perhaps the most emphatic in his declaration that it is those agencies that are unaware of PID rules regarding billing that complain about not receiving their dues. Since almost 80% of his agency’s business comes from the Government, he believes the key is “managing cash flows and having enough financial muscle to be able to deal with delays in clearance. Government payments do take time, but if rules have been followed to the letter and all transactions have been documented, the payment eventually does come through.”
Another issue relevant to government advertising was the creative (or the lack thereof) aspect of public sector campaigns. One of the primary reasons, according to Nadeem Akbar, CE, Midas Communications Pakistan, is that government clients typically expect agencies to put together entire campaigns in a matter of hours or days at best. “Designing innovative campaigns at such short notice makes it extremely difficult to be creative. Our focus shifts towards meeting the stringent timelines in which there is zero leverage.”
However, Imran Irshad, Founder and CEO, Pirana Group, and Raja Jahangir Anwar, Secretary, Government of the Punjab, are among the few who believe that if government departments and agencies are willing to invest time and resources for public sector campaign development, then quality creative work is possible. The launch campaign for the Greater Iqbal Park last year and the more recent Metro Bus Multan Project were cited by many industry professionals interviewed by Aurora as prime examples of clutter-breaking campaigns.
“Delayed payments. Stringent delivery deadlines. Ungodly working hours. Collaborating with people who have no earthly idea of what advertising is.” These were the four most commonly cited grievances of having the Government as a client.
This begged the question that if working with the Government is such a tedious and thankless endeavour, then why not limit agency business to the private sector? The response was refreshingly honest and unanimous, and best summed up by Sohail Kisat, Group Chairman, MCOM: “Government is the only client that allows the agency to keep a 15% commission on media placement and that is where the real money is. In the private sector, the margins have become as low as two to three percent and this is why we are seeing more agencies pitching for the so-called ‘dreadful’ government campaigns.”
Government advertising spends are expected to continue increasing across media platforms. As agency margins continue to shrink in the private sector, not to mention the Government’s extension into new avenues of marketing and PR (the Punjab Government has become the first to launch its Digital Advertising Policy in the FY 2015-16), agencies working with the Government foresee the competition intensifying in the future.
In conclusion, there is no denying the inherent challenges in working with the Government sector. The APNS will, in all likelihood, continue to lobby for an increased share of government sector advertising, and at higher tariffs. Advertising agencies handling government accounts will constantly be trying to file the right paperwork, while managing their cash flows to avoid suspension. Yet, interviews with key stakeholders across the advertising and media industry make it clear that despite being well-aware of the financial and logistical challenges involved, no media platform or agency wants to miss out on receiving its share of the Government’s considerable ad spend.
When it comes to government advertising, two different rates are used. Pure Government (for non-revenue generating government entities, welfare departments and other state-owned enterprises) and Government Commercial (applicable to autonomous, revenue generating departments). Entities that are charged the Pure Government Rate benefit from a higher discount than those charged the Government Commercial Rate (on the tariff applicable to the private sector by the print media).
In terms of the payment release mechanism, the departments that get the Pure Government Rate forward the agency bills to the Attorney General’s Office, which prepares and sends the payment cheque to the PID to be handed over to the agency. Government Commercial clients, on the other hand, can release payment cheques directly to the agencies, after the PID’s approval.
Unfortunately, there is no clear government policy specifying what criteria should be used in order to classify government entities in either category. In fact, there are certain departments that are independent and non-welfare based that continue to take advantage of the heavily discounted Pure Government Rate. Unless a consensus is reached between the PID and APNS, this unresolved issue of print tariffs will continue to plague the print media. — AS
The Government of Pakistan is indisputably among the largest advertisers in the country. According to estimated figures provided by the All Pakistan Newspapers Society (APNS), in the last Fiscal Year, the Federal Government accounted for an ad spend worth eight to nine million rupees while the combined total figure for the provincial governments came to approximately Rs 11 billion; Punjab accounting for five billion, Sindh three-and-a-half to four billion, KP two billion, Balochistan 500 million and AJK Rs 200 million. Of this far from insubstantial sum, 65% went to TV and 35% to print.
Given these amounts, there are no surprises that the Government is a prize client for both the media and the advertising agencies. However, the question is: How effective is this advertising in today’s age? The answer, unfortunately, is no and there are multiple reasons for this.
Firstly, there is the question of tariffs. The Government traditionally sets the tariff the media is allowed to charge when releasing government advertising. In actual effect, the media (media in the government context is basically print and electronic) should (as is the norm in most other countries) be able to set its own tariff for government advertising, just as it does for private sector advertising. The core issue here is that on the Press Information Department’s (PID) Central Media List, 1,612 print publications are listed, as well as all the TV channels that have a PEMRA licence, and in the Government’s view, it is part of its mandate to support the press. To quote Rao Tehsin Ali Khan, Press Information Officer, PID: “Advertisements are the main source of income for the print and electronic media and the Government must ensure that the health of the media is not compromised, which is why time and again we keep giving these ‘health injections’ in the shape of 15% rate increases.”
What this in effect means is that in order to support the press, the Government reserves (standard practice, no matter which government happens to be in power) the right to set the tariffs and revise them whenever they deem it opportune. (As it happens, the latest revision for print media tariffs took place after five years in March this year in the shape of a 15% increase.) For the electronic media, the Government works on a different model whereby TV channels are required to give the Government a 30% discount on their official tariff – but can revise their rates upwards at will, provided they abide by the agreed discount. What is important to note is that although the PID speaks of providing ‘support’ to the press, the fact that many smaller publications and channels are heavily dependent on government advertising constitutes a significant area of leverage if and when the government of the day takes umbrage at the coverage it receives.
The second issue is the quality of the advertising. All APNS accredited agencies are on the government panel (revised every two years) and the general consensus is that all agencies that make a pitch are given the chance to work on a government account. The fact that many of these agencies deliver perfectly decent work for their private sector clients begs the question of why the difference when it comes to government accounts.
Although this cannot entirely exonerate the agencies, it seems the answer is either the government lacks the will to create good advertising or it lacks professionals able to extract quality work in terms of design and copy communication. Compounding this is the fact that many agencies, for various reasons, prefer not to pitch for government accounts. This is unfortunate because governments do have a mission to communicate what they are doing, yet the quality of what they end up putting out is so lacking in appeal, and so ‘typically government’ that the credibility of the message is compromised.
The third issue is that government advertising is restricted to print and electronic media. The fact that the digital space is left entirely unoccupied is indicative of the broader problem of a mindset that sees advertising as a method to leverage influence over the media rather than a potent means of engagement and communication. There is government advertising, but there is also a glaring absence of government marketing.
In her interview with Aurora in this issue, the Minister of State for Information, Broadcasting and National Heritage, Marriyum Aurangzeb, posed the question of why when an ad can sell a million bottles of Coke, the same effect cannot be replicated when it comes to communicating the Government’s performance. The Minister’s question is valid and if she is serious about it, she will first have to completely change the paradigm upon which successive governments have based their advertising.
— Mariam Ali Baig
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Illustrations by Creative Unit.