HONG KONG 4As advertising agencies must revise their traditional method of charging clients to avoid losing business to the growing number of smaller agencies, Hong Kong Advertiser's Association (2As) chairman Belinda Luk has warned.
'I think the way advertising agencies are charging us in Hong Kong is wrong. Why should we pay 15 per cent commission every time the agency buys advertising space for us, when that is the least expert part of the overall service?' Ms Luk was referring to the industry standard method of taking a cut of all advertisements placed on behalf of the client.
'Choosing and buying media space in Hong Kong is far more easy than in America, where there are thousands of publications and television channels to select from.' Most of an agency's revenue comes from the 15 per cent commission it makes on buying media space but it also charges for production work and sometimes creative input.
Ms Luk could not suggest an ideal method with which to replace the commission structure, but she believed an hourly fee system for account servicing could cut out wasted manpower.
Ms Luk, who works as senior marketing manager for Eagle Star and voluntarily represents Hong Kong's advertisers as 2As chairman, said performance-related payment schemes should not be ruled out.
Vice-chairman of 2As and Hong Kong Bank advertising manager Anthony Lau supported Ms Luk's call for an alternative method of payment.
He said it was unfair that agencies charged clients 10 times more for buying $10 million worth of media space than for buying only $1 million worth.