Agencies applaud 4As for waiving levy

Entropia senior partner Prashant Kumar said: “I think it’s a very pragmatic step. I am happy for the 4A members and the larger marketing industry community as it lowers some barriers for business to happen, for certain types of clients, at a time when many need it strongly.

PETALING JAYA: Agency leaders have commended the move by the Association of Accredited Advertising Agents Malaysia (4As) to waive up to 100% of its membership levy.

The association recently said it would reduce and, in some cases, waive its annual membership levy for 2020, to ameliorate the impact of Covid-19 on its member agencies.

The membership levy reduction is another way that the 4As is supporting its members during this challenging period.

Agencies with an annual revenue of less than RM3mil would be granted a levy reduction of 100%, while those with an annual revenue of RM9mil and above would be granted a levy reduction of 25%.

All other member agencies would receive either a 50% or 75% levy reduction, depending on their revenue tier.

Supporting the move, Publicis Groupe and Leo Burnett Malaysia CEO Tan Kien Eng (pic below) told StarBiz: “This is definitely a good decision by the 4As and a good gesture too in these challenging times.

“The only thing is the reduction should be flat across agencies instead of tiered reduction according to size.

“Being small doesn’t mean they are performing worse off as compared to a mid or a larger sized agency.”

Currently, he said agencies are having to pay service tax and digital service tax. So, he said technically, agencies are facing double taxation.

“With the current MCO, production houses and creative agencies are facing challenges in getting work out.

“The relevant authorities are forced to remain shut due to the MCO as they are considered non-essential.

“The relevant agencies could consider using online submission and approval processes for things such as censorship approval to overcome this issue, ” Tan added.

Entropia senior partner Prashant Kumar said: “I think it’s a very pragmatic step. I am happy for the 4A members and the larger marketing industry community as it lowers some barriers for business to happen, for certain types of clients, at a time when many need it strongly.

“Agencies are typically small businesses. Client businesses are typically big businesses. Much of the cost of agencies is salary costs. I would encourage all client companies to realise that without timely payments as per the credit term, agencies can get impacted severely. So it is important that agencies do not suffer when it comes to payments.”

He said all industry associations must continue to emphasise the importance of brand building in this trying times.

Tough times force people to reconsider a lot of choices in their lives and brand choice is one of them, he said.

New brand trial and brand switching is expected to explode in several categories, Prashant said, adding that these categories must brace for the new normal, where brands that have ensured availability - both mental and physical - would emerge as the big winners.

“For categories where the sales are being postponed or usage occasion is tagged to outdoors, it’s a great time to stay in touch with their customers and remind them that they are not forgotten in these perilous moments.

“Every category must start rethinking how they can deliver higher health and hygiene across different customer touchpoints and in their value proposition.

“They must start thinking about contactless alternatives, e-commerce infrastructure, digital acceleration. And this is the time to bring all that to the fore, ” Prashant noted.

IPG Mediabrands Malaysia CEO Bala Pomaleh (pic below)said as agencies are under severe cost pressures at the moment, the move by 4As is timely and a welcoming one.

He said assisting their members in this way would demonstrate unity and empathy given the deep economic impact on the industry.

As to the other measures which should be undertaken by 4As or any relevant authorities to reduce the burden of agencies, he said: “The primary objective of associations like 4As is to help our industry grow and develop, and to foster continuous professional development for our talents.

“As such, 4As should look into creating free programmes for members to enable them to continue their L&D, as many agencies have unfortunately had to cut back on training budgets.

“This will ensure that talents remain relevant in the face of changing global trends, and be poised to help revive the industry.

“It would also be helpful if the association could create a database of resources to assist industry talents who are affected by the current wave of redundancies, ” Bala said. These resources, he added could provide opportunities for reskilling to allow talents to make necessary pivots based on industry needs.

Commenting on the move, 4As president Andrew Lee (pic below) said as a result of the reductions, the association would forgo an estimated 55% of its 2020 income derived from membership levies.

Nevertheless, he added the 4As Council felt it necessary to extend immediate help to the member agencies through this initiative.”

“Covid-19 and the resulting extended MCO have put agencies in a position of making decisions that we have never made before. We need to remain passionate with our work and to be more creative in finding solutions to problems we may not have encountered before.

“Our clients are also facing the same challenges and pressures that we are. They need us more than ever right now, and we are committed to helping them navigate uncertainty, pivot plans quickly and to offer them support, ” Lee added.

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