Govt warned on cuts

ADVERTISING industry heavyweights have warned WA Government moves to slash costs in their sector by 30 per cent could backfire, possibly resulting in significant media cost rises.

Vocal opponents of the proposed budget cuts believe the Government’s discount for big spending could be eroded if advertising budgets are reduced heavily, potentially prompting media outlets to review negotiated rates.

However, not everyone in the industry agrees, pointing out significant below-the-line savings in a variety of largely non-media activities such as research, publications and brochures.

The industry has been concerned about the impact of the Government’s election promise, and last week’s news that leading industry figures were seeking a united front to stop big cuts has been followed by warnings this week that budget cuts may not save any money.

“In this instance 30 per cent off represents a significant shift in the spending behaviour and would probably be the subject of discussions with the master media agency,” a media industry source said.

The Brand Agency director, Steve Harris, said the media cost was usually the major component of an advertising project budget.

“A full page colour ad in Saturday’s West Australian for government contract users is around $12,000 but the casual advertiser rate is almost $6,000 higher,” Mr Harris said.

“Our advice for Western Australian Government clients is that media rates are likely to increase by at least 10 per cent to 20 per cent over the next 12 months as discount contracts are likely to be renegotiated at lower spend levels.”

The Sunday Times advertising manager, David Perrins, said any potential change in negotiated rates would depend on how the Government implements any savings.

“I can’t see it being an across-the-board, 30-per-cent cut,” Mr Perrins said.

Government Media Office director John Arthur said it was a bit too early to say if the proposed savings would have any effect on negotiated media rates.

“The Government is asking agencies to come back to the Government with how they’re going to implement these savings,” Mr Arthur said.

If individual government departments chose to make savings in areas apart from traditional advertising the negotiated media rates would not be affected.

“If you look at this holistically there is a lot of media below-the-line rather than the high-profile advertising,” another media industry source said.

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