ISA seeks to engage with SMBs to drive awareness on advertising 'best practices'

In August 2023, the Indian Society of Advertisers (ISA) created a sensation by releasing a “media charter” and a “model agency contract” with strict provisions such as the “right to audit” an agency’s full turnover — including its entities and vendors — and a fair share in agency rebates.

However, the scope of ISA’s directives primarily covered large advertisers. Now, nearly 18 months later, the advertisers’ body recognizes the need to engage with small and medium-sized businesses (SMBs) as well who have been fuelling India’s ad spends, particularly in digital advertising space, since the pandemic. 

“We are planning a series of conferences or workshops to educate and engage SMBs across India, which have emerged as key drivers of digital advertising. We plan to host webinars and regional sessions—not just for small advertisers but for all stakeholders—to address queries and deepen understanding,” ISA president Sunil Kataria told e4m. 

He added, “We are continuously working to bring more SMBs into the ISA ecosystem. Many smaller advertisers lack the organizational bandwidth to access industry knowledge. Our focus is on simplifying access to best practices and insights for them.”

ISA’s broader mission is to promote and safeguard the rights of all advertisers, guiding them on responsible advertising while ensuring fair media costs and competition, the officials of the body emphasize. 

Small and medium enterprises, whose ad spends are usually in the range of few crores to a few lakhs, have been traditionally out of the ISA. The number of such enterprises has now crossed 6.3 crores, according to the Ministry of MSME. 

SMBs ad spend over Rs 30,000 Cr

The MSME sector in India has consistently demonstrated remarkable resilience and adaptability, significantly contributing to the nation's GDP over the years. Even amid the unprecedented challenges posed by the COVID-19 pandemic, the sector sustained a contribution of 27.3 per cent in 2020-21, rebounding to 29.6 per cent in 2021-22, the Ministry told the Parliament last year. 

While SMBs ad spends are largely in the private domain, it is believed that they contribute approximately Rs 30,000 Cr to the country’s ad kitty. While digital platforms get the lion’s share of this pie, outdoor media, newspapers and television are also benefitting from the boom. Smaller and independent ad agencies are usually catering to this sector. 

“As many as 72% of Indian SMBs invest in advertising to fuel growth in domestic and global markets,” said a study conducted by Amazon Ads, advertising arm of the e-commerce giant Amazon.com Inc.  

Global tech giants like Google, Meta and others also increasingly rely on SMBs for ad revenue. In the fiscal year ending March 2024, Meta India's gross ad revenue saw a 24% surge, reaching Rs 22,730 crore, largely driven by strong monetization from both major advertisers and SMBs.

Model agency contract on 'unbilled media'

Amid economic headwinds, where every dollar counts, advertisers are demanding greater transparency from ad agencies. Many have already adopted ISA’s model agency contract, which includes stringent clauses to ensure accountability.

One key focus of ISA’s contract is "unbilled media"—a practice where clients are billed for media costs before vendor invoices arrive or when invoiced amounts differ from what was billed. Digital campaigns, often billed monthly per media plans, frequently require reconciliation due to discrepancies in actual impressions delivered.

Such differences can be permanent, where media is billed at varying amounts, requiring refunds to clients, or timing-related, where agencies hold payments while awaiting vendor invoices—sometimes for months or even over a year.

To prevent prolonged fund retention, ISA advises advertisers to include a clause mandating regular reporting on unpaid funds held by agencies for more than three months.

Model agency contract on 'media rebates'

ISA’s model contract also addresses rebates, which media agencies receive from TV channels and other media houses—ideally to be returned to advertisers. Typically given as free ad spots, these Agency Volume Benefits (AVBs) range from 2-5% of media spend. Traditionally, agencies have kept these rebates for themselves.

“For advertisers spending Rs 1,000 crore on ads, rebates can amount to Rs 20-50 Cr — a significant sum in today’s market. Big advertisers have now started demanding these rebates,” CMOs told e4m.

The issue has become such a pain point that it has led to agency contract breakdowns, industry veterans say. ISA members urge all advertisers, regardless of spend, to claim their rightful media rebates.