Mrs Mary Falbo

Mr Nick Arakgy, Viacom

Mr René Desmarais, Astral

Mr Glenn McConnell, Pattison

OMAC

Dear Mary, Glen, Nick, and René,

First of all, thank you very much for your visit to the QMDC session last week. There is nothing like partners in business that communicate and explain their views.

In trying to summarize our understanding of the situation, we come back very closely to the key issues that have been stated by the CMDC:

1. In eliminating the agency commission system, the outdoor industry is proposing to eliminate the recognition of the role played by agencies in the sales and execution process and our assumption of the financial liability.
   1. Showing gross figures in proposals and contracts is not sufficient to maintain the agency commission system; it is when you give commission only to recognized agencies, not direct clients.

2. Television, radio, magazines, newspapers, all other media available in Canada are working with the agency recognition system. Outdoor would be the exception. There is a risk of confusion. Our management and reporting systems are most of them configured to work with agency commission.

3. There is still a perception that some operators are using this opportunity to increase dramatically their rates.

4. Moving to net rates will provide to clients a perception that agency costs in outdoor are 17,65 % higher.
   1. A 50 GRP campaign in CARD will be 17,65 % higher than what the agency will propose as a rate card starting point. And in a sold out timing, we suspect chances are high that the final agency cost (gross) will be 17,65% higher than a direct client cost.

2. We recognize that discount level and buying power can make a difference in the final cost but perception is too often reality… A direct client could be tempted to deal directly for this reason; outdoor suppliers would then become competitors to agencies, which creates a strange industry context.

5. As stated by the CMDC: Move to net rates are for the benefit of the outdoor (retail) sales reps and the disadvantage of the entire Media Buying community across Canada, and as such would put the outdoor industry in the unique position of being the only major media not working in partnership and collaboration with the media buying community.

We feel that this important move from the outdoor industry is anything but inspired by a client-driven approach. If the media buying community is an important client to the outdoor operators, then they should reconsider their approach.

Most of the QMDC members are against this elimination of the agency recognition. We also understand that many of the CMDC members are also against. Those who are not against are not necessarily in favour; they just don’t share the same view on the importance of the issue.

In a situation like this, instead of going forward with a non welcomed measure that strongly challenges the remuneration system of the whole advertising industry, common sense dictates the status quo. That is what QMDC is asking for.

Regards,

Sylvie Lalande                                  Alain Desormiers

President                                        Past President

CC :           Jean Ringuette, Sophie Dufour, Pattison

                  David Chung, CMDC