Brazil to stop regulating ad agency commissions

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SAO PAULO -- The Brazilian government is deregulating the payment of advertising agency commissions. Current law stipulates the amount of a commission a marketer can pay an advertising agency for its services. According to the law, commissions were 20% for media and 15% for production.

But there is so much blatant disrespect for this law that the Government's Communications Department decided to review it and has now decided to open the market to free negotiations. Brazilian President Fernando Henrique Cardoso will be on hand for a deregulation ceremony to be held on June 25.

Advertising industry leaders, belonging to organizations such as the Brazilian Advertising Agencies Association, are creating a voluntary set of guidelines that stipulates that commissions for media be set at around 15%. To try to control the market they are also creating a Self Regulating Organ, to be responsible for making sure that everyone is obeying the new guidelines. It's uncertain whether the new system will be workable, but observers warn that major changes may be in store for the Brazilian advertising industry.

Copyright June 1997, Crain Communications Inc.

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