The Spanish government plans not to extend the advertising framework agreement after a single agency monopolised the majority of campaigns
The government plans not to execute the extension of the advertising framework agreement currently in force. This instrument – regulated by the Ministry of Finance – is the method used by the General State Administration to contract media agencies to manage institutional advertising campaigns.
This advertising framework agreement came into force two years ago. It was due to expire on 23 May next – in the case of lot 1 – and on 21 June next – in the case of lot 2. But the government had the power to extend the contracts with the media agencies for another two years. But, the government has no plans to renew the contracts.
Under the current framework agreement, the Treasury has tendered a total of 77 advertising campaigns, valued at 107 million euros (excluding VAT).
The plan, on the other hand, is to tender a framework agreement in the first quarter of the year, with entry into force already in the second quarter. These deadlines are quite tight, so there could be slight delays. The Treasury is currently in the process of preparing the new documentation.
Since the current advertising framework agreement came into force in mid-2021, the government has tendered a total of 77 advertising campaigns, all valued at 107 million euros (excluding VAT). To allocate this budget, the Treasury held an advertising tender for each institutional campaign in which only approved agencies could participate. There are 13 of them, including large multinationals.
Media Sapiens has managed more than half of the budget
However, most of the contracts have been won by a single agency – Media Sapiens – with hardly any private clients. This company -with 15 employees at the end of 2021- has managed 63 million euros in public campaigns for the government thanks to the framework agreement in force. That is, more than half of the total budget. Media Sapiens has been awarded up to 27 advertising campaigns in the last two years, a third of all those tendered.
It so happens that Media Sapiens has won the tenders for the Government’s most expensive campaigns. Some of them are those of the Tax Agency (7.2 million euros), DGT (7 million euros), Energy Saving (5.6 million) or Red.es (5 million). In fact, this agency’s strategy has been to win by all means the big campaigns and leave the smaller accounts to other agencies. It has achieved this by offering the most attractive prices for the government, which is basically the only selection criterion.
As a result, Media Sapiens has boosted its business in recent years. In the financial years 2020 and 2021 it had a turnover of 50 million euros and a net profit of 5 million euros.
Apart from this anomaly that has marked the present advertising framework agreement, during its period of validity, the Treasury had to notify the selected media agencies that they had to certify the campaigns with official measurement sources, such as Kantar, for example. This obligation led to an appeal by Media Sapiens to the Administrative Court of Contract Appeals, which was finally rejected.
In any case, market sources doubt that the next advertising framework agreement will be able to solve these problems, as the wording of the terms and conditions is expected to be quite similar to the current one.
