State Sales Tax Coming to Your Favorite eTailer

Posted on June 25, 2018December 11, 2019 by Bajkowski + Partners

According to eMarketer, the US Supreme Court struck down a 26 year old law last week that permitted pure play online retailers to avoid charging sales tax if they weren’t physically operating from that state.

With online sales forecast to grow six points from 10% of all retail sales to 16% by yearend, or more than $525 billion in sales, traditional retailers have felt at a competitive disadvantage against etailers for the past two decades.

On the flip side, online merchants have argued that having to manage tax collection for 45 states would be unduly burdensome for small etailers.

Will this move truly level the playing field and drive people back to bricks and mortar shopping for purchases they’ve shifted to online? Probably not.

For more details on the court’s ruling and implications, visit eMarketer.

Media Trading Practices Under FBI Scrutiny

Posted on June 14, 2018February 10, 2021 by Bajkowski + Partners

According to Campaign, the FBI may be reviewing media trading and transparency practices in the US, and focusing on specific media companies and any role played by executives.

The article reports that neither the FBI nor DoJ will confirm or deny any activity around the matter.

However, it’s been a widely held belief that some action by the DoJ would take eventually place after the Association of National Advertisers (ANA) and its third party auditors issued its K2 Report (June 2016) claiming that media agencies in the US were, to varying degrees, pocketing media rebates and lacked sufficient transparency in their media buying practices.

According to an AdAge article published on the heels of the report’s release, K2 “cited 150 independent sources and ‘substantial evidence’ from 41 sources who reported direct knowledge of rebate deals occurring in the U.S. market. Of those sources, 34 indicated rebates were not disclosed or returned to advertisers.”

The report, however, does not name any agencies or media vendors, and according to the ANA, five of the six major holding companies at the time refused to make any of their executives available for interviews by its auditors.

The 4A’s leadership and some holding companies rebuked the report, citing a “lack of transparency” in the ANA’s investigative process as well as the report itself.

It’s been two years since the K2 report was released, yet according to a presentation by McKinsey at the ANA’s recent Financial Management Conference in Hollywood, Florida, the problems with media transparency and pocketing rebates is still pervasive despite a push by advertisers for greater transparency into the process.

Perhaps this is why larger advertisers are taking part or all of their media investment management in-house.

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams including building in-house media planning and programmatic as well as in-house creative and production operations.

65% of Marketers Moving Some or All of Programmatic Buying In-house

Posted on May 23, 2018February 10, 2021 by Bajkowski + Partners

According to a study just released by the Interactive Advertising Bureau (IAB), 65 percent of surveyed marketers making programmatic buys have either moved some or all of those functions in-house or are planning to doing so.

Key reasons cited include greater cost efficiencies and transparency, improved targeting and control of ads, shortened optimization time frames, and better focus on business objectives.

Not An Overnight Process

Taking programmatic in-house requires more than just appropriate staffing and isn’t accomplished overnight. In fact, it could take a year or more, and that’s after you develop your scope and implementation plan. And since you’ll need to hire the right talent, integrate multiple data sources, and build the right tech stack, you’ll need to prepare a detailed human and hard capital budget too.

Fortunately the IAB report provides a checklist to facilitate the process – plus there are external consultants to spearhead this initiative or advise along the way.

Freelance Worker Restrictions – Coming to a State Near You?

Posted on May 22, 2018February 10, 2021 by Bajkowski + Partners

In an April ruling, the California Supreme Court significantly raised the bar that companies must meet to classify workers as independent – aka freelance – and not as employees.

What’s driving this? Money of course.

Money in the form of lost revenue to state and federal coffers, and in benefits “denied” to freelancers.

Freelancers have long been the backbone of the advertising industry as agencies worry about margins while trying to meet the demands of clients and new business opportunities that ebb and flow on a weekly basis. Between 2005 and 2015, the number of workers classified as freelancers rose more than 50 percent, accelerated by the 2008 recession and changes in worker attitudes about their work-life choices.

There certainly has been abuse, which gave rise to the term permalancer as agencies denied employment opportunities when there was clearly a sustainable need. We even know a few permalancers that rotated between a couple of NYC agencies every 4-6 months just so the agencies could avoid having to classify them as employees.

In these instances, however, those permalancers were paid through payroll as temporary help and all taxes were collected as though they were real employees. What they were denied was vacation and sick time benefits as well as access to agency 401k programs.

But what of all those gig economy predictions, whereby temporary positions for short term assignments are offered by companies to independent workers, would become the new normal? A study by Intuit predicts that by 2020, independent contractors will comprise 40 percent of the workforce.

Between clients squeezing agencies on pricing and increasing government scrutiny of worker classifications, agencies and clients may need to rethink their remuneration as well as staffing practices.

Some agencies have already turned to using staffing companies that take care of payroll matters while supplying temporary creative, production and even account management help. The challenge though is getting top talent to work through these temp agencies that can skim anywhere from 10 to 33 percent of the worker’s wage – and that’s before covering the payroll taxes.

Another solution is to directly hire top freelance talent as temporary employees for clearly defined short terms assignments, paid through payroll, and then released when the assignment is over.

While the right solution may not be a lasting one, it’s clear that agencies as well as marketers with inhouse studios need to work with their human resources and legal teams to find a solution that heads off potential legal battles while attracting top talent that just don’t want or need a full time permanent job.

After all, your state could be next.

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams in the areas of agency relationship management, agency search, process audits, contract and SOW development and audits, and a number of other marketing resource and marketing operations related areas. For more information, please visit our website.