• The Buzz on Undisclosed Ad Agency Rebates

    stock-photo-rebate-298940795Insider wrote Saturday about an Association of National Advertisers study which found that ad agencies are getting undisclosed rebates from radio, TV and outdoor clients.  The study will be released this week.  Insider asked three industry executives whether undisclosed rebates are are a problem in the outdoor industry.  One source said it’s a problem, one source said it’s not a big problem and one source said it could become a bigger problem as the outdoor industry moves to automated digital payment platforms.

    It’s a problem: “Without question it exists in OOH in the US and in nearly every agency. If major agencies deny they are receiving kickbacks, rebates, discounts and ‘gifting’ worth thousands of dollars, it’s because they were threatened by the investigation and ceased.”

    It’s not a big problem:“Perhaps some of the big agencies with multiple ooh clients and the bigger ooh companies? I’ve never come across it and certainly no ooh company has ever discussed this method with me during my 5 plus years as a buyer. I think this was more more an individual issue with certain higher ups at a few ooh companies several years ago but not a company wide issue. Similar to local politics there’s always someone waiving money for favors, and not everyone is good with temptation. But an overall big problem, don’t think so.”

    It could become an even bigger problem when we move to automated digital payment platforms:   “Do I still think there are paybacks? Yes. They are more secretive “under the table ” which have always been going on and very hard to catch. I’ve heard of gifts (trips, designer shoes and yes autos.). The latest model I have heard is a “loyalty fee” where in order to be considered, the vender must “pay in.

    I think with the evolution of these digital buying platforms, paybacks can get worse as when a third party company gets involved, (domedia, adstruc etc) there is an opportunity to hide money exchanges. Obviously , the agency isn’t going to pay for this service as they already are working off of razor thin margins, and the client doesn’t want to pay anymore, so the cost and or “incentives” has to come from somewhere.

    On the flip side, if I were defending said practice in court, I would argue that there is not much difference between entertainment and example- holiday gifting to what they are talking about in this article. It’s all an incentive for buyer to buy your product.”

     

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