A new survey by The World Federation of Advertisers indicates that media rebates -- payments to media agencies in return for spending client money with media owners -- are provided most often for digital transactions, followed by print, TV and outdoor. The survey polled 32 multinational advertisers with a collective $35 billion in annual ad spending.
The survey identifies Asia-Pacific as the region where there is a significant lack of transparency in how the rebate process is conducted and a greater likelihood that agencies will not properly credit their clients with the savings.
The issue of media rebates has always been a sensitive subject in the industry. While rebates per se are typically not provided in the U.S., bigger agencies spending billions often achieve similar results by using their spending clout to get lower rates. The difference in the savings is passed directly to clients via the transactions.
According to the WFA, rebates themselves aren’t the problem, and it’s a commonly accepted way of doing business in many parts of the world. The problem arises when agencies receive rebates, but don’t properly credit clients and keep the rebates themselves.
Stephan Loerke, WFA managing director, said that a key priority of the organization is to ensure that agencies are completely above board about their rebate procedures. He said the practice is “often shrouded in secrecy,” but shouldn’t be. “Our members expect agency partners to be open and honest about these payments and return them to the advertisers whose investment generates them.”
The booming China market, where 17% spending growth is projected for 2012 according to GroupM, was identified as the country with the highest level of rebate activity. It is also one of the markets where clients are least likely to be properly credited for rebates owed to them. Indonesia, the Philippines and India were also cited as high on the list of countries with similar issues.
In Europe, respondents identified Greece and Turkey as the markets with the highest level of rebates in Europe, closely followed by Russia, Ukraine and Spain. For the most part, marketers seem satisfied that they receive proper credit for rebates in the region. While not broken out in the summary released publicly, a WFA rep cited Germany and Spain as places where more clients tend to believe they don’t get proper credit for rebates.