Roth, Sorrell Say U.S. Rebate Crisis Is A Myth

Two holding company CEOs — WPP’s Martin Sorrell and Interpublic’s Michael Roth — told an investment crowd Thursday morning that this year’s surge of media agency reviews had nothing to do with the alleged rebate issue that garnered attention earlier this year.

That occurred after former MediaCom CEO Jon Mandel told an ANA gathering that the practice was widespread in the U.S. -- even though many clients weren’t aware of it. 

“There isn’t a rebate crisis in the U.S.,” Sorrell told investors attending a Goldman Sachs conference in New York. To suggest so amounts to “scare mongering,” he added. 

Roth, in a separate session at the same conference, reacted similarly when asked about the issue. In the U.S., he said, “there are no rebates.” In other parts of the world, he noted, rebates are part of the process and at least in IPG’s case, a transparent process that is part of contractual agreements with clients.

That wasn’t always the case, Roth acknowledged, noting that when he joined the holding company over a decade ago the firm was embroiled in an SEC investigation over a number of issues, including rebates that weren’t properly accounted for.

But the company has been transparent about rebates for 10 years now, he said. 

Both executives said the reason so many reviews popped this year had more to do with the complex media landscape, challenging times for clients and a desire on their part to have best-in-class tools, talent and processes for planning and buying their media. “It’s client recognition that the world has changed,” said Roth. 

For most clients, said Sorrell “growth is hard to come by” in the current economic environment, making ROI a key concern for every dollar spent. 

Added Roth: “It’s about the best bang for the buck.” He noted that in the case of some of the reviews. client policy mandates a reassessment every three years. But Roth acknowledged there were probably some clients who looked at all the activity and hopped on the bandwagon. 

Both executives also said that increasingly, bigger clients are looking to pare back their rosters of specialized agencies in favor of one entity that can provide a fully integrated solution across all marketing disciplines. Sorrell said that pressure on growth was causing that shift in thinking. “Pressure is the new normal,” he said. 

Roth noted that with a lot of recent pitches, marketers are coming to the holding company and saying “’you tell us how to approach it.’” 

The two chiefs were also critical of today’s measurement standards, with Sorrell calling them “dysfunctional,” particularly within the online space, reiterating comments he made last month during a conference call with analysts. 

Asked about the shift of ad dollars from TV to digital, Roth replied that marketers will “go where the results are…Better measurement would help.” Digital will surpass TV at some point, he said, “but who knows what TV is anymore? It’s evolving. The real issue is content and how you measure it.”

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