Holding Companies' Rebate Denials Don't Ring Entirely True In The UK

Look closely at the big holding company denials over the ANA report that labelled media buying as tainted by rebates, and you notice a very odd thing. Rather than say they don't believe in rebates, the denials only extend to the U.S. Seems reasonable on first inspection, but the cynic has to say, why limit your rebuttals to the U.S.? Why not just say we do not believe in rebates and do not accept them?

I have a very good feeling as to why. At least one of those holding companies, I know from ex-insiders, most definitely does take rebates -- and it adds a great deal to the profitability of many clients. I cannot say it is the same for all, but the feedback I get from people in the industry that it usually is an accepted practice in media-buying circles. The only issue comes when agencies decide to pocket the rebate rather than either offer a cut or all of it to a client or simply use the credit to buy more media for that client.

Then the really huge issue arises when buying arrangements with a media owner impinge on planning decisions. I called it a couple of weeks ago, but here we go again, seeing how the ANA report has put it at the top of the agenda again. The real problem of rebates, or at least media-buying contracts, is whether advertisers can be assured that planning decisions have been built around them or the agency's contractual requirements. Huge contracts, particularly between tv channels and agency groups, can mean quotas need to be reached to hit certain targets to obtain a favourable rate.

If a brand has its plan drawn up at a time when there is pressure on planners and buyers to put business the way of a media owner they need to spend more with, guess what can sometimes happen? In fact, don't. I'll give you an example -- the same one i offered a couple of weeks ago, but it's a good one. A health organisation looked to a holding company in the UK to get its message out there, it thought primarily via a bunch of health-related shows, primarily being aired on Channel 4. It was in the buyer's favour to put the business the way of ITV and so the organisation ended up advertising in the middle of a popular talent show.

The holding companies need to address this. They can say what they like about what they do in the U.S. -- I have no insight there -- but I can tell you there are issues in the UK. Of course, it may only be a minority of cases, that are the exception to normal high standards, but these examples exist, regardless of the denials issued today.

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