Rebates? Really? Oh, Damn Those Other Guys...!!!

In the least surprising finding since the CDC revealed that more than one-third of U.S. adults are obese, an Association of National Advertisers investigation revealed that ad agencies have been taking undisclosed rebates from media owners. In a thankless task to begin with, the ANA refrained from naming names, giving the Big Holding Companies grounds to say, "Weren't us, we play by the rules, musta been the other guys." And if you believe that, you probably still argue that the Tooth Fairy and the Easter Bunny are real.

The fact is that media has been bribing clients and agency folks since the beginning of time, and everyone knows it. They just don't call it “rebates" — they call it being flown to and housed at the Olympics, the Oscars, or nearly every other spectacular that normal people don't stand a chance of getting into. Tickets to Broadway shows and every major sporting event in the world are handed out like shopping mall Santas distributing candy canes. I once had a middle-level media buyer say to me, "I can get two tickets behind home plate at the 7th game of the World Series 15 minutes before game time — with just a phone call."



I know other media buyers who go to the finest restaurants in New York three nights a week, and never once pick up the tab.
When I asked an agency friend why he’d put a brand that simply DID NOT belong in a sports magazine there, he replied simply, "Hey, I want to go to the Olympics."

Five days at a spa, a week of fishing in Alaska, a shopping spree on Boulevard Saint-Germain, a cruise down the Dalmatian Coast — all can and have been had by media buyers as “thank-yous" for their spending. Under the guise of "building and maintaining relationships,” millions have been spent by media companies on junkets, gifts, tickets and meals for those at agencies who can redirect where ad money goes.

To be sure, this kind of kickback takes place in nearly every industry, and probably pales in comparison to what happens in pharma and defense, and is decidedly different from cash rebates that are not disclosed to clients. (Or is it?)

Everyone is running around like town criers calling for more "transparency" as a potential resolution to the cash/inventory rebating. But seriously, if you want to be really transparent, add up ALL of the ways that media bribes more spending out of agencies. Have every agency person at every level disclose the value of any meals or tickets they get, and from whom. Should then be pretty easy to see if their media buys are trending off-base as a result.

The ANA is a trade association. It answers to its members. If the members wanted to know who, what, where, when and how, they should have demanded it.  

This all kind of sounds like folks writing letters to the editor complaining about speeding in their neighborhood, then routinely doing 45 in a 25-mph zone on their way home. Those who get tickets, well, they are the bad guys.


8 comments about "Rebates? Really? Oh, Damn Those Other Guys...!!!".
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  1. Morten Pedersen from GLUE2020, June 9, 2016 at 5:54 p.m.

    Don't forget to mention the huge amount of "independent" pitch consultants who calls for more transparency one day, and then receives a check the next morning from the very same agencies.

  2. Ed Papazian from Media Dynamics Inc, June 9, 2016 at 6:13 p.m.

    And what about all of those media "bribes" paid to advertiser media execs and other "decision makers"---the free lunches, those trips to the Olympics, all of those sports outings, etc. And who pays the bill when an agency account supervisor takes his client out on the town for an evening? Is that a "bribe"?

  3. Neil Ascher from The Midas Exchange replied, June 10, 2016 at 10:35 a.m.

    Ed, thanks for the reality check!

  4. George Simpson from George H. Simpson Communications, June 10, 2016 at 10:51 a.m.

    Without question a certain amount of "T and E" is part of every business. But I think that the "generous" amount of media "entertainment" is clearly meant to influence both client and agency spending. My only point is that in reaction to the ANA report, there are clarion calls for more "transparency." Ok then, let's see a little more on who gets what from whom across the board.

  5. Ed Papazian from Media Dynamics Inc, June 10, 2016 at 11:50 a.m.

    Can't argue with that, George, however in this case many agency people are afraid to speak out publically, least they "offend" some client. I just felt that it was only fair to point out some of the other perks that are also "pervaisive" in the business. Also, I must note that many top management execs at advertisers regard media as boring and can't be bothered to find out how things work---or don't work. Perhaps it's time they showed more active interest, in which case they might be better informed and there would be fewer "surprises".

  6. Kenneth Hittel from Ken Hittel, June 11, 2016 at 1:32 p.m.

    They're some good folks out there. I spent about $2MM a year for five or more years on Google search engine advertising on behalf of the life insurance company for which I worked -- admittedly not a huge sum as far as Google was concerned. I received one polo shirt and a handful of Google baseball gaps during that time. The one "lunch" that our Google reps brought in one day was from the local deli. I was quite satisfied never to be bribed by these guys. Although I must say I couldn't eat much of that lunch...

  7. John Grono from GAP Research, June 12, 2016 at 8:54 a.m.

    So I assume that it is transparent when the client calls and says "can you get me tickets to ...".   Silly me.   That would never happen.

  8. Paula Lynn from Who Else Unlimited, June 25, 2016 at 11:03 a.m.

    It's part of the salary that the agency does not pay the buyers. Been around for years. The less employees earn in comparason to value to the company and what the top skimmers take out, the more payola pays out. The WWA (wonderful world of advertising) is not the only business that reeks of theft. Theft = theft of the client's money, theft from the client's money, theft of the consumer with the cost of their merchandise having the cost of the WWA built in. Back to who pays, after you peel back the layers ?

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