Allegations of kickbacks have rocked the advertising world.
Top advertisers say in a new report the biggest agencies are getting undisclosed payoffs from media companies — something those agencies refute.
Media buyers connected to ad agencies get rebates when they buy large blocks of ad space, which may or may not be disclosed to their clients, says the Association of National Advertisers in the report. “There was evidence of non-transparent practices across a wide range of media, including digital, print, out-of-home, and television,” according to the ANA. (Radio was not included.)
The K2 Intelligence study doesn’t name ad agencies or their clients or reveal specific amounts. In general, the report says the rebates range from 1.67% to 20% of aggregate media spending.
The 4A’s reacted quickly, stating: “A healthy and constructive debate about media buying can only happen with a bipartisan, engaged, industry-wide approach – and that is precisely the opposite of what the ANA has pursued. The immense shortcomings of the K2 report released today — anonymous, inconclusive, and one-sided — undercut the integrity of its findings.
The 4As called on the ANA to make available to specific agencies on a confidential basis all of the materials related to them. It referred to a joint task force that the 4As and the ANA took part in to establish clear standards for transparency in media buying. “The entire industry is harmed and at risk of further damage as a result of the path the ANA has chosen.”
The report found evidence of rebates in the form of free media inventory credits and dual rate cards in which agencies and holding companies negotiated separate rates with media suppliers when acting as principals and as agents. There was evidence of markups on media sold ranging from about 30% to 90%, with media buyers sometimes “pressured or incentivized by their agency holding companies to direct client spend to this media, regardless of whether such purchases were in the clients’ best interests.”
Download the full report at: www.ana.net/transparency/