Warc Blog

Advertisers must track agency rebates

19 July 2012
NEW YORK: A majority of brand owners are not familiar with the world of media rebates, a trend with potentially negative consequences, new figures have revealed.

The Association of National Advertisers, the trade body, and Reed Smith, the law firm, polled 181 marketing executives regarding the rebates issue.

Overall, 51% of the panel did not know that agencies sometimes do not reimburse their clients with the discounts or incentives they receive from media owners when buying ads.

Familiarity with this process stood at 32% when looking at the situation outside the US, and 28% when solely considering America.

In accordance with this finding, a modest 13% of brand owners incorporated media rebates into their plans and decisions regarding budgeting, marketing, channel mix, and so on.

"It is imperative that advertisers become more aware of these incentives and take ownership of all assets recouped on their business," said Bill Duggan, ANA group executive vice president.


"The only way to make this a reality is for advertisers and agencies to maintain clear, contractual transparency about rebate and incentive activity."

Among the participants familiar with this matter, television assumed the status as the medium where its incidence was highest, posting 27% in the US and 55% overseas.

Over 30% of the sample agreed magazines, outdoor and newspapers were subject to similar trends internationally, falling to between 10% and 17% in the US. Online registered 27% and 14% respectively on this measure.

More specifically, 85% of US respondents agreed that agencies should not retain incentives or rebates at the expense of their clients.

By contrast, a 4% minority of marketers said that agencies may keep some returns, and 1% took the same view for all the dollars secured in this fashion.

Elsewhere, 63% of contributors thought shops accepting these perks would not make objective choices, and 35% believed they would "sometimes" unduly influenced by the benefits on offer.

To date, however, just 35% of advertisers had inserted clauses in agency contracts covering the reimbursement of incentives, and 30% conducted audits in this area.

Where firms used audits, 35% did so in-house, 37% employed to external accountants, and 55% relied on other third party organisations with established expertise in the field.


Data sourced from Association of National Advertisers; additional content by Warc staff

 
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