Warc Blog

Media rebates cause concern

22 March 2012
BRUSSELS: Many major advertisers believe their agencies are not passing on the rebates they secured during the media buying process, multimarket research has found.

The World Federation of Advertisers, the industry body, polled 32 senior executives representing firms with a combined global media expenditure of more than $35bn. "Many marketers believe that the perceived level of rebate is higher than what they believe is being returned in a number of markets," it reported.

When ranking how widespread rebates were on an ascending three-point scale, the Nordic markets posted 0.9 points, which was the lowest frequency of this activity in Europe.

France came next on 1.3 points, followed by the UK on 1.6 points, both on a "medium" rating. Poland logged 1.8 points and Germany two points, similarly leaving them in the middle range.

Several nations received "high" scores, with Italy on 2.1 points, Russia on 2.3 points and Spain on 2.4 points. Greece and Turkey registered the largest totals here, on 2.8 points and 2.7 points respectively.

By channel, the internet was regarded as having the greatest number of rebate transactions, ahead of TV, press and out-of-home.

In all, 82% of cash rebates returned to brand owners in Europe were paid annually. Another 28% took the form of free media space. More broadly, 15% of brand owners used rebates to reduce direct agency remuneration.

Turning to Asia, China was awarded 2.8 points, above Indonesia on 2.3 points, the Philippines on 2.1 points and India on two points. Australia had the smallest figure on 0.9 points, with New Zealand on 1.2 points.

But advertisers in Asia cited a "major gap" between the rebates supplied to agencies and what was then passed on. Television held the lead role in terms of the level of such repayments, beating outdoor.

Some 13% of rebates in the region were constituted of free media space, while 14% of participants allocated the resources provided to trim the fees they paid to agencies.

Colombia attained the highest score in Latin America on 2.5 points, beating Mexico on 2.4 points and Brazil on 2.3 points. Argentina was on 1.7 points, with Peru on 1.5 points and Chile on 1.4 points.

Online and TV were again seen as the mediums where this activity was most widespread. A 22% share of advertisers in Asia used this source of income to cut agency fees.

Data sourced from World Federation of Advertisers; additional content by Warc staff

 
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