Earlier this summer, the ANA commissioned law firm Reed Smith to ask advertisers about "media rebates" and incentives in the ad agency business.
Media rebates are one of the most controversial areas of advertising. They are, as Reed Smith defines it:
The industry practice of media companies providing rebates/incentives to agencies for referring or influencing client spending towards that media company, and then the agencies not reimbursing those funds to the client ...
Rebates are a type of bribe: Media companies pay them to agencies to keep client dollars—in the form of ad buys—coming, even when those dollars may be more efficiently spent elsewhere.
In the U.S., ad executives can go to jail for attempting this. This year, two executives at Aegis' Posterscope unit pleaded guilty to an accounting scam that, in part, revolved around a sketchy volume discount scheme. In Germany, Aegis president Aleksander Ruzicka also went to prison for exactly this kind of thing a few years ago.
The survey identified how widespread the practice is, and who clients believe are the worst offenders in the business.
Media rebates are common outside the U.S., but 28% of clients said they had encountered them domestically, too.
Television, magazines and outdoor are the industries with the worst reputation for the practice.
The vast majority of marketers believe agencies should not be allowed to keep rebates.
See the rest of the story at Business Insider
Please follow Advertising on Twitter and Facebook.
