Rebate On A Global Holiday – Good! Rebate On A Global Media Buy – Perhaps, Not So Good!June 27, 2012
By Bill Duggan, Group EVP, ANA
The industry practice of media companies providing rebates/incentives to agencies for referring or influencing client spending towards that media company and then not reimbursing those funds to the client, has long been acknowledged as a common practice outside the United States.
The WFA (World Federation of Advertisers) recently released results of a survey on global media rebates. WFA based in Europe, is the only global organization representing the common interests of marketers and is a “sister” association of ANA. Key findings of that research:
- Rebates on media spending are common throughout the world outside the U.S.
- Marketers frequently use rebates to get free media space or cash, or to reduce their compensation payments to media agencies.
- Many marketers believe that rebate amounts are higher than what media agencies are passing on to them.
- Rebates are most often provided for online, followed by TV, print, and outdoor.
- Asia-Pacific is the region where there is a significant lack of transparency in how the rebate process is conducted and a greater likelihood that agencies do not properly credit their clients with the savings. China was identified as the country there with the highest level of rebate activity.
- In Europe, respondents identified Greece and Turkey as the markets with the highest level of rebates.
- In Latin America, Brazil has the highest rebate activity.
According to the WFA, rebates themselves aren’t the problem, and it’s a commonly accepted way of doing business in many parts of the world. The problem arises when agencies receive rebates, but don’t properly credit clients and keep the rebates themselves.
Stay tuned as ANA is in the process of conducting our own research on media rebates in the U.S. with results expected to be released later this summer.
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