JUNE is usually a cheerful month for admen: they are scheduled to celebrate their feats at the humbly titled Cannes Lions International Festival of Creativity, which starts on June 18th. Yet the get-together this year may be abuzz with darker talk. On June 7th America’s Association of National Advertisers (ANA), a trade group for marketers, published a report accusing advertising agencies of accepting rebates, or kickbacks, from media companies. A group representing American ad agencies slammed the report as “anonymous, inconclusive, and one-sided”. The brawl is sure to continue.
The ANA’s report is the culmination of years of conjecture about such rebates, whereby media companies reward agencies for buying chunks of ad space by giving them cash, fees or other benefits. In some countries advertisers know of such rebates and plan for them. In America the practice has haunted the industry.
Big advertising holding companies such as WPP, which owns several big ad agencies, deny the existence of rebates. Others in the industry say rebates are a shadowy practice, undermining clients’ interests. Last year a former WPP executive declared rebates to be widespread. In October the ANA hired an independent company, K2, to investigate.
Its report has fanned advertisers’ fears. Based on interviews with 150 anonymous sources, K2 found that rebates are…Continue reading