Drugi jezik na kojem je dostupan ovaj članak: Bosnian
Source: The Economist
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 delivered both in cash and in subtler forms. For example, media firms pay fees to agencies for services, such as research, that are often nominal or not provided at all. This is worrisome for clients for at least two reasons. Unbeknown to them, agencies might pocket rebates that should presumably be theirs. Or a client might find itself spending money on a certain ad, not because it fits its marketing strategy but because it allowed the agency to gain a rebate.
Such findings would stretch even the strongest bond between advertiser and agency. But the relationship is already frayed. Advertisers have long squeezed fees to agencies and remain wary of wasting money. The complexity of the digital ad industry is partly to blame. It is hard to track which fees are paid to which vendors. Too often ads are fraudulently funneled to robots rather than people.
There is broader concern, too, over conflicts of interest. K2 pointed to holding companies directing advertisers’ spending to firms in which they had invested, as well as buying media space and reselling it to clients at a 90% mark-up. K2’s report reinforces the fear that an agency’s remit to serve clients might clash with a holding company’s duty to shareholders. “There may be lots of transactions that are not necessarily done with the best interest of the marketer in mind,” argues Bob Liodice, president of the ANA.
Whether the report will lead to legal action remains unclear. K2 did not condemn any company by name, nor label any activity as fraudulent in its study. Agencies may not even have violated the terms of their contracts.
Nevertheless, the relationship between advertiser and ad agency may become increasingly hostile. Advertisers are likely to become stingier with their budgets, reckons Brian Wieser of Pivotal Research Group, a research firm. They may also seek stricter terms. In April a British advertisers’ trade group published a new template for contracts, including broad rights to audit agencies. The ANA is now developing its own scheme, to be finalised by the end of June. Advertisers are likely to think much longer and harder before signing on the dotted line.