Several people who rightly chose to remain anonymous talked to The Wall Street Journal about the Association of National Advertisers’ eight-month probe of the relationships between ad agencies and their media partners. The piece just went live, and it is a mess.
Seems that quite a few agencies receive “rebates” or kickbacks from certain unnamed media companies as long as they spend a given amount to place ads in those publications. According to the sources mentioned above, “The group found that the practice was widespread within the sample it studied.”
That sample was approximately 150 people interviewed by the investigative firm K2 Intelligence.
The ANA declined to discuss the report with the WSJ prior to its release, and a spokesperson for the 4A’s told us today: “We cannot at this time comment on anonymous sources… we have not seen the study , have always preached full transparency to our members and will act accordingly when the details are released.”
For context, this sort of scheme is common and essentially accepted in Europe and Latin America…or so we hear. Some of the specific behaviors aren’t necessarily in violation of existing contracts, either–they’re just completely lacking in transparency. And it’s not just digital: print and TV are in on it, too.
As for the reasoning behind the trend, unnamed “ad executives and marketers” blamed the “enormous pricing pressure that marketers have placed on their agencies,” a la the ongoing McDonald’s creative review.
Despite the fact that this sort of thing is accepted throughout most of the world and that the legal implications of the behaviors documented in the forthcoming report are unclear, spokespeople for Havas, Dentsu, Omnicom, IPG and WPP’s GroupM gave some variation of “we do not participate in kickbacks” statements to the WSJ. Publicis Groupe declined to do so.
Unfortunately, the report ultimately will not name names or organizations. For that reason, it’s not at all clear whether it will lead to “jail time,” as sources told Business Insider last month. But at the very least, this sort of development is all but guaranteed to damage relationships between agencies and clients, especially when the latter may believe that the former are driven primarily by their own self-interests.
Get ready for some audits.