An eight-month probe by a marketing trade group revealed that ad agencies in the U.S. are accepting rebates from media companies. The Association of National Advertisers found that media companies are using rebates to reward ad agencies for buying a certain amount of advertising time or space on behalf of their clients, the people said. The group found that the practice was widespread within the sample it studied. This comes at the same time that ad agencies are reporting record billings. Ooops!
According to the WSJ “the findings are likely to intensify marketers’ concerns that ad agencies don’t have their best interests at heart and could be allocating ad dollars in ways that benefit their own businesses, as opposed to those of their clients.” DUH!
Do you think any ad agency is going to tell clients that they are spending too much money on TV ads? If they did, we wouldn’t be sickened by repetitive commercials like Progressive and Geico.
I have seen, so many times, agencies put their best interests over clients. It usually happens when recommending more TV and less digital but any client that allows their business to be dictated by an agency is just asking for trouble. The restaurants in Manhattan are still crowded with agencies buying lunch for clients and sucking up to get more dollars while marketers are left to try and convince management that their ads are actually working.
I believe it’s best to have a separate on and offline agency and among online the smaller houses with in house expertise can usually run rings around big conventional agencies whose CEO’s rake in tens of millions of dollars. The reality of the ad market today is that consumers don’t like ads, don’t want to be interrupted and are using more ad blockers online to tell advertisers to leave them alone. The agencies still can’t figure out how to combat the power shift from advertisers to consumers.
Marketers should have at least one ‘come to Jesus” meeting with their agency to directly ask if they have received any rebates on their ads. If the answer is “yes” they should immediately terminate them and find an agency that wins when their brand(s) win.