A new study by ANA (Association of National Advertisers) and Reed Smith reveals that nearly one-third of U.S. marketers are aware of rebates / incentive payments from media companies to agencies that may not be reimbursed to the advertiser.
Through its new white paper Media Rebates / Incentives Require Full Transparency, ANA seeks to help marketers better understand this type of incentive. In support of the white paper, the ANA surveyed nearly 200 client-side marketers to fully explore this topic. The white paper calls for agencies to be transparent about these rebates, and for marketers’ agency contracts to clearly outline the proper handling and return of rebate assets.
According to the ANA / Reed Smith white paper, best practices for advertisers regarding rebates / incentives paid by media companies to agencies include:
• Agree that the entire benefit of media rebates / incentives belongs to the marketer and that agencies will be completely transparent regarding any rebates / incentives received.
• Use clear language in agency contracts specifying how rebates will be handled. Contracts should exist at both the agency and holding company level to address “global” advertising arrangements and ensure the fair allocation of rebates / incentives.
• Consider conducting periodic audits to ensure that unauthorized incentives / rebate activity is not occurring.
“It is imperative that advertisers become more aware of these incentives and take ownership of all assets recouped on their business,” said Bill Duggan, ANA Group Executive Vice President. “The only way to make this a reality is for advertisers and agencies to maintain clear, contractual transparency about rebate and incentive activity.”
“Addressing this issue is long overdue and should be on the radar of every ad agency and advertiser to insure that money flow is accurately reported and, more importantly, understood by the entire marketing ecosystem,” said Douglas Wood, Partner and Co-Chair of Reed Smith’s Media & Entertainment Industry Group.
The study found that 85 percent of those surveyed believe agencies should remit all rebate dollars to clients, and that 63 percent of respondents believe that agencies who accept rebate dollars from U.S. media cannot be objective with their media allocation recommendations. Only 35 percent indicated that they have clear, specific language in their contract that outlines the incentives and rebates that should be returned to them.
Detailed study findings, as well as suggested contract language regarding rebate ownership and agency auditing, are also included in the white paper. The study was conducted from May to mid-June 2012, with 188 client-side marketers responding to the survey.
About the ANA
Founded in 1910, the ANA (Association of National Advertisers) leads the marketing community by providing its members with insights, collaboration, and advocacy. ANA’s membership includes 450 companies with 10,000 brands that collectively spend over $250 billion in marketing communications and advertising. The ANA strives to communicate marketing best practices, lead industry initiatives, influence industry practices, manage industry affairs, and advance, promote, and protect all advertisers and marketers. For more information, visit www.ana.net.
About Reed Smith
Reed Smith is a global law firm with nearly 1,700 lawyers in 23 offices throughout the United States, Europe, Asia and the Middle East, and has represented the advertising, marketing, promotion, and entertainment industries for more than 50 years. The firm’s worldwide presence, together with its membership in the Global Advertising Lawyers Alliance, provides access to an extensive network of counsel throughout the world, allowing clients to obtain the advice they need in locales where they need it. Practice areas include truth-in-advertising, e-commerce, intellectual property, celebrity endorsements, collective bargaining agreements with performing unions, film and television production, distribution and financing, sweepstakes, contests, promotions, event management, sponsorships, ambush marketing, product placement and integration, licensing, labeling, packaging, defamation, invasion of privacy, viral marketing, contracts, mergers and acquisitions and joint ventures. For more information, visit www.reedsmith.com.
