It is a “surprise” the practice of agency rebates isn’t a bigger issue, according to David Wheldon, CMO of the RBS Group.
Over recent months, the ANA has claimed senior executives at ad agencies are aware and regularly mandate controversial practices that are often not disclosed to clients. These include cash rebates, rebates as inventory credits and ‘service agreements’ for non-media services such as consulting or research.
In April, meanwhile, ISBA announced a new contract designed to create more transparency for advertisers when negotiating with media agencies. At the time, Debbie Morrison, ISBA’s director of consultancy and best practice, said: “Certain agency groups only use certain auditors and it all looks very fishy.”
And speaking to Marketing Week, Wheldon said he couldn’t understand why so many marketers were choosing to ignore the advice of ISBA and the ANA.
“My view is the best relationships are built on trust, and that trust depends on openness. “Clients need to know what agencies are charging them for, as if they take them without telling clients it won’t build trust,” he said.
“Frankly, I am surprised it isn’t a bigger issue yet. I think this is because the marketing industry is often ostrich-like in that too many marketer’s heads are stuck in the sand and need someone to give them a good hard kick up the arse.”
According to Wheldon, ‘procurement’ is the go-to-excuse for agencies looking to justify rebates.
“If you had Martin Sorrell on the phone, he’d probably say to you the problem is procurement,” added Wheldon. “He’d say ‘They don’t pay us fairly enough, so we need to find ways to make money’, that would be the justification.
“But the problem isn’t procurement but the problem is your clients who aren’t paying you fairly who should manage their own procurement people properly.”
More than 70% of global advertisers and agencies agree that the way an agency manages rebates is the biggest barrier to building long-term trust, according to ID Comms.
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