The hidden truth about about media rebates: Agencies are paying settlements, but they're not being disclosed

An Ad Age investigation indicates settlements are being paid to marketers, but they are being kept quiet. Stephen Broderick, Global CEO at FirmDecisions, shares his view on what’s wrong with U.S. media buying and client-agency relations today.

“Some clients are settling small claims and saying, ‘I’ll take the $2 million or $5 million or $20 million in free media,’” Broderick says. “And I’m saying to them, ‘This is just crazy, because it’s free media, and you can’t value how much it’s worth, because it’s free. Secondly, how do you know it’s not your free media that you’re now taking in settlement for what they’ve done wrong?’”

Stephen Broderick, Global CEO

The Ebiquity/ANA model contract, and some marketer contracts, try to prevent this by prohibiting agencies from making deals on their own accounts with media companies that are better than deals passed along to clients. But auditing and enforcing those provisions is difficult since it potentially requires access to records of every deal every agency holding-company entity does with every media company.

To read the full article on the AdAge website, please click here.

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First featured 16/10/19.