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Are media rebates being paid to offshore holding company accounts?

The debate over agency media rebates in the US (and, by implication, everywhere else) seems to be generating more heat than light.

The US Association of National Advertisers, which hosted ‘whistleblower’ Jon Mandel, formerly a CEO of WPP’s MediaCom and now of the Dogsled consultancy, has backtracked a bit, saying it isn’t suggesting that all agencies are taking kickbacks from media owners.

jon-mandelMandel (left) now says: “Some people came away thinking I was saying every single agency in the universe does this. There are some agencies that do not do it.” He also told Ad Age he’s had around 100 emails of support, including one from an unnamed adtech company that said it was routinely frozen out of deals because it wouldn’t rebate ten per cent. Interestingly these rebates are allegedly paid to “offshore affiliates” of the big holding companies and, therefore, sit outside US-based contracts.

Which sounds very dodgy indeed – if it’s true.

Nancy HIll, CEO of agency trade body the 4As, says: “We have not been shown any data or information that warrants such allegations. Our position is that the financial arrangements between agency and client are just that, between those parties and confidential.”

Hmm. Those contracts again. You’s think that, in a world crawling with lawyers, someone would know what all the contracts had in them.

Either Mandel’s making it all up – which seems unlikely – or various parties are being economical with the truth.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

One comment

  1. Rebates are definitely being paid from local markets to Headquarters, and to different companies within the same group, or not being paid at all but are taken as “value added services” such as creative work, technology, data, or even key staff dedicated to work directly for the agency (not not on their pay-roll).

    That rebates exist is not in doubt, despite the denials of every agency on the planet. (We recently had one agency in a Global Media Pitch say that there were no Rebates in Russia……!!)

    What does this mean for advertisers, and what do they do about it is the bigger question. That’s where clients may need a bit of help: – knowing where the bodies are buried is one thing, digging them up another, and what to do with the corpses, another entirely! Do call us if you have a point of view or would like to discuss in confidence: http://www.flock-associates.com/contact/

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