US agencies and advertisers fall out over media rebates even before inquiry is complete

There’s an old phrase ‘Get your retaliation in first.’ Some say it originated with the British Lions rugby team in South Africa in 1974 when, on the call ’99,’ each member of the team would race up and whack his opposite number. This got a bit silly between the opposing full backs, who were about 100 yards apart. Anyway it worked and the Lions won.

A rather newer one is ‘transparency,’ something all sides call for in commercial disputes, whether or not they actually want to see any.

4As_Logo_GraphicyirThese apparently unrelated phrases come to mind in the current spat in the US between the 4A’s (which represents agencies) and the advertisers’ body the ANA.

The ANA has been gunning for media agencies (and their holding company owners) ever since former MediaCom boss Jon Mandel, now a consultant, told them about the extent of media owner rebates, money handed back by media owners to their biggest customers. In many cases these are alleged to be media agencies rather than advertisers, the people who paid the money in the first place. You can see why this isn’t popular with advertisers. Agencies say (off the record) that it’s inevitable – clients have ground fees down so low they have to make their money somewhere.

Anyway, the two parties announced a joint inquiry into rebates and other matters only for the ANA to move things up a notch by hiring corporate investigator K2 and auditing firm Ebiquity to carry out a confidential investigation. The 4A’s declined to be associated with this. Hardly surprising as their members were being probed. The two trade body inquiries were now supposed to run in parallel.

This was a recipe for disaster of course and daggers are now drawn because the 4A’s has released its own recommendations as to future arrangements – incorporating the dreaded ‘transparency’ – in advance of the ANA and its investigators completing their inquiry. This is ‘rogue’ behaviour according to the ANA. The ever-reliable Steve McClellan at Media Post has chapter on verse on this with a link to the 4A’s interminable proposals included. As any tax accountant or lawyer with a smile on his face can tell you, the longer the proposed regulations, the more loopholes there will be.

Our friend Tom Denford of media consultancy ID Comms, one of whose jobs it is to wade through these things, comments on Media Post: “Am deeply concerned that these “guidelines” aren’t serving any advertiser’s interests, in fact they potentially make getting transparency harder, not easier. Section 4 is a particular worry, appears to be suggesting that potential lucrative barter and content arrangements between agencies and vendors are none of the clients business.

“I think smart clients will politely beg to differ and be asking these questions anyway. Also very disappointed that 4A’s could not wait to see if any alignment with ANA was possible once they complete their first stage investigations.”

So it looks like a right old mess, one possibly destined to become messier when K2 and Ebiquity report. This is scheduled for ‘late spring.’ In the meantime there will be leaks aplenty (hurray), possibly even all-out war.

In this instance the 4A’s decision to get its retaliation in first doesn’t look like the wisest of moves.

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