ISBA ups stakes in war over secret media owner rebates

UK advertiser body ISBA has taken media agencies by surprise by circulating a standard contract to its 450 members – most of the UK’s big advertisers who spend £10bn annually – aimed at achieving that rather hoary objective, ‘transparency.’

In some ways the move echoes the current US Association of National Advertisers investigation into undisclosed media rebates from media owners to media agencies. That’s due to report soon.

UK advertisers are worried about two things: the complexity and opaque nature of much digital trading and the aforementioned rebates. It seems to have finally dawned on UK advertisers, as it has with their American cousins, that some such rebate deals are struck with the big media agency holding companies, not the individual agencies they have contracts with.

debbie-morrison111ISBA’s Debbie Morrison (left) told the FT: “We’re at a tipping point, we’ve got to do something. I don’t believe that (the media agencies) have got the best interests of their clients at heart any more.” Which is fighting talk, especially coming from the usually circumspect ISBA.

Media agencies don’t seem to have seen the contract, drawn up by consultancies MediaSense, ID Comms and Ebiquity, yet. But already there’s been an “over my dead body” reaction. IPA director general Paul Bainsfair says: “Since the contract has been developed by ISBA for advertisers and solely from their perspective, it is highly likely that it will not be even-handed. If this is the case we will not be recommending that IPA member agencies agree to use it.”

These current rows are a direct result of clients grinding down media agency fees over the years to the point at which those agencies have to make their money somewhere else. The trouble is that they’re doing so with client money even though they’re the legal principal in such media deals.

Life would be much simpler if the big media agencies – nearly all owned by WPP, Omnicom, Publicis Groupe, Dentsu and Havas – went back to media broking: buying time, space and digital inventory on their own account and selling it on to clients at whatever margin they could muster. Some of them do this already in certain scenarios.

But were this to happen on an industry-wide scale some media agencies, and maybe their holding company owners, would, at some stage, go bust when they misread the market.

Deep waters Watson.

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