What Happened to Transparent Media Deals?

Last week The Telegraph Media Group published its agency rebate payments for the year 2018As Campaign reported quotTelegraph Media Group has disclosed for the first time in its annual accounts that it pays rebates to media agencies and clients These rebates can take the form of cash payments free advertising space or a mixture of bothquotThe article when on to say quotThe companyamp160enters into agreements with advertising agencies and certain clients which are subject to a minimum spend and typically include a commitment to deliver rebates to the agency or clientamp160based on the level and share of the spend over the contract periodquotThe amount in question Campaign did not quote a number but the publication previously reported that amp16322 million was set aside at The Mail so it seems likely that Telegraph Media Group39s number is of the same order of magnitudeAnd where did that money go It would of course be truly scandalous in light of the agency39s newly converted status of dealing transparently to suggest that it wasn39t returned to those who made the rebates possible the clientsThere39s no doubt that major Telegraph advertisers are checking even as I write this to ensure that they got their fair share of the bootyMeanwhile an AdAge report from the frontline of the global Disney pitch won by a combination of Publicis Media and Omnicom suggests amp8212 but does not confirm amp8212 that Disney expects what is coyly described as a quotshare shiftquot from the winning agenciesHere39s how this works The media vendor ie prospect calculates that a pitching agency generally commits a certain percentage of its clients39 budget to them As a part of the pitch conversation the media vendor makes it clear that should the pitching agency win they will expect that percentage to increase by a certain number of share pointsAn insider quoted in the AdAge story suggested this was quite a normal business practice quotamp8230much like someone who has ATampampT as a key client might use the company as his mobile provider even if Verizon provides better service in his neighborhoodquotExcept of course it39s absolutely nothing like this at allThe agency39s phone contract is negotiated by and paid by the agency with the agency39s own money Spending with a certain media vendor is negotiated by the agency using the clients39 moneyIt may be contractually transparent for the agency to shift a percentage of funds towards the vendor as long as the discount accrued was returned to all of those clients participating amp8212 all of whom would be in full knowledge of the arrangementBut there are several issues First it is unlikely that any client would be asked if they favored such a shift which presumably would go against the agency39s wellworked planning considerations If this was not the case then why would the agency be underspending with the vendor in the first placeSecond the odds on the client being rebated would be on the low sideThird if the agency39s prime role is to plan and then buy the plan the agency is acting in an opaque fashion by negotiating first then shaping the plan around the dealBut let39s look on the bright side In Disney39s case maybe this method is attempting to increase ad revenue through its properties by leveraging a pitch for its business In other words a crude attempt resisted by the pitching agenciesOr maybe at least one of the winning agencies really wanted to winWho knowsClick the social buttons to share this story with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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What Happened to Transparent Media Deals?

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Brian Jacobs

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What Happened to Transparent Media Deals?

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