TV Commercials - The Cost Keeps Getting Higher

First, if you haven’t gotten ahold of the “Marketing Fact Pack 2016” produced by Advertising Age, it’s worth your time and money to get one.  The piece is one of the better information resources to help make decisions and comparisons.

Second, in reviewing the information specific to the cost of a 30 second TV spot, I nearly feel out of my chair — wait, I actually did fall out of my chair.  The lowest cost of a :30 second weekly network spot was $14,309 for the CW’s Crazy Ex-Girlfriend, running Friday at 9:00 p.m.  Now sit down because the high end weekly network spot was Sunday Night Football at $673,664.

And as usual football was priced at a high premium across the entire week:

NBC Sunday Night Football — $673,664

CBS Thursday Night Football — $522,910

NBC Thursday Night Football — $485,695

Running a single :30 second spot to reach the male demo in each of the above football programs would cost you a mere $1,682,269 per week.  Naturally, that cost is un-negotiated.  If you’re one of the big boys you could easily spend $2,500,000 a week on TV advertising.

Even bulking up a TV schedule with lower rated and lower cost TV while utilizing remnant TV with the goal to get the CPP down would be tough to do.  

Now taking into account all of the other media channels $3,300,000 a week for a medium GRP media schedule would not be out of the ballpark.

My preference is to run an 80/8 schedule (hit 80% of the target audience at least 8 times).  And while I’d love to see if that is still doable with the increased pricing I’m not even sure reaching 50% of the target 5 times is achievable.

How the times have changed.

Scott

The rumble in the jungle -- ANA vs. 4A’s

“In this corner… the Association of National Advertisers (ANA) a heavy-weight known for its pummeling attack.  And in the opposite corner the American Association of Advertising Agencies (4A’s) known for quick moves and ability to dodge an opponents attack.”

Media transparency… the issue which has shaken the advertising/media industry this year continues to be a discussion vs. a solution.  But where to go from here?  Is it the 4A’s of ANA’s responsibility to solve the issue?  Or is it the client?  What about the agency?  And how about the media property?

Yes to all of the above.

-       Associations. 

o    The ANA and 4A’s should “attempt” to come up with guidelines for both associations members. 

o    However, I don’t believe it’s possible that they could ever come together with a single guideline document. 

o    Does this take the teeth out of each organization?  Not sure, but time will tell.

-       Clients.           

o    Need to clearly define any financial compensation that the agency receives. This needs to include, but limited to, any cash rebates, discounts, bonus inventory, barter rebate, agency fees, media fees, etc.  

o    Next, clients need to clearly state what happens with those rebates, fees, etc. 

o    Who has to approve all of these compensation opportunities? 

o    It needs to be put in contract language in the Master Services Agreement and applicable across any/all units within a holding company.

o    Get tighter control over tracking of media spend and fees in general.

o    Take a hard look at the compensation model you have setup with your agency – perhaps you need to call off the Procurement Dept. and actually put a bit more money in the agencies pockets. 

o    Consider putting specific contractual language with your main media partners describing your expectations in regards to media rebates, etc.

o    Continuosly audit the agency.

-       Agencies.   

o    Get over it.  You and the clients agreed that a 3^rd party audit was needed.  Now you didn’t agree to agree with the results, but come on, the results are pretty clear.  Just move forward and fix the issues.

o    Speak to your client about your compensation challenges… if the rebates were providing the revenue you needed to meet your financial targets then there’s a bigger issue.  Look most clients actually want you to make money.  But if a client’s procurement department has wacked away all your profit… it’s time to have a serious conversation with the client.

o    Don’t try to get squirm out of the issue with interpretive analysis of legal documents put forth by clients.

o    Be transparent – this is a chance to hit the “reset” button on your client relationships if you work it correctly.

-       Media Properties.  Ahhhh, I didn’t forget about you!  You’re part of the issue as well.

o    Stop playing the victim in these conversations… “I had to do it to get the business.”

o    You need to be transparent with clients on the full compensation picture – rebates, payments, discounts, etc.

o    Make your rate card and prices more transparent.  Break down the costs so clients can understand what they’re paying for. 

o    Stop playing both sides of the fence with the agency and clients.  Stop telling clients how the agency isn’t fair and stop telling the agency the client loved the idea.  You’re feeding the issue.

The Dalai Lama had it right when he said “A lack of transparency results in distrust and a deep sense of insecurity”

See my previous posts on this subject on my Linked page or on my blog.

Scott

Estimated Media Spending Up? What’s Driving the Increase?

It seems all we hear about is how media budgets are being cut.  But some positive news came out of eMarketer which predicts media spend will increase  5.1% this year.  That number is slightly lower than had originally thought, but yes this is overall good news.  Let’s be wary of what is driving that increase. 

        

•       Politics -- political spend always tightens media inventory which naturally creates higher prices for media.  This supply/demand balance slow burns as caucuses occur state by state.  Then around June onward, inventory significantly constrains as we head into the Presidential election.
•           Olympics – the sporting events put a huge constraint on inventory during the summer months. Advertisers who normally don’t run consistent media schedules do burst media campaigns around the event.
•          Early Holiday Promotion – it seems Christmas shopping literally starts at Halloween.  Special “before” holiday shopping deals are becoming more prevalent.  Look at this new trend to constrain inventory as well.

So before we celebrate the “rise of media” let’s make sure we know the reasons for the increase and realize this might be an abnormal year of spend.

Scott  

My Daddy is Bigger Than Your Daddy

The latest article regarding chest thumping between the AAAA’s and the ANA reminds me of two kids playing on the playground and proclaiming their Daddy is bigger than the others.

The continuing saga of transparency whether media agencies have received financial compensation from media properties has clearly drawn a line between clients and agencies.  Each seems to have taken a strong stance for each organizations constituents.  The AAAA’s issuing transparency guidelines and publicly naming clients and the ANA expressing displeasure  of the client names being released and setting up a confidential reporting hotline.

This entire situation is all about money — plain and simple.  The word transparency is just a substitute for whether agencies or clients receive the proposed media property compensation. 

At this point in the saga, I wonder if any results which come back from the auditors will be accepted by both sides of this issue.  My gut tells me this situation is far from being over…

Scott

International Advertising Festival Cannes Lions - Entry Tips

As we turn into Winter the CannesLions entries will be due shortly. Here’s a few tips from my judging experience.

1.  Read — yep it sounds simple, but read the entry rules and what is required in the entry form. If you don’t provide the information required, more than likely the judges will immediately discount the application.
2.  Language — when I judged about 50% of the judges spoke fluent English. The rest knew English but at varying levels. So keep the messages, short, simple and easy to understand. No fancy/dancy words.
3.  Culture — given the International makeup of Cannes, don’t do anything to offend another culture. Also, pay particular attention to whether any comedy is culture specific. If so, it might be hard for judges to understand the intent.
4.  Teachers Pet — the number of pounds you application has no relevance as to whether it wins. So don’t throw a ton of crap in your entry. If anything it will make it harder for the judges to sort the real entry from the hype.
5.  Numbers — INCLUDE numbers! Results matter… especially if you can attribute sales to the initiative.
6.  Goal — tell the judges what the goal(s) were with the initiative. Keep it short, don’t put the kitchen sink in on the goals. Don’t use the old SNL Shimmer Skit language “it’s a floor wax and a dessert topping.”
7.  Bullet Points — don’t write a lot of paragraphs…. make it quick to get through the application.
8.  Creative — use color versions not black and white reproductions. Yep, saw a few of these.
9.  Video — make sure you have it in the proper format as asked for in the application.
10.  International Campaigns — if you have a campaign which has run across multiple countries make sure to show it off. And if you’re a global company, dig deep across your regions to find the best and the smartest entries. Frankly, many of the best entries I saw were from Asia.
11.  Backups — send a backup electronic copy of the presentation in the event one gets damaged.
12.  Check Off — I can’t stress it enough. You must have all the information or questions answered. Don’t try and put in fluff material which doesn’t answer the question.

Good luck!

Scott

It’s Awards Time

The Golden Globes, Academy Awards, Screen Actors Guild… you name it and it will be awarded in the coming months.  And Marketing is now different.

The one I like to key in on, is the Cannes Lions.  Held every summer its kind of the “Academy Awards” of Marketing.  It’s the big one.  If you’re lucky to win one, you’ve covet it forever.

So now is the time to start sifting through all of your marketing activities to find those gems in all the categories.  But remember folks, you’re competing against Marketers and Agencies from across the globe.  

Take a few moments to get educated on Cannes.  I’ll provide some tips on how to bolster your entry in the coming weeks.

Scott

Digital Disconnect

Over the Christmas holiday, my family and I traveled to Charleston, SC to have some low key quality time together.  I noticed something which  I found fascinating - three woman and one teenager were sitting in the airport coloring in a very meticulous coloring book.  

I asked a few of the ladies and the teen the reasons for taking up what I thought to be a child’s activity.  The answer I got was interesting… they said they were “burned out” on technology and this was a way to escape the digital world we live in, if just for a few hours.

This “escape” became clear, when I looked upon those in the airport and 90% of the travelers were staring into a small phone screen.  I use the words “into a small phone screen” on purpose.  They seemed to be so transfixed on the phone for hours, ignoring much of what was going on.  In fact, two individuals missed their flight because they were transfixed on the screen.   They didn’t hear the announcement of the flight, nor did they hear their names being called out for the “last call.”

As a Marketer I now question whether the mobile ads we run are being recognized or are lost in the blank stares of the consumer… I don’t have an answer, but the thought runs across my mind.

I’m now looking to find my “Big Chief” Tablet and that 64 Crayola set I had as a kid.

Scott

TV Ratings -- Sometimes a Case of Shooting Yourself in the Foot

AdAge reported on a December 9th, 2015 article that TV ratings continued to fall… and this time 39 legacy shows are experiencing the issue.  Just 3 are feeling an uptick.

This shouldn’t be a surprise to anyone.  We know live sports events always do better as people would rather experience the action as it happens vs. rebooting TIVO to watch.  The Sunday Night Football ratings prove that as the ratings were up 8.2 in the 18-49 demo up from the last ratings period.

But I’m confounded by a move ABC is making.  Marvels Agents of Shield just ended it’s Fall shows on December 8th.  But the show doesn’t return until March… March, you’ve got to be kidding me.  It’s time slot is being filled by Agent Carter another Marvel property during the vacancy, but March?  It’s 2.5 months from now.   That’s an eternity to have the show off the air.  AND… Agent Carter really doesn’t have a solid track record as a ratings driver.  And hoping that the Shield crowd stays around for Carter is a risk.  Certainly, getting the audience to gravitate to a new show is great, if, they also stay around for the old show.  But that’s a damn big risk.

Now summer is different story, consumers expect the reruns or shows off the air.  But during the prime season to keep a show off for 2.5 months.  Good luck boys.  My gut, ratings will fall on Agents of Shield at least 15%.

I don’t know about you, but I’m so frustrated with the TV networks these days.  Shows are off the air for extended time periods, get switched between different TV properties, can be watched online etc.  It’s no wonder ratings continue to fall.  The disaggregation continues making it easier for consumers to get access to the show, but this continues to hurt aggregation of ratings.

I long for those days of less tech, and schedule simplicity.

Scott

Agency Negotiations - Tips

Agency Negotiations are critical to the success of marketing initiatives.  I’ve done a number of negotiations over my career.  Here are a few things I’ve learned.  The below are some thoughts… you are responsible for anything you implement, I’m not responsible for anything you do.

1. Negotiate each price piece separately.  You need to understand the exact costs you will be charge for each function.
2. Salary’s — you do NOT have the right to see the agency’s staff salaries.  But you can identify the salary bands.
3. Identify the definition of each salary band and the number of staff members who will be in each band.  Not the names.
4. Determine the exact number of people on the account — full time, part time, as needed, etc.
5. Provide the agency with a very clear statement of work.  They can’t tell you the cost if you don’t tell them the work.
6. Thus, the statement of work will help determine the resources and allow you ensure you have the right level of staff.
7. Take a look at how Executive salaries and time are applied to your account.  These salaries are higher so the more time on the account the more the cost.  Are you going to be engaging with them that much?  And what type of engagement?  Is it a check in?  If that’s the case, I’d question whether you should pay anything.
8. Overhead — the hidden costs. Understand every single piece of overhead for each office, geography, etc.  Here’s my thought… there are overhead fees which need to be paid, but you should pay your fair share.  Larger clients usually cover a larger portion of overhead vs. smaller clients just based on shear overall billings.  Watch these expense carefully.
9. Rebates.  As I’ve blogged about earlier you must clearly state what your position is with rebates.  Do it in the contract so you’re not dealing with this issues later.
10. Data security and privacy.  You don’t think of this one until either your company data is leaked or your customer data is leaked.  Make sure you are clear as to who has access to your company marketing data.  And I always want my agency to have the same strict data privacy and security rules for any customer data they might possess.  Anything less will probably cause heartburn.
11. Media Rates — are you paying a percent of media only, which covers everything?  Or are you paying a media rate and also a fixed fee for staff.  Or something in-between.  This can get very complicated.  I always like to look at it from different options and see what makes sense — both cost and support wise
12. Individual Media Rates — check out all of the rates for each media type.  Digital, search, TV, etc.  Negotiate them all individually if possible.
13. If you can cut to the chase and get everyone to sing from the same hymnal… get agreement with the agency for a set a profit percentage.  If you get to this, then you need to work on reporting and quarterly adjustments as appropriate, etc.
14. Setup quarterly reviews with the account team, etc.  Discuss performance.  Identify what and how any issues will be dealt with and a correction plan.  these will be carried out.
15. Set the rules — sounds easy right?  Do the advertising, place the media.  But what about entering your ads into award contests?  How about paying for tickets for your staff?  All without your knowledge?  Put some parameters around some of the big areas.  You won’t get them all, but everyone will know your intentions.  Also, make damn sure your staff is aware as well to avoid the “didn’t know syndrome.”
16. Bonuses. Just like your employees, bonuses will probably be a form of most agency staff compensation packages.  This one gets tricky… is the agency responsible to pay for this out of profits?  Or, should it be something which is worked into the overall compensation you pay the agency.  I’ve done it both ways.   
17. Clearly identify the business performance metrics and apply these to the agency’s performance metrics.  Get the scorecard defined, agreed upon by all and put in the contract.
18. kick backs or added fees preferential vendors
19. Always have the right to audit every single dollar and invoice which flows through your account.  Get the agreement on how many times an audit can take place, but the circumstances, scope, if any costs will be applied for doing an audit.
20. Procurement.  Have them lead any negotiation, but for God’s sake, keep the pitfalls at bay.  This should not become so intense that you and your agency questions whether they should actually have this relationship.  
21. Don’t get carried away.  You’re not going to get everything you put on the table.  Make it clear with Procurement what you can and can’t live without.  And make sure you understand what Procurement can and can’t live without.  Usually indemnity gets dicey. 
22. Structure.  Lay out your agency organizational structure ahead of time.  This can be an addendum, etc.  But get something down on paper so you understand what/who is being hired, for what positions, who they report too, etc.
23. International aspects.  If you’re an international marketer, check to see if they have translation experience.  Cultural knowledge is key.  Knowing the media within the market.  Don’t get the typically “yes we do that” — get examples, speak to clients.
24. What will constitute past due billing for the client and what the agency will charge you.  Again, they are not your bank.  Pay them on time.  Don’t play the “float” game after you’ve negotiated the time for payment to be received.
25. Make sure the agency is paying it’s vendors on-time for your business.  At one point, media company’s wouldn’t buy media for me, because the agency had not processed previous payments due to them.
26. Professional Agency Negotiator.  This might be a good idea if you or your procurement team are new at these types of negotiations.  Agencies are different than your typical vendors and you need to understand this prior to going into negotiations.
27. Scope of Work — make the scope of work the agency is responsible for very tight.  Make it      clear, understandable, with notes and examples.
28. MSA.  Align your statement of work as close as you can to that of your normal contracts.  One note, media agencies are shelling out a great deal of money to media companies, so pushing the agency’s payment to 60 or 90 days is unrealistic.  I prefer 30 days… an agency is not your banker.
29. How to add in other work.  You want a control point for moving additional work product under an agency.  Hopefully, you’ve already negotiated the pricing, but allowing your entire company to move business around without a control point is problematic.  It’s not that you’re telling people they can’t move the business, but rather, you’re making sure you know what the agency is doing… as this can impact service levels and the like.
30. Indemnity.  I wish I had a lot of input on this delicate topic.  Basically, who takes the blame and is legally responsible.  Experience has taught me this is a mid point type of discussion.  Be smart on what the agency is fully responsible for, but also realize you have responsibility as well.
31. Do NOT have any work start before negotiations are completed and contracts are signed.
32. Don’t screw them — come on, they’re not in business not to make money.  And this is down right stupid.
33. Administration — how solid is their accounting/billing function… how about legal?
34. Meet the entire staff — everyone who will be on the account.
35. Have your finance/accounting department meet with the agency to determine strength in billing function.
36. Legal — same for your legal team… understand if they experience in particular advertising based legal research… and what will be the split between responsibilities.
37. Industry experience — is it important they have it or a nice to have
38. Determine if they are going to bill you for the pitch.  And frankly, you might want to offer to pay each agency a certain amount to offset their costs… it will show a partnership spirit.
39. Find out the exact date that the billing starts — I’ve seen arguments start at the beginning of an agency/client relationship over this very question.
40. Ensure a cultural fit between the client team and agency team.
41. Make it clear when the metrics for performance start… and ensure the agency has the numbers/criteria, etc.  And of course make sure everyone is in agreement on these areas.
42. References — speak to the ones the agency gives you, but research others or past clients and try and connect with them as well… let’s be honest, everyone doesn’t always have a bad experience… but, finding out the warning signs at least gives you heads up when you need to course correct.
43. Don’t be an asshole during the negotiations… respect is critical all around.
44. Set a schedule of when and what you want done during the first 90-120 days. e.g.  when all staff will be on-board, when media is transferred, when international operations will start, when the first campaign will launch, etc.
45. Determine what you own, vs. what the agency owns as it relates to IP, research, modeling, data, creative, etc.
46. Make sure you feel comfortable with account management, research, database marketing, and other disciplines… I always like to have the client teams meet with the agency teams to get a feel of strength/weaknesses, etc.
47. Conflict of interest.  This one is difficult with large holding company’s.  I just like to make sure any of the agencies working on the business do not have a conflict.  
48. International culture experience.  Sounds simple, but having those people in country to advise and work with your country teams is imperative.
49. Working with other agencies/vendors.  Make it clear that everyone will play in the sandbox nicely.  This is your responsibility.  The statement of work needs to be clear, and ensure one agency doesn’t play the blame game.
50. Technology — do they have the proper tech to service your account… how about servers, a Digital Asset Management system, the right statistical modeling software?  And if they don’t, list out your expectations, and find out if you’re responsible for the cost.
51. And speaking of a DAM — make sure YOU own the content on the DAM.  And make sure you own any and all work product.
52. Who’s the “one throat to choke” — you’ll need to know who it is, trust me on this.  And I mean the very top… meet them, know them, etc.
53. What’s the agency’s employee policies as it relates to background screenings, etc.  Make sure they are similar to yours… I once had an agency employee who’s background was flagged by our security team when we did our checks given they were going to be on-site.  You don’t want that stomach acid.
54. T&E — I like to match them identical to the company’s.  Reason?  There isn’t any bitching by your staff when they see an agency person sitting in first class, having a top end hotel room, etc.
55. Define your competition and product categories.  Determine if the agency is in anyway working with those you consider competition.  And if so, are you willing to live with it.
56. Qualify if the agency can pitch others in your category.  There is nothing worse than being dumped by the agency because they went fishing for a larger client.
57. Put in place a time period in which the agency can not work with those in your competitive set.  And make sure this applies to the actual people who have been on your account.
58. Ensure that agency staff must sign confidentiality documents on your specific account information, etc.
59. If the agency resigns the account, determine the time period they will need to continue to manage the account, until a subtle agency is found to replace them.
60. Determine how you will notify the agency of a dispute, the time period associated to fix the issue and ramifications if it’s not fixed.
61. Check if the agency’s holding company is working with a competitor and what your stance will be.  And again, put it in writing.
62. Make sure you inform the agency of special circumstances… the one I always had to deal with while at HP, was agency staff coming into the building with a Dell or Apple PC.
63. New skills — how does the agency staff on top of new skills, products, etc.  For instance do they really understand SEO and social media and the like.  Make sure this is specifically called out and defined.
64. Clearly identify the fee schedule for everything… I mean everything conceivable.  Document everything.
65. Identify when you’ll have discussions on compensation in the future.  Face it, inflation happens and your costs will probably go up at some point.  If you can limit this contractually, all the better.
66. International agency alignment — in Japan, more than likely you’re going to work with either Dentsu or Hakuhodo… their the biggest players.  Make sure BEFORE you sign the contract what those terms are so you don’t have to negotiate again.  And ensure that your primary agency is responsible for and manages that work with the international agencies.
67. Currency buying — ensure you know if the agency is hedging currency for media buys.  And make sure you don’t end up having to pay the price if they hedge incorrectly.  Frankly, I don’t like this practice…
68. Is you're working with an agency who is part of a holding company, it’s probably a good idea to get agreement that the rates you negotiate are applicable across other agencies in the holding company. 
69. These are just a few thoughts, check with the ANA and the AAAA for more information and thoughts on agency negotiations.
70. Finally, this should not be “us vs them” — it really should be a discussion of the needs of each side of the equation.  Respect should be key in all of these discussions.

Good luck.

Scott

Ad Placement - What To Do When The Public Complains

Our country provides everyone the right to express themselves via freedom of speech, etc.  You’re going to find, like minded groups who won’t be happy with your media placement.  These groups typically spam Executives or the Marketing Team, with canned emails expressing their displeasure with the advertising and asking (or demanding) that you change your media schedule based on this “controversial programming.”  Some might include:

• Sexual specific programming
• Gay or lesbian programming
• Questionable family values
• Actors/Actresses within a program which might have controversy surrounding them
• Politically based programming
• News programming — too liberal, too conservative
• Basically about anything someone will complain about
• Ethnic based programming

I used to get thousands of emails when these groups would target their displeasure.  I even had a media company threatened me if I didn’t run advertising with their publication.  So I was getting hammered by consumers and the advertising media at the same time.  

At first I was appalled… well pissed is probably the best word to describe someone telling me what and where I could advertise.  But after calming myself I came to accept that everyone has their opinion, they can express it and I needed to deal with it.  So I came up with some general rules of the road.

1. Respect the opinions of these groups/people.
2. Have a drawer statement ready and pre plan for these types of events.
3. Communicate your decision in a professional manner.  You don’t need to give your reason - if you do, you’ll get into a war of ideals, which you’ll never win.
4. Determine if your advertising actually ran on the wrong show… if you’re doing direct advertising, you might have been plugged into a show which might have been inappropriate.  Sometimes mistakes happen.
5. Does the show represent your brand values?  If so, no worries.
6. How many GRP’s is the program in question pulling?  Determine if it’s worth the stomach acid to run in the program.
7. If you have events, etc. which surround the program target audience this should be considered.  Sunk costs without any promotion aren’t going to generate revenue
8. Don’t fall on the sword for a show… if your management isn’t happy and wants you to move the media, do it… don’t argue…it will only create turmoil later.
9. But, don’t let any group tell you what to do.  Stick to your plan if it’s the right place to advertise, do it.  Don’t be swayed by detractors…this too shall pass.
10. Document, document, document… if it gets nasty you’ll need the facts.
11. Have your tech group stop the emails from reaching your email box and other executives email boxes.
12. Notify legal AND security of the situation in the case you start getting protestors out the front door, or the situation escalates further.  Keep your eyes open for any suspicious activities. 

Don’t be paranoid, but also stay vigilant.  

Scott

Simple Learnings From a Tragic Loss...

This past weekend, we suffered the loss of a colleague at our company.  It got me thinking about how I had interacted with this individual over the past year.  Probably 75% of the interactions were via email, a social media platform – LinkedIn, Facebook, Twitter, etc. 

However, in retrospect, I’ve realized the electronic channel of communication has limitations and it seems I took for granted the importance of picking up the phone, meeting for lunch… the true personal touches which mean so much given today’s fast-paced society.

So as we post on LinkedIn information about business, as we post to Facebook about our kids, as we post to Twitter about our immediate thoughts…let us not forget we are human first and picking up that phone, meeting for lunch is more important now than ever.

Scott 

YOWSER…. $5M for a 30 second Super Bowl Ad!

AdAge announced today CBS has nearly sold out all of the TV inventory for the upcoming Super Bowl airing February 7th.  Prices are at $5M for a 30 second spot or an 11.1% increase year over year.

I can remember buying a 30 second spot for a mere $1M around 12 years ago.  I can’t believe I just said “a mere $1M”….

I’ve always had a love/hate relationship with Super Bowl advertising… the ratings are massive, people focus in on the spots and messages.  Digital integration is becoming stronger so the spots live on post airing.  And naturally, if the creative is killer, everyone is talking about it for weeks.  Then again, if the creative or message is poor… you die a quick death of ridicule by late night TV hosts and you’re forever known as the media guy who pissed away a ton of money.

Needless to say, I’ll be tuned in February 7th like most of America, looking at those spots like everyone else.

Scott

Agency Rebate Allegations – “RebateGate”

In the October 20^th issue of Advertising Age, it was reported that the ANA and the AAAA’s have come together to investigate allegations of “agency rebates.” 

Basically, the situation(s) is this:

-          Media agencies purchase media on behalf of multiple clients.

-          Media companies have allegedly provided incentives to agencies for buying more inventory from       them.

-          The agency then received a “rebate” for spending more money with one media-company.

-          Rebates haven’t been passed back to clients but pocketed by the agency.

-          Clients have been kept in the dark for the most part regarding this practice.

This isn’t anything new… it’s been going on for years.  Media audit companies have been pointing it out to clients for a number of years.  And savvy large advertisers have been able to claw those dollars back.

The rebate situation brings up:

1.       Transparency – why haven’t clients been informed of these rebates by media companies and others?

2.       Trust – if the “value” of a media agency is to strategize, plan, measure and frankly buy media at the lowest possible cost for clients… how do I know they’ve been purchasing the right media for my campaigns? 

3.       Motivation – is the agency motivated to meet my needs or thinking about how they can make the rebate?  And, have those fees helped make up the delta for lower costs on media buying fees paid to the agency?

So what to do?

1.       Ask the question of your agency – Are you receiving any rebates from any media partners, vendors etc. for the work you do on behalf of my company?

2.       Hire a media audit company to look at the media and vendor purchases… audit the numbers and report back on rebates and other financial concerns.  Hopefully, a clause such as this is included in your agency contract.

3.       If rebates are found, have the amount calculated by a 3^rd party.

4.       Ask for a rebate check, not media credits or agency fee credits.  A check makes this a clean transaction, getting media or fee credits will just make things more complicated.

5.       Current agency fees – make sure you keep an eye on any additional fees which might start being applied to your bill.  This could be to make up for any media rebates which might be taken way.

6.       Future Negotiations – when you look at negotiating for a new term (or with a new vendor/agency) make sure you understand if fees are going up because rebates might be taken away.

7.       Quarterly Review – if you don’t already do it… start a review to keep this and other potential issues in the windshield vs the rear view mirror.

8.       Provide very clear contractual language on rebates, etc. in your agency contract

9.       Make it known to media companies your input on this situation.  It’s your money the media company gets… so they will listen.  As my Dad would say you need to have a “come to Jesus” conversation with them.

10.   Follow the Money – this is a simple situation to follow who’s getting the cash and why.  Start investigating.  Don’t stop with the agencies … look at media companies as well.

If agencies aren’t transparent with clients… it will eventually come out.  It might take some time…you can run, but you can’t hide.  And if this investigation yields specific names as to company’s potentially involved in the rebate allegation… restoring trust of clients will be tough…and explaining this at pitches is going to be interesting to say the least.

Getting in front of the Marketing community with your cocker spaniel named “Checkers”, getting on TV and saying “I am not a crook” or getting rid of 18 minutes on tape… ain’t gonna work. 

Scott