Confessions of a publisher: Rebates ‘drive a lot of buying decisions’

This article is part of our Confessions series, in which we trade anonymity for candor to get an unvarnished look at the people, processes and problems inside the industry. More from the series →

Last week, the ANA dropped its much-anticipated report on the practice of rebates, or kickbacks, that media sellers pay agencies for steering clients’ dollars their way — without fully disclosing it to the clients. While the report focused largely on non-transparent practices by the agencies, for this Digiday Confessions, we talked to a veteran publisher who says media sellers aren’t helping, because their outdated way of doing business hampers already-squeezed agencies.

How widespread do you think these rebates are?
It drives a lot of agency buying decisions. Anyone who thinks it doesn’t is very misguided. It’s a function of these agencies being understaffed. The gifting and these buying deals are symptoms of the same thing. The agencies are squeezed. Their businesses are bad. That leads down a path of vendors having to ultimately have to supplement the compensation of their employees.

How do you become aware of it?
You see trends in terms of accounts buying certain brands over and over and over. You can call it preferred vendor status; you get the sense that clients would be better served being in certain places than others. It’s not “what’s good for the client;” it’s just what they do.

Who’s to blame?
The blame lies in exactly same place as the ANA says. We use agencies to the point where there’s no account that’s properly funded and staffed, so you have an absolute explosion of ad tech companies calling on me.

What part do the media sellers have in all this?
The way sellers are being directed to go to the street is part of it. The message being sent to them is: Do whatever you have to do to get the business. Buy them sunglasses. If you’re a senior level person, it’s, just get the money. We’re a relatively unregulated industry. So [rebates are] a super-expensive pair of sunglasses.

So it’s a bigger-scale version of gifting, which has become so commonplace.
It’s just pervasive, and it’s just how business is done. And it’s increasingly hard to get the attention of these people because they’re so overworked. The gifting almost doesn’t matter anymore. It doesn’t get noticed anymore. It’s reached such a level of ubiquity that it’s almost expected. It’s treated as, “Isn’t this how business is done?”

How do things on the seller side need to change, then?
It’s hard to say. Publishers are so broad these days. On the premium content side, we need to recognize there are staffing challenges at agencies. We have to recognize that we’re selling in same way we used to and they’re not buying same way they used to. Some brands, you call on them and they have a separate print and digital person. If the agency can barely do their jobs, we have to make it easier to reduce the friction to make it easier for them to buy from our organizations.

You don’t sound very outraged about all this, though. What’s been the reaction at your company?
People are more concerned about Facebook eating the world. This is not the biggest issue.

https://digiday.com/?p=182783

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