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New Revenue Stream Increases Need for Media Audits

March 18, 2008

Posted by: Peter Infante in Stewardship

Business Week recently reported that GroupM, the largest media buying agency in the world, has announced it has been working with its outdoor media vendors to institute rebate programs.  Rebates are a common practice in Europe, and can represent as much as one third of an agency’s total revenue.  Rebate programs typically involve an agency making a spending commitment to a media vendor (TV network, magazine, outdoor company, etc), in exchange for receiving a percentage back as a rebate.

It’s not too different from the commission discount currently given by many U.S. media vendors, except that the size of the rebate is negotiable and varies in relation to the size of the advertising commitment.  That represents a potential conflict of interest.  Rebates could lead agencies to place media not where it makes the most sense for a client, but where the rebates are larger.  In Europe, this system works because clients regularly conduct independent media audits.  These give an advertiser an unbiased review of its media strategy, targeting and purchases.  Audits aren’t as common in the U.S., but they are a specialized service that Butler/Till has offered for over five years.