Rebates are biggest barrier to brands building long-term trust in agencies

More than 70% of global advertisers and agencies agree that the way an agency manages rebates is the biggest barrier to building long-term trust, according to ID Comms’ 2016 transparency survey.

marketing effectiveness

The report, based on responses from 140 senior executives at global agencies and advertisers, found that 67% of agency respondents believe “how the agency trades with media vendors” and “how the agency manages rebates/AVBs” are the most influential factors in gaining the trust of a brand.

Advertisers, meanwhile, think “how an agency makes money” is most important at 51%.

And of the European marketers surveyed, almost half described current trust levels with their agencies negatively: with 22% describing current trust levels as ‘low’ and 14% as ‘very low’.

“The challenge is that issues such as transparency in planning and data, all of which are critical to a trusting relationship, are overshadowed by advertisers’ concerns around the business models that have been adopted by the big agency groups,” says Tom Denford, chief strategy officer at ID Comms.

The issue of rebates remains a controversial topic. Just last year, for example, the US-based Association of National Advertisers hired two consultants to conduct an inquiry as it investigates allegations that undisclosed rebates are influencing media agencies’ work on behalf of marketers.

Trust between brands and agencies

According to the report, agencies are more optimistic about improving future trust levels than brands.

Among clients, only 7% expect trust to increase “a lot” in the near future compared to 15% of agencies.

However, both agency and brands are aligned when it comes to their support of a trusting relationship, with the vast majority (77%) of respondents agreeing or strongly agreeing that a close relationship with external marketing agencies will “tend to deliver a stronger marketing performance”.

Denford adds: “An advertiser that has a strong and transparent relationship with their agency is most likely to build a trusting partnership for the benefit of both parties, including longer tenure for the agency and an increasing willingness to reward them when they deliver business value.”

Over recent years, the relationship between clients and agencies has come under question, with the likes of P&G looking to cut agency fees and Pret A Manger taking the lions’s share of its marketing activity in-house.

However, a tempestuous relationship can be healthy, according to John Lewis’s customer director Craig Inglis.

Speaking last year, he said: “We’re not in a functional relationship. We’re happily dysfunctional [with Adam & Eve DDB]. My proudest moments in the relationship are when I see people from within the agency arguing with each other, that’s when you know you’ve actually got the relationship right.”

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