Probe Finds Ad Kickbacks Are Rampant

Ad-buying firms are taking kickbacks from media companies and cheating their clients, according to an explosive report on Tuesday that called the practice “pervasive” across the industry, report The NY Post.

Even worse, the eight-month investigation by the Association of National Advertisers, which represents the biggest US marketers, found “evidence of potentially criminal activities.”

Madison Avenue execs were not only aware of so-called rebates — steering clients’ money to media companies in exchange for cash or free ad time — but in some instances demanded them, the report said.

“Specifically, the study revealed that senior executives across the agency ecosystem were aware of, and mandated, some non-transparent business practices,” the trade group said in a statement.

“Contracts for rebates and other non-transparent business practices were negotiated and sometimes signed by high-level agency executives.”

The ANA investigation, conducted by K2 Intelligence, found that agencies pocketed rebates anywhere from around 2 percent to as high as 20 percent of a client’s ad buy.

Ad agencies also bought media and then resold it to their clients at steep markups that ranged from 30 percent to 90 percent — conduct that the report deemed “potentially problematic.”

Agencies refer to their biggest-spending clients as “whales” and leverage their buying power to extract rebates from media companies, according to one executive interviewed for the report.

The report doesn’t name names and relied on interviews with 117 anonymous sources, with 59 reporting direct experience with rebates or other “non-transparent” practices.