Agencies Add Data to Boost Fees, But Whose Data Is It?
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In most of the world (the U.S. excluded), ad agencies get rebates from media companies based on their “pooled buying” power. In other words, they get cash returned, above and beyond their normal commissions, based on all the money they spend for all their clients.
Clients aren’t routinely informed about exactly how much of these rebates is generated by their particular spending. Even when clients press for answers, they often allow agencies to keep the extra money so clients can continue to pay lower fees.
In the U. S. the pooled buying concept never really gained a foothold. But now agencies have the opportunity of using similar pooled buying and selling techniques to gain additional revenue in the digital-media realm. In this case, the money doesn’t come in the form of media rebates but from buying low and selling high, a technique called arbitrage. Agencies are able to sell high because they add audience and behavior data to the original digital-media buy.
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