Business & finance · also called agency volume bonus, AVB, kickbacks
Media rebates
Media rebates are payments, credits or free inventory media owners give agencies for the volume of client spend they bring, which may or may not reach advertisers.
A media rebate is a reward for volume. A TV network, publisher or platform might give an agency cash back, bonus inventory or credits once the agency's clients spend above certain thresholds. In some European markets these are called agency volume bonuses (AVBs) and are an openly discussed part of the business.
The problem is disclosure. If the agency keeps rebates without telling clients, it has an incentive to steer budgets toward whichever media owner pays the best rebate, rather than what is best for the client. In 2016, a report commissioned by the ANA and prepared by investigative firm K2 Intelligence described non-transparent rebate practices in the US media-buying market, which triggered a wave of contract audits.
Today, many advertiser contracts require agencies to disclose and pass back rebates, and give clients audit rights. Rebates overlap with principal-based buying, where margins are built into resale prices instead.
Think of it like this
Media rebates are like a travel agent receiving a hidden bonus from one airline for every ticket sold, which might explain why you keep being booked on that airline.
An example
An agency places €40M of client TV spend with a broadcaster and receives a 5% volume bonus (€2M). The client's contract requires full pass-back, so the €2M is credited to the client.
Related terms
Agency
An agency is a company that plans, buys, creates or manages advertising on behalf of advertisers, in exchange for fees, commissions or a margin on the media it buys.
Holding company (agency holdco)
An agency holding company (holdco) is a parent group that owns many advertising, media, creative and marketing agencies, such as WPP, Publicis Groupe, Omnicom, Dentsu and Havas.
Principal-based buying
Principal-based buying is when an agency buys media for its own account and resells it to clients at a price it sets, instead of buying at cost as the client's agent.
ANA (Association of National Advertisers)
The ANA (Association of National Advertisers) is the main US trade association for advertisers and marketers, founded in 1910, known for research on media transparency and programmatic waste.
Ad tech tax
The ad tech tax is the combined share of an advertiser's spend taken by intermediaries, such as agencies, DSPs, data providers, verification vendors and SSPs, before the rest reaches the publisher.