WPP reports strong growth across 2021 despite Q4 stagnation in Australia
IVE Group delivers a 104% uplift in EPS driven by strong revenue growth
MAFS shows no signs of slowing down as Nine takes Wednesday
WPP launches The Metaverse Foundry, available to all WPP clients and agencies
Paul Coles departs BMF after nearly 5 years for indie agency DO
Joe Rogan and the tension between truth and attention
Dynamic duos: Laura Quigley and Jessica Miles
Advertising often relies on dirty tricks to push bad products. It doesn’t have to.
We’re fed up with the systems designed to keep us quiet and smiling
Journalists step in where platforms have no answers
Mumbrellacast: Interviews with Kirsty Muddle and Ken Cato, while Ben Willee talks financials
Keeping it flexible: CMOs talk hybrid work and how they maintain work/life balance
Mumbrellacast: Gaven Morris on Bastion and the ABC, plus TA markets to the world
Blue skies ahead: CMOs reflect on the year behind us and what’s to come in 2022
Mumbrellacast: Interviews with Justin Hind and Pete Bosilkovski, plus TV ratings in 2022
Nine’s Roll the Dice on Creativity
Gumtree Media UpNext: The Future is Sustainable
Dr Mumbo: 6 guesses, 5 letters what brands are posting on socials
What makes an NFT? And can I screenshot it?
Corporate needs you to find the differences between this M&M’s picture and this M&M’s picture
What newsreaders really think about Novax Djokovic
McDonald’s dips its toe into swimwear with Budgy Smuggler range
Magnite launches Live Stream Acceleration to help publishers monetise live CTV programmatically
Mint drives internal training as part of talent growth and retention strategy
New charter to show the way forward for freelance media workers
Suada PR to exclusively work with clients driving positive change
Milk and Honey United add Rosemary Health to client roster
Foxcatcher welcomes two new appointments
Idris Elba first international cover star for T Australia
Crime Stoppers Australia combat illegal gun ownership via The Shannon Company
Virtue Worldwide builds virtual metaverse office for Vice Media Group
CommsCon Awards
Mumbrella Awards
Publish Awards
Travel Marketing Awards
Sports & Entertainment Marketing Summit
CommsCon Conference
Mumbrella360
Finance Marketing Summit
Andrew Condon, managing director of sports and entertainment agency Gemba, has spoken out about what he describes as a “significant” portion of “double-dipping” when it comes to sponsorship deals in the Australian marketing industry, or where agencies make a sponsorship deal while working for both the brand and the rights-holder.
Last week, Condon took to LinkedIn to call out a practice he feels damages the reputation of sponsorship as a marketing channel.
This same issue was raised previously in an opinion piece by Rob Mills, then director and CEO at Gemba and now director and CEO at Gemba’s owner Tenka Group, back in 2016.
Speaking to Mumbrella, Condon said these allegations undervalue the industry.
“It cuts to the heart of integrity of the sponsorship industry and the credibility of sponsorship as a channel,” said Condon. “It compromises an agency’s ability to provide objective advice and because reward drives behaviour they are going to make decisions based on remuneration.. A commission-based model is not incentivising them to do the best deal for the brand. It’s incentivising them to do a deal that delivers them the greatest financial gain.”
Condon continued: “[It’s] taking a lot of money out of the industry that that could best be used elsewhere. And at a time like we are now, where a lot of rights holders that are posting losses for the past year due to COVID disruption and things like that, it’s a time where the industry can ill afford to be wasting valuable sponsorship revenue that might better be spent on fan engagement, participation and women’s sport.”
Clemenger Group’s activation agency Traffik head of sponsorship Mark Edney agreed that this is an issue in the sponsorship industry, having said via email: “Sponsorship is an effective channel for brands to leverage, but it’s not the only channel. As an industry, if we continue to demonstrate this type of behaviour, brand’s may lose trust with this part of the marketing mix.
“I am convinced most brand’s probably don’t know this type of behaviour exists, and brand’s need to ask: Are we receiving objective and unbiased advice that best fits our brand, or are we being funnelled into an opportunity that best remunerates the consultant?”
Edney also commented his support on the above LinkedIn post.
The scenario Condon is speaking about is one where a brand approaches an agency to sponsor something, then that agency approaches a rights-holder. The agency makes recommendations and as part of negotiations with the rights holder requests a commission be paid to the agency for successful transaction. The agency essentially represents both sides of the deal, meaning they are not incentivised to find the best price for the brand or rights-holder.
Condon admitted that there is a chance that brands could be aware the agency they’re working with has this conflict of interest: “If a brand wants to pay the agency a fee and allow them to take your commission as well, then I think that’s a poor commercial decision, but at least it’s transparent. If a brand wants to allow an agency to be remunerated for acquiring the sponsorship purely on a commission from the rights holder, which I know does happen in some occasions, again, I think that’s some more ridiculous way of paying an agency to acquire a sponsorship, but at least it’s transparent.”
He further suspects that the level this most often happens with is with smaller organisations that don’t have the resources to back themselves up: “I’m not saying it doesn’t happen [at a large sports organisation level]. But it tends to happen more often with the next level down of sports. They’re very keen and, in some cases, desperate for that commercial revenue.”
In order to fix this issue, Condon is recommending that brands ask for agencies to declare conflict of interests.
In an email to Mumbrella, Condon said: ” Here’s a suggestion for any brand marketer who engages an agency to lead or support sponsorship acquisition on their behalf; ask your agency to clearly declare any commissions or fees they will generate from the transaction. And, for rights holders who sense something is amiss, call the sponsor in question and confirm that they are happy for their appointed agency to receive a commission on this deal. If there is any pushback or hesitation from your agency, then get suspicious.
“Apart from the fact that hidden commissions represent a massive conflict of interest and mean the strategic advice being provided is far from objective, these undisclosed fees are costing brands and the industry millions of dollars. It is time for agency fees on sponsorship transactions to be completely transparent. And it’s up to the brands and rights holders to do something about it. To keep calling it out.”
Condon declined to comment on the record who were the agencies allegedly engaging in this activity.
This article has been updated to clarify a quote.
Anna Macdonald (she/her) is a reporter at Mumbrella. She started in October 2019 as the researcher for Mumbrella Pro and was promoted to editorial assistant in March 2021. Anna graduated from the Australian National University in 2018 with a Bachelor of Arts and a Bachelor of Law (Hons).
Just testing if comments are back. I really miss these.
User ID not verified.
Hi ‘Testing’,
Comments are indeed back on but do need to adhere to Mumbrella’s comment guidelines, which you can find here: https://mumbrella.com.au/about/community-guidelines
Thanks,
Anna
or
document.getElementById( “ak_js” ).setAttribute( “value”, ( new Date() ).getTime() );
This website uses cookies for proper functioning and enhancing the user experience. By clicking ‘Accept’ on this banner or using our site you accept our use of cookies. You can also ‘Read More’ to view our Cookie Policy and learn how to control them. Read More
Sign up to our free daily update to get the latest in media and marketing.