Tuesday, November 12, 2024

Google Sought to Pay Agencies to Sway Media Buys

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Google executives anticipated it would pay out around $100 million in discretionary incentive funds in 2018 to advertisers, according to the doc.

The second type of incentive is called Agency Capability Fund (ACF), where Google provides agencies cash back at the end of the year in exchange for meeting YouTube growth targets and training requirements year-over-year. Google said it expected to pay over $300 million in these payouts in 2018 to advertisers, which Google executives specifically called rebates. ACF makes up most of the “hard costs” across all three incentive programs, per the document.

The final type of incentive Google detailed in the filing is KPI Deals, where agencies get cash at the end of the year for mutually agreed upon display and video KPIs. Google expected to pay out $45 million for this deal type in 2018.

It is not clear from the document how many agencies and advertisers Google executives planned to pay via the incentive programs.

Google executives conducted an internal audit of both ACF and KPI deal types.

“Despite our initial hypothesis that we needed to accelerate a glide path toward ACF removal, what we’ve actually found is that volume-based rebates and KPI deals can still be effective in satisfying existing market needs,” the documents read. “Furthermore, we can successfully minimize any risk of collusion and competition with the right controls in place.”

One of the changes to the program outlined for 2019 was “ensuring ACF grids are discoverable upon requests from clients” to achieve “the right level of transparency.”

Raising red flags?

The incentive programs raise questions about how agencies manage their relationships with the world’s largest media company.

What makes Google completely different “to another publisher or media vendor that participates in upfront negotiations is that the universe that you can transact through Google’s platform is endless,” the media auditor source said.

For instance, to fulfill a minimum spend commitment under an incentive program with a TV company, there are a finite number of shows in which agencies can buy airtime. But with Google, much more inventory is on the table, making it more likely brands don’t know which exact Google media their agency is buying, the source continued.

A Google spokesperson said that brands can learn exactly which Google media their agencies spent on via impression reporting.

It’s not clear how the U.S. Department of Justice plans to use these documents in the upcoming trial, slated to start Sept. 9. But sources believe this shows how Google can influence how brands spend their media budgets.

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