Creative Kickbacks: The rot runs deep and pretty ‘high’, say creative leaders

Last week, exchange4media ran a story on how creative agencies are receiving kickbacks from production houses, and how it has become a mutually beneficial arrangement to some extent between the two parties, with each standing to gain something from the other. But while marketers are in the know and not much has been done to nip this problem in the bud, we spoke to creative agency heads to understand whether they are well aware that a storm has been brewing under their nose, and what have they done to do away with such unethical practices at their agencies.

While some top leaders admitted to having been approached for such kickbacks, others said that decreasing agency margins was no excuse for unethical practices and that the ‘bribe takers’ in each agency have the protection of the higher-ups whose bonuses are dependent on this easy cash. While some said this was a problem that persisted more in the past, others said it was one which will never cease to exist because there was acceptance for it at the very top of the agency chain.

Soumitra Karnik, ex-Chief Creative Officer of Dentsu Impact, Mcgarrybowen and Dentsu India, has a strong opinion on this. “One could give any other name to stealing but it will remain stealing. When an individual does it, it is a kickback but when a company does the same thing how is it volume discount? And more importantly, if you are not being transparent with the client from whose money you are taking a cut, then the entire deal should be seen as just skimming. Clients not paying the agencies enough is the most rubbish argument I have heard. Why did you agree to participate in a pitch without first ascertaining the size of the business and your own fee? Why did you quote a low fee in the final round of negotiation? You do not have the right to whine about the low fee and justify taking the kickbacks. It is like saying that it is okay for the police who are not paid as well as they deserve for their long hours to resort to picking the pockets of the ones they are supposed to protect. Companies normalizing kickbacks is just corporatization of bribery.”

When asked if he has been approached by production houses for a similar arrangement, Amer Jaleel, Chairman and Group CCO, Mullen LoweLintas Group, says, “For someone who has done social and ethical work like Jaago Re and Hawa Badlegi it’s ironical but as a novice in advertising I was offered my first kickback some 25 years ago - Rs 1 lakh for a Rs 12 lakh film then. I politely refused but did not allow the servicing guy to reduce the budget by that margin. Instead, we got the production value upped by that Rs 1 lakh. Felt really good to snub a producer back then! Most people in advertising are not in for megabucks, there are no megabucks! But for the lifestyle and conversation. At least most people I know. But ad guys don’t mind the small perks, a bouquet of flowers, a scotch or an extra night in a hotel in Goa. But I guess there are exceptions. Those who want to get themselves a snazzy car faster than the next guy. And that probably tempts. In Lintas, I’ve known creative juniors who’ve refused to charge dinner or taxi allowance from the company far less falling for producer handouts.”

But does that mean he has never seen something like this happen at his agency ever since that incident in the past, Jaleel responds, “We have very strong values and systems as an agency but yes, I have come across the odd case who got caught out and was dealt with summarily! We’ve also instituted a blockchain-based system to ensure that all financials are absolutely transparent and can be identified at all levels. Despite the quality of our people, we’re still ensuring it’s fully watertight.”

For Arvind Nair, Director North, Mirum, a WPP agency, the problem of production house kickbacks was one historically faced by the older generation in advertising and is much less rampant today. He elaborates, “I feel it's a cultural and legacy issue as it was a way of working. I haven't heard it of being as rampant today as in the early days of my career. There is an amount of trust that we build over time with brands. And transparency is a great way to build it better. There are already enough measures like audits, transparency of bills, and working with multiple partners as opposed to fixed ones to help navigate some of these cultural issues. I feel the younger lot is less exposed to such practices.”

Azazul Haque, Chief Content Officer, Media.Monks, says the rot runs so deep that literally, everyone in the industry has been at the receiving end of such offers from production houses, even as production houses argue that it is the creative lead who assumes there will be something in each campaign for him. “Almost everyone big in stature or designation in advertising must have got an offer for kickbacks. Some take it. Some are afraid of taking it. But most want it. The root cause of this is huge margins in profits in film production. And lack of proper tools to check for transparency. I think kickbacks were more prevalent in past when the production budgets were huge. Almost every big name in advertising came under the scanner but it's tough to find who is taking it and who is not. But in time to come, I think it will reduce because of smaller budgets of film production,” he noted. 

Offering a solution, Haque says, “After joining Media Monks and seeing the benefits of having an in-house production wing, I think having such a unit can solve a problem like kickbacks, which has been prevalent in the advertising industry for decades. Also, if we can correct the remuneration of the advertising fraternity it might reduce such practices. I personally think it does affect the creative output. Because if you have taken a kickback, you can't ask a production house for better creative outputs. But of late because of really tighter budgets, it has reduced drastically. My single advice to everyone in advertising is - great work goes a long way. Focus on that instead of looking for smaller financial benefits.”

For another established name in the industry, Santosh Padhi, CCO, Wieden and Kennedy, the decreasing remuneration is hardly an excuse to indulge in unethical business practices. He explains, “Taproot was known as a traditional agency, hence we were approached and used to work on many ad films. There were enough signs and signals from some production houses who reached out to us for a messy understating, both of us, creative founders were very clear about our strengths and weaknesses and never really entertained anyone who gave us the setting/ kickback signals (they were kept miles away) nor did we have people in any department to deal with the new worm that’s eating up the good side of the industry.”

“We had our names linked to the creative product and I definitely didn’t want to compromise on the end product at any cost. We were happy with making money through our creative ideas/strength and services, (sometimes premium compared to industry standards). We clearly didn’t want to go down this path as there was no need. But it’s sad to see some agencies making this a part of their culture due to the massive pressure of outgoing/network ask or due to their bonuses linked to the commitment. As a creative community and industry, we should believe in the power of ideas and encash them and not waste the energies finding unwanted shortcuts to make one-time monies, we should push our clients to be braver and more courageous and only that relationship will articulate in better monies,” he added.

Pointing at a very grave concern, which is much bigger than individuals being tempted to take such offers on a smaller level, Karnik says, “One must look at the Code of Conduct guidelines of these global networks. Most of the guidelines strictly prohibit taking bribes. All employees would have signed and agreed to comply with the company CoC at the time of joining. Then how come a few of them can take the liberty of violating these guidelines? Even if you happen to be a global head of the network, you are still an employee and bound by the same set of compliances. The serious problem is that agencies which are okay with cheating their clients’ trust like this are hand in glove right from the top. They have the protection of the higher-ups whose bonuses are also dependent on this easy cash. Who does one turn to in an organization then for protecting the Code of Conduct? The circle is vicious, and the rot is very real. Till the unscrupulous lot is not called out and brought out in the open, the clients are going to walk around with empty pockets and daggers in their backs, stabbed and robbed by their own bodyguards.”