Daily Mail publisher sets aside £20m in advertising rebates

The owner of the Daily Mail set aside £20m in advertising rebates during a year when it said it "out-performed" the newspaper ad market and MailOnline's growth offset print decline.

Daily Mail publisher sets aside £20m in advertising rebates

DMGT’s annual report shows DMG Media, the consumer publishing arm, made a "provision" of £19.7m for "contract discounts and rebates" for advertisers and agencies in the 12 months to September 2017. The provision was similar to a year ago when DMGT set aside £20.9 million.

DMG Media’s advertising revenues rose 2% to £319m on an underlying basis. However, the mix of ad revenue has been shifting because of MailOnline. 

Digital advertising generated almost 39% of all DMG Media’s ad sales, compared to 34% a year earlier. Programmatic ad sales had "a strong performance in both the US and UK".

It remains unusual for media owners to disclose that they pay rebates. DMGT first made a disclosure in its 2015 accounts. The Guardian and The Sun are the only other UK newspaper publishers to mention rebates in their annual accounts.

Such payments have been an open secret in much of the media industry for years, but have come under growing scrutiny from advertisers which have been demanding more transparency from their agencies.

The DMGT annual report said: "The DMG Media segment enters into agreements with advertising agencies and certain clients, which are subject to a minimum spend and typically include a commitment to deliver rebates to the agency or client based on the level of agency spend over the contract period."

A DMGT spokesman declined to comment further but the company previously told shareholders in 2015: "These rebates can take the form of free advertising space, cash payments or both."

Several ad industry sources said the practice of paying rebates has been changing.

The chief executive of a UK media agency said: "Cash rebates have largely stopped in the last couple of years. They've been shut down by clients because of transparency."

Another media industry source said the rise of programmatic advertising means that obtaining the cheapest price by bidding successfully for an ad impression at a specific moment in time has become more important than a volume discount for some advertisers.

That's because some brands want to reach a target audience via an open exchange, which pools online ad inventory from many publishers, rather than going direct to a particular publisher.

However, some industry players have warned that advertisers’ money may be being "lost" elsewhere in the digital media supply chain before it reaches a media owner.

Agencies and other intermediaries such as buy-side and sell-side platforms and exchanges have been levying fees, which have been dubbed "tech taxes".

The Guardian found last year that it was receiving as little as 30p for every £1 it spent on its own digital ad inventory.

DMGT’s annual report was upbeat about its ad sales operation at a time when many publishers have seen Google and Facebook take market share.

"Whilst the UK newspaper advertising market continued to decline, Mail Newspapers outperformed the market," it said.

Total advertising revenues at the flagship papers rose 7% to £248m.

MailOnline’s ad revenues jumped 20% to £119m, including £36m in the US, which offset a 10% drop in print ad sales to £130m at the Daily Mail and Mail On Sunday.

If current trends continue, MailOnline’s ad revenues could overtake the Mail papers’ print titles next year.

DMGT, which also owns Metro, saw its share price slump by a quarter from £7 to £5.35 last month after it warned about a slowdown in revenue and profit in the new financial year.

The stock has recovered nearly half of that drop since then and now stands at around £6.14.

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