The Eagle recently presented an excellent series on rebates and the often bizarre and convoluted relationships between the dealer channel and the equipment manufacturer’s that sell to the printing industry.

In their series finale, The Bottom Line on Rebates, With Comments from MAN Roland one of the comments that caught my eye was the following: "In this series, we have shed light on printers who are being lured into treating rebates paid to them for making equipment and supply purchases as "income" rather than what they are – deferred discounts."

On this point, I disagree with The Eagle’s position that owners of these printing companies are being lured. I have been involved in the printing and prepress industry for more than twenty years and everyone I have known is aware of exactly what is going on. No one is naive enough to be lured into the rebate game. Most love the rebates and some, not all, use them to line their own pockets.

Dr. Joe Webb put it best when he wrote in a recent column under the heading - Whining and Dining, or Something Like That: "The truth is that everyone is entitled to make stupid management decisions. And I'm concerned that some of the blame is being placed on the wrong culprits, like a bad carpenter who blames his hammer for shoddy work. It's the managers, not the tools, that deserve criticism."

The Real Game Starts At the Ad Agency

I believe the rebate issue is just a drop in the bucket compared to another area that should be exposed. Each year, corporations pay millions of dollars to advertising agencies for work that either did not take place, or was billed at a higher rate than justified.

Sometimes it is quite simple like invoices that include ten hours of retouching at $200 per hour when it only took 30 minutes. Or projects that should have cost $25K, but are invoiced at $50K so everyone can keep their revenue model on track.

In some cases, bids are even rigged. Many of the Art Directors and Production Managers I worked with over the years were happy to disclose the final bids for me to match. I went through a period of time with one agency where my firm received every job for two years. It was not uncommon for me to submit a bid for 20% or more so the agency could hit the revenue target. Of course I never worried about going over budget because the agency would just bill another client for the project.

Many advertising agencies are not in the business of being efficient or saving their clients’ money. Some production managers at big advertising agencies do not want to use printers or prepress companies that can produce work at a lower price even when the quality is equal to the highest bidder… because it lowers their revenue structure.

Of course the most heinous of all crimes is when the magical shifting of funds must occur to cover production costs that have run over budget. When this happens, and it happens often, Nissan winds up paying for Levi’s ad campaign and Taco Bell may be asked to help out as well.