Ad-based Preferred Wedding Vendor Lists and Kickbacks

A Message to Brides and Grooms:

When it comes to the "Preferred Lists" of vendors brides and grooms receive from wedding venues and other wedding professionals, "preferred" may not always mean what you think it does. Whether the list is printed on a sheet of paper, posted on a company's website or is a glossy brochure full of beautiful photographs, questioning the criteria upon which the "preference" is based may be information you don't realize you need to know. Should it matter? I think it will to some of you.

IMO there are basically two ways to create a Preferred List:

1. Recommendations based solely on merit. This means the referring company most likely has a very positive history with the vendor. They know the vendor is going to be on time, easy to work with, professional and most importantly, has made past mutual clients very happy. A referring company wants to continue working with this type of vendor because they help to create a wonderful experience for their mutual brides and grooms.

2. Referrals based on a fee or cost to the vendors to be included on a referral list. This could be an annual fee or a mandatory kickback for each client the vendor books based on a referral by the company that introduced them to the clients. Why is this worrisome? Because on some fee-based referral lists vendors are carefully screened for quality but on other lists they aren't.



Food for Thought: Is it worth considering that the companies on a paid list will not always be the most qualified? The companies on a paid list may range from poor to average to good or they may be the best. But unless you ask the person who hands you the list if it is a merit based list of their best and most favorite vendors they've had the pleasure of working with or if it's an advertisement bought and paid for by those who advertise in it, you won't know for sure.

Here is my issue and the main point of this post:

By definition "preferred" means to "like" one thing better over others. Here are my questions to brides and grooms:

1. Does the word "preferred" reasonably imply that preference is based upon liking a vendor based on their reputation, quality and skill level?
2. Does the word "recommended" reasonably imply that a company is being vouched for endorsed and supported because it's not just average or better than average but it's one of the best?
3. If money changing hands is a key factor in the process of "preferring" a company enough to "recommend" them to you, do you want to know?

Whichever paid scenario is used (fee based sales or kickbacks) they both mean that most likely, at least some (and possibly all) of a Catering or Site Director's favorite and most qualified vendors are not on the list because they either chose not to pay to advertise or were unable to afford to pay for the opportunity to be included. While there is an absolute value and advantage for vendors to pay an annual fee, some venues charge hundreds or even thousands of dollars to be included on the list or in the brochure putting the cost to advertise out of reach for many.

Where I Stand:
I believe every business has the right to put forward any companies they choose to refer or recommend in the manner they choose. In my opinion there is nothing wrong with companies collaborating to create a joint brochure or to pay to be on a preferred list so long as it is clearly disclosed to those receiving the list that they are advertisers and the list is an advertisement.

---

About Ad-supported Preferred Vendor Lists
Lately it seems that venues, in particular, are making a transition from merit based recommendations to referrals for which they have been compensated for. Often the facility gets a beautiful brochure for free (because it's paid for by the vendors who are featured in it). The recommended vendors (aka advertisers) are able to be part of a high quality, full color brochure they couldn't afford on their own and receive needed and very valuable exposure. On the surface it sounds like a win-win situation, and in some ways it is. That is until you realize that some of the better and best companies are excluded from the list for solely monetary reasons. You might think to yourself, "Hey, that's free enterprise, nothing wrong with that." I agree, so long as there is the afore mentioned disclosure. Without the disclosure I think such lists can be deceptive in general, and unethical if the companies listed aren't reputable.

To listen to wedding professionals talk about ad-based preferred lists (specifically the brochures provided to wedding and event venues by outside companies that specialize in creating them) my impression is that the above illustration is how the process begins.

To be Clear: I'm not saying that the companies who pay to be on a list are not worthy or qualified.
Two site directors I spoke with assured me (and I believe them) there is absolutely a qualifying or vetting process for vendors who are included or are offered the opportunity to be included on their venue preferred lists. One doesn't used a fee based referral system while the other (Clos LaChance Winery in San Martin, CA) uses both a merit based list and an ad-based brochure. By qualifying the professionals on both their list and brochure Kristin Murphy, VP of Business Units & Private Events at Clos LaChance, told me they are able to guarantee that not only have they met the companies they refer in person but each company they recommend has worked on their premises before which means they know the location, access for set up and site rules, all details that make for a more smooth wedding day experience for their clients.

While reputable venues do require the vendors they recommend to pass some type of vetting process, the problem arises when less ethical companies and venues are willing to basically sell "recommended" ad space to any vendor that is willing and able to pay a fee. This means that sometimes you can receive a list or glossy brochure that looks very professional, but that's where the professionalism begins and ends: With how the list looks. My opinion? This is your wedding day and that's not good enough.

Are Ad Based "Preferred" Lists Legal?
As renowned wedding marketing expert Andy Ebon stated in a post he wrote about what he calls "fatally flawed" ad-supported banquet publications:

“perfectly legal, but fraught with conflicts of interest and ultimately bad for the venue, the vendor, and the client.”

From my pov there are striking similarities between ad-based preferred lists and the new Federal Trade Commission guideline that passed in 2009. For the first time in 30 years the FTC saw a situation as significant enough to update their guidelines regarding "endorsements and testimonials," for bloggers. They felt the need to clarify that readers have a right to know if bloggers are receiving any type of compensation or incentive for the endorsements and reviews they write on their blogs. To quote myself from a previous blog post:

The FTC believes compensation can create a conflict of interest if a blogger gives a favorable review to a less than favorable product or company simply because they are receiving an incentive in the form of money or a freebie sample.

And...

To be clear, the FTC isn't proposing that compensation can't happen, they're simply saying that if it does happen it needs to be "conspicuously" disclosed to the blog's readers. My understanding is that the guidelines are not law but are interpretations of law. If compensation for a particular post was received but not disclosed the blogger could face legal action by the FTC.

Bacially the FTC is protecting the consumer from making incorrect assumptions about why a product or company is being endorsed. I see parallels? Do you?

You can read the my previous blog post about the new FTC Guidelines by CLICKING HERE.

Read more about Ad-supported Preferred Lists by others in the wedding industry :

Beware the "For Profit" Preferred Wedding Vendor List! by Maureen Thompson

Ebon blasts ad-supported banquet publications in ADJA presentation by Andy Ebon

---

About Hidden Fees, Kickbacks and Commissions

commission
noun: an amount of money, typically a set percentage of the value involved, paid to an agent in a commercial transaction

I have no issue with people receiving commissions. (I earned commissions for 7 of the years I worked in retail sales.) They are a standard business practice in many industries. My definition of the term "commission" is that the commission amount (whether a percentage paid to a professional or a set amount paid to a salesperson) is either fully disclosed in a contract that the client signs, or is paid for from the profit margin of the manufacturer or service provider. Bottom line, the client may or may not be aware of the commission but pays the same price for the same product or service as every other customer.

kickback
noun: informal a payment made to someone who has facilitated a transaction or appointment, esp. illicitly.

Call it what you will but be aware that many times the word kickback is substituted with a more palatable and less stigmatized synonym.

What is concerning, to more people than just myself, are the lists that require wedding professionals to agree to pay a hidden fee to be listed or referred. The reason hidden fees are problematic is because rather than take a discount on their normal fee, some vendors may instead inflate the price they quote clients to cover the amount of the kickback they have to pay to the referring company. This means the referring company makes more money, the vendor earns their usual rate and you just paid more for the same service by the same vendor than they would have charged you at a different location.

To read more on the subject of kickbacks you can click on the following links:

Kickbacks, Commissions and Dirty Wedding Secrets by Liene Stevens

CHECK THAT REFERRAL by [b]ecker's blog

Shady deals don't just happen in dark alleys... They also happen in fancy offices where the consumer allows their guard to drop because they think the company they are dealing with is too classy to do anything behind their back.


Referral Fees

Referral fees are sometimes a standard business practice that a company uses to reward other companies that send them potential clients. Referral fees are more similar to sales commissions in that the company pays the referer out of their profit margin so that every client pays the same price for the same service. On the con side, you need to know that the the person referring another company is doing so based on merit and not reward. On the pro side some vendors simply decline accepting the referral fee instead asking the incentive be applied towards their mutual client's balance, thereby gifting the discount directly to the bride and groom. Now that's classy!

---

In closing I'd like to say that with or without a vendor list your ability to locate qualified and trustworthy professionals to hire isn't as daunting as it may seem. Do your research, talk to your friends, colleagues and other brides. Read reviews, ask other professionals you have hired, and trust, their opinion about who they trust in the industry. And always make sure you have a written contract with anyone you're hiring to provide services on your wedding day.

Additional Nitty Gritty Articles:
• TMI on Facebook & Twitter - Can Professionalism Survive Social Media?
• How Much Should Your Wedding DJ Cost?
• Event Draping Safety - Flame Proof Fabrics