The advertising industry is not only admitting it has a problem with transparency over agency practices, such as receiving rebates from media companies and not disclosing them or passing those back to clients, but it is looking to outside help to try to solve the issue.
The Association of National Advertisers (ANA), the US advertiser trade body, has put out a call for a research agency to conduct an industry-wide media transparency study.
In its RFP (request for proposal), the ANA says it hopes to: “demystify the landscape;” understand the practices and processes of holding companies, suppliers, vendors, and media companies; assess marketers’ processes; and develop practical industry solutions in order to elevate trust and confident across the entire media-buying supply chain.
Earlier this year Business Insider took a deep dive into the media transparency issue. Despite the fact that has been a huge talking point amongst the industry this year, none of the big advertising agency holding groups have wanted to admit there is a problem.
And that’s even after Pivotal Research analyst Brian Wieser downgraded all the advertising agency holding groups he covers, citing “emerging concerns among marketers” around “misleading” payments and different forms of volume rebates in the United States.
While almost everyone in the industry knows practices such as kickbacks and rebates have been going on for years, the transparency issue was thrust into the spotlight at the ANA’s 2015 Media Leadership Conference in March this year. There, former MediaCom CEO Jon Mandel said media agency kickbacks were so widespread in the US, it was what forced him to leave the business. Most people usually thought the practice was something that only still happened overseas, and that it didn’t really affect the US any more.
At the heart of the issue is also how clients and agencies view contracts differently. An agency may say its contracts contain complete disclosure over its practices (including whether it receives rebates, or bonuses), but a client may believe that disclosure doesn’t go deep enough. Contracts can contain ambiguous wording, and clients may be unclear exactly what it is they are paying for.
Just the other day, AdAge unearthed a contract between Havas Media US and two ad tech vendors. The vendors say the contract they were asked to sign required them to pay fees to a Havas entity in Spain. But the vendors didn’t know what the entity in Spain actually did for the fees (the contract just said “planning services.”) Havas Media Group global managing director Dominique Delport told AdAge the contact “has nothing to do with rebates” and that the Spanish entity only charges for appropriate services.
The ANA hopes to receive applications from research agencies looking to study the transparency issue by July 24.
The trade body says it has “elevated media transparency to one of its top priorities” and it has already set up a task-force of senior marketing and agency executives focused on developing industry codes of conduct and improved media contracts.
Last year the ANA ran a survey of members, conducted by research agency Forrester, to poll marketers on how concerned they were about several areas of media transparency. The results showed there were growing concerns around transparency across a wide array of business practices within the media buying industry, as the chart below shows.
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