The Association of National Advertisers in the US has released the second part of its report into media agency rebates and others matters which says – as various consultants have been telling advertisers for years – that they ought to look at their contracts more carefully.
The first bit of the investigation was carried out by K2, corporate investigators, who outlined various practices the ANA disapproved of but without naming names.
This bit is by Firm Decisions, now owned by media consultancy Ebiquity, which sends accountants into agencies and advertisers to try to find out what’s been going on. The report is called Media Transparency: Prescriptions, Principles and Processes for Marketers.
It recommends, among other things, that advertisers appoint a chief media officer to oversee such dealings (C-suites are becoming a bit crowded these days but this seems fair enough) and recommends a standard contract, much like the one that ISBA has recommended in the UK, that prevents media agencies receiving income from media owners without client agreement.
This isn’t quite as straightforward as it seems as much of this ‘income’ is in the form of free time or space which the agency can sell on. Much of this is done via agency-owned barter companies. It actually suits media owners to shift stuff they can’t sell in this way because they can maintain they’re holding their rate card prices or something close to them.
Ebiquity CEO Michael Karg says: “Advertisers are now experiencing a unique environment where demands for financial accountability and ROI are increasingly high, while transparency into media spending is difficult to achieve. We’re at a turning point in the US advertising industry. With these recommendations, advertisers have the opportunity to pave the way towards greater transparency while laying a strong foundation to manage future complexity.”
Will anything change in the US and elsewhere? Media consultants will do even better as the world’s big advertisers realise they’ve been left behind by the clever boys in big media agencies. But the world’s big media buyers – WPP’s GroupM, Omnicom, Publicis Groupe and Dentsu Aegis – are now so big that they’re the reality for media owners. If you want access to all this stuff you’ve really nowhere else to go if you’re a multinational or global advertiser.
And if, like Volkswagen, you’ve just moved your £2bn global media account from GroupM’s MediaCom to Omnicom’s PHD through a ‘blind’ e-auction – which means that everyone, apart from MediaCom, was guessing prices, you should expect the media agency to make its money somewhere – maybe somewhere you don’t know about. The profit motive is hardly unknown in Wolfsburg.
The simple answer is to pay media agencies bigger fees or more commission. In a procurement driven world that isn’t very likely to happen.