Brands need ‘chief media officers’ to ensure media agency transparency says part two of ANA report
Media agencies should be forced to declare all “conflicts of interest” and allow clients “thorough audits”, according to the second part of US advertiser association ANA’s controversial report into media agency rebates and kick backs.
Part two of the report, authored by auditors Ebiquity and its subsidiary Firm Decisions, sets out a series of recommendations for media agencies and marketers to follow, after the first part of the report released last month found “non transparent practices” are “pervasive” across the United States.
Among recommendations are for major brands to create a “chief media officer” position to manage the relationship with media agencies for advertisers, and that media agencies be forced disclose all potential conflicts of interest and allow thorough audits of not only the agency but its parent company, affiliates, and subsidiaries to reassure their clients of full transparency and contract compliance.
“The purpose of these guidelines is to provide marketers with prescriptions for addressing transparency issues specific to the K2 Intelligence study,” said Bob Liodice, ANA president and CEO.
Liodice: the report aims to give advice on achieving transparency.
“We outlined actions marketers should consider to diminish or eliminate non-transparent and non-disclosed agency activities and to ensure that their media management processes are optimised.”
“We’re at a turning point in the U.S. advertising industry,” said Michael Karg, Group CEO, Ebiquity. “With these recommendations, advertisers have the opportunity to pave the way towards greater transparency while laying a strong foundation to manage future complexity.”
The release of the second part of the ANA report will likely further raise pressure on the Australian advertiser association AANA to act and update the one page transparency framework it released in conjunction with the media agency industry body Media Federation of Australia (MFA) last year.
The new ANA/Firm Decisions framework goes much further than the Australian regime with recommendations urging marketers to:
- Establish new agency management principles that require media agencies to ensure complete transparency in all transactions with parent companies, subsidiaries, affiliates, and third parties. Agencies should err on the side of communicating everything to marketers, the report said.
- Establish “primacy” over the client/agency relationship. The report argued marketers must have a thorough understanding of the existing client/agency relationship and know when the agency is acting as an agent on behalf of the client or as a principal representing itself.
- Create a uniform code of conduct between the advertisers and agencies. The code of conduct between advertiser and its agency of record would be mutually agreed to, signed by both parties, and provide a framework in the event of conflict between the parties.
- Where the agency is acting as a principal versus an agent, the advertiser should have a disciplined and reliable process for managing this conflict of interest.
- Advertisers should insist on thorough and far-reaching audit rights that include tracking contract compliance and measuring the media value delivered.
- Marketers must implement disciplined internal processes to deliver contracts designed to ensure strict accountability, rigorous process governance, and senior management oversight.
In Australia media rebates have been an ongoing hot topic following the 2015 revelation that GroupM operated so-called “value banks”, which generally refers to using inventory given to agencies either for free, or at a heavily discounted rate, by media companies, and that its agency Mediacom had charged four clients for advertising inventory that should have been passed on at no additional cost.
In the wake of the explosive ANA report, which found non transparent practices to be “pervasive” in the US, the heads of all of GroupM’s major rivals Dentsu Aegis, IPG Mediabrands, Omnicom and Publicis Media have all refused to comment on whether the operate similar “value bank” practices.
Marketing consultant Darren Woolley has also come out publicly questioning the AANA for what he described as a lack of leadership on the issue of transparency and questioning whether it has a conflict of interest in allowing media agencies to be members of the marketer association.
Woolley has questioned a “lack of leadership” on transparency
At the time of publishing, the AANA had not responded to requests for comment on this newest report but has previously said it will review the US report, but was not inclined to conduct a similar investigation of media rebates in this market.
