Opinion

APAC advertisers can no longer ignore the issues of media agency transparency

The time for media agencies in Asia ignoring the warning signs from the ANA report in the US are over with the revelation that Dentsu has been overcharging clients for digital media, writes Darren Woolley.

With reports of over-charging of digital media by Dentsu in Japan with one of there most significant and longest standing clients, Toyota Motor Corporation of Japan, advertisers across the region need to reflect on their own media agency arrangements rather than to continue to ignore the issue thinking it is an isolated issue or one for the US alone.

Darren Woolley

If this can occur in a market where trust and honour are such core concepts to business practice, between two such long standing business partners, then how can any right thinking person no believe it is happening elsewhere across the region.

The relationship between the agency and their client has traditionally been one of a trusted advisor or partner, and yet increasingly the facts are that the relationship is a commercial one too where the agency has a responsibility to drive profits, seemingly at the expense of their clients best interests.toyota-dentsu

While the reports today are about the Toyota relationship in Japan, it is likely over the coming days and weeks; other DAN clients will be drawn into this situation. And when they are the advertisers and marketers will be held account for the situation by their CEOs and the Board.

To point the finger at the agency alone is to play the blame game, to admit that as a marketer you have simply place responsibility for the investment of your significant media budget in the hands of the agency without the due governance it requires.

You have trusted the agency to do the right thing with that budget and they have let you down. Yes, trust is important to the daily functioning of the relationship between agencies and their clients, but trust is earned and maintained by meeting expectations and obligations too.

The great conundrum facing marketers and advertisers is what to do. In the situation unfolding today it is likely that the long-standing relationship ill survive with some significant work needing to be done by the agency to repair the trust and honour that has been lost.AANA

In the US, following the revelation of the non-transparent kick-backs and rebates, many major advertisers immediately took their account to market which created a mediapalooza with billions of dollars in media up for pitch.

But going to market is not the solution as selecting the cheapest media agency offering available will most likely increase your chances of being overcharged elsewhere as the agency makes up their margins lost in agency fees.

Instead, marketers and advertiser need to look at their current arrangements and make sure they have the right governance, accountability and transparency built into their agency agreements. ISBA, the advertiser body in the UK has provided their members with a recommended media agency contract.

The ANA in the US has provided guidelines and recommendations on how to achieve this to their members, but there has been very little in the way of leadership on this issue from the Advertiser Bodies in the region such as the AANA who continue to maintain their silence on this issue stating it is not a significant problem.

Perhaps now it is time for us to acknowledge that there is a problem here and start to address this as an industry. The media markets of APAC are not uniform, and each has its unique practices and issues. Therefore it requires application of some of these general global principles and some customisation for individual markets and business requirements.

But this news today signals it is time for action. If the industry bodies responsible refuse to provide leadership and guidance on this issue for the region and the markets, then it is definitely up to individual markets to take the lead. Or risk being tomorrow’s headline in the next media agency transparency scandal.

Darren Woolley is the managing director of TrinityP3

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