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Marketer body repurposes US guidelines for media agency-advertiser relationships for Australia

The Australian Association of National Advertisers (AANA) has adapted a US code of conduct for the local market to help marketers manage their media agency relationships in the wake of local and international revelations on transparency.

The new code has been adapted from the one released by the US-based marketer association, ANA, four months ago, after a damning report found “non transparent practices” were “pervasive” in the media agency sector.

AANA logo

Earlier this year the AANA came under fire for its failure to take action over marketer concerns they are being overcharged in areas such as digital media, after the move by the ANA and its UK equivalent ISBA, with one marketing consultant claiming it faced a conflict of interest because it allows media agencies to be members of the association.

However the AANA says while it consulted some members, including Foxtel, to gain insights from their experiences, media agency members were not included.

In its notes to advertisers in the new code the AANA writes that “transparency in the Australian media market is not where it should be”.

It goes on: “A significant concern is to ensure that media agencies and all parties in the transactional chain are motivated only to make recommendations on spend that deliver the best outcome for the brand owner.

“The ability to ‘follow the money’ is crucial for advertisers seeking greater transparency. Media is traditionally the single largest marketing expense for a brand owner but understanding how the rationale for allocating an advertiser’s investment has been arrived at has become more unclear. The introduction of programmatic trading desks further exacerbates the problem.”

Now the AANA has partnered with law firm Bird & Bird to provide “capability training” on drawing up a contract, while the association has also launched a localised 52-page example media contract to help marketers navigate the complex space.

The AANA says the local version has been altered to reference Australian laws, but also to include: “the concept of operating procedures, to include engagement protocols, planning processes, briefing and approval processes, performance review etc”.

It also includes references to non-cash rebates, a requirement that the agency must not make a media placement without the written approval of the client and a dispute resolution clause, “so that (except for interlocutory relief) the parties must attempt to settle any dispute in accordance with the procedure set out in the agreement”.

AANA chair, Matt Tapper, said in a statement: “The template has been written to equip advertisers with a starting point to each element of the contract negotiation. We believe that appropriately detailed contractual agreements together with capability training are the keys to achieving transparency in media buying and ensure that media buying dollars are spent with the sole objective of securing the best outcome for the brands they are promoting.”

AANA CEO Sunita Gloster

AANA CEO Sunita Gloster

Sunita Gloster, the AANA’s CEO added, in the statement: “The dealings agencies undertake with third party media and technology vendors, and the media owners themselves, are much more complex today than a few years ago so these initiatives are very timely.

“Individual brand owners, as the buyers of the services, must always take primary responsibility for carrying out their own due diligence and our role is to look to ways to help them by providing guidance and tools to do so.”

The introductory paragraph for the AANA contract states there is “no obligation” for members to use the contract template.

aana-contract-template

Australia is the only country globally where a major media agency group has admitted it runs value banks – free or bonus inventory given to media agencies by media vendors in exchange for putting a certain amount of business their way.

In March 2015 GroupM admitted its agency, Mediacom, had not only operated value banks but that it had charged four clients for advertising inventory that should have been passed on at no additional cost.

The guidance advises marketers to ask whether their agencies use value banks, and whether they “gain financially” from using them, whether they can be audited, and how it affects their pricing.

It also advises them to ask whether any other parts of the group, locally or overseas, will benefit from their ad dollars, whether they “benefit” from the ad tech platforms they use – an allusion to kickbacks from some suppliers to agencies – and whether marketers are willing to get assurances from tech vendors about the agency’s answers.

The AANA has also recruited audit firms Ebiquity and Firm Decisions, which were behind part of the US transparency report, to provide capability training for members.

In the guidance notes the AANA also highlights the dangers advertisers face if they squeeze profit margins for their agencies.

“Those advertisers who increase their demands of agencies while pressuring agency margin structures through reduced fees and extended-term negotiations should understand the impact this subsequently places on the agency’s ability to deliver quality services. This includes developing the systems and skill set to be truly agnostic about its media buy recommendations, which should also be considered in contract negotiations,” it states.

The guidelines also outline certain elements of reasonable behaviour required from clients to make the relationship run smoothly, such as timely payment of invoices, feedback structures and how limiting their non-compete contracts should be.

The information will also be made available to non-members of the AANA.

 

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