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MFA launches ‘transparency framework’ on rebates, value banks and agency trading desks

MFAThe industry body representing Australia’s major media agencies yesterday issued a new “transparency framework” which is set to govern how they interact with clients on hot button issues such as agency rebates/commissions, so-called ‘value banks’, disclosure of margins on agency trading desks and ethics training.

The industry transparency move is endorsed by marketer body the Australian Association Of National Advertisers (AANA) and comes in the wake of this year’s misreporting and ‘value bank’ scandal involving GroupM agency Mediacom.

“This is a document that sets a standard of what clients should expect from their service providers,” Peter Horgan chairman of the MFA told Mumbrella. 

The 243 word transparency framework which has been posted on the MFA and AANA websites and is understood to have been developed after months of discussions between both groups.

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The document highlights the need for client contracts with their media agencies to be rigorous, for marketers to be across the details of how their agencies are remunerated and whether they are in fact operating as a media owner in areas such as agency trading desks.

In a statement on the MFA website around the publication of the framework the industry body, which represents most of the major media agencies who represent some $10bn of client spend in the $12bn industry said: “The MFA Transparency Framework has been developed in consultation with the AANA to provide an agreed common language and expectation for Agencies and Advertisers to use when discussing and agreeing terms of operation.”

The release of the document comes despite the MFA claiming earlier this year that there is no wider industry transparency problem and no need for tighter regulation.

In an email to AANA members, Sunita Gloster, CEO of the peak advertiser body said: “One of the challenges our industry has faced this year, both globally and locally, is in the area of  transparency by media agencies in relation to value-extraction and the resulting impact this has had on trust within our industry…

“The AANA has endorsed the MFA Transparency Framework as a means to facilitate improved knowledge and understanding between advertisers and agencies in relation to contract discussions.

“This framework is the first of a series of initiatives that will be developed to enable and encourage advertisers and agencies to reach a better understanding of the issues.”

Nic Christensen 

Update 11.30am after publication of this story the MFA issued the following statement:

“Part of the MFA’s role is to educate, inform and establish guidelines for our members on issues impacting our industry.

“The MFA takes this responsibility seriously and has developed a Transparency Framework, in conjunction with the AANA.

“We believe this Transparency Framework will greatly assist our members and their clients when discussing terms of operating.

“This Framework is the first of a series of initiatives that are underway to improve Agencies and Advertisers knowledge and understanding in the areas identified.”

Full MFA transparency framework:

The MFA Transparency Framework for Agencies and Advertisers

Endorsed by the AANA

Rebates

• The Agency or the Agency Holding Company discloses any rebates that it receives in relation to their Australian business tied to a client’s media spend (volume or share), in accordance with the clients’ contract. Rebates are defined as compensation (cash or value) awarded to media agencies by media owners for placing media buys with them.

Agency Commissions

• Where media owners extend Agency commissions to the Agency or the Agency Holding Company they are rebated directly to clients or retained in lieu of service in accordance with the clients’ contract.

Value Banks

• Where value banks exist they are used at the discretion of the Agency or the Agency Holding Company and in accordance with the clients’ contract. Value banks are defined as space, time, impressions, awarded free of charge by media owners to agencies as a reward for volume commitments.

Agency Trading Desks

• Agency trading desks operate in either a disclosed or undisclosed manner. Where clients’ elect to opt-in to the undisclosed model this is via a client contract.

Ethics training

• Agency staff members are required to undertake training on the Agency’s ethics/anti-fraud corporate protocols at induction and at least every 24 months.

The MFA Transparency Framework has been developed in consultation with the AANA to provide an agreed common language and expectation for Agencies and Advertisers to use when discussing and agreeing terms of operation.

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