‘Real transparency’ from media agencies too complex and expensive for many clients, says consultant

Transparency issues can, at least initially, be tackled by allowing marketers to stop paying agencies and publishers for input and start paying for output instead, says Nathan Hodges.

Many advertisers are incapable of managing “real transparency” in their dealings with media agencies nor can they afford it, a client-agency relationship consultant has suggested.

A “crazy flip-side” to the unfolding controversy over media agency transparency that followed a landmark report in the US last week is that many clients are “perfectly happy with the way things are,” Nathan Hodges, a former Ogilvy and TBWA executive now GM of TrinityP3, told Mumbrella.

nathan hodges - GM at TrinityP3
The report from the US advertiser industry body found that “non transparent practices” such as kick-backs from media owners and reselling media at a mark-up to the client were “pervasive”.

Hodges said the implications of the report are global, later suggesting that the state of media transparency in many parts of Asia could be “in an even deeper quagmire”.

But a more transparent client-agency model would be beyond many marketers, because of the complexity of upgrading to a new way of working, and the likelihood that it would cost more to pay a media agency “fairly for what it does” and by results, Hodges said.

“For some clients [non-transparency] is okay. Because they haven’t got the budgets or the structures or the arguments inside to the board to say we’re not going to pay the media agency 1.5%, we’re going to pay them 8% to do the job properly. Some clients are just not equipped for that,” he said.

“Organisationally, some can’t master the kind of complexity and relationship that’s required to make it fair. Some are happy to bury their heads in the sand and on work on 1-2% commission.”

“A lot of clients aren’t equipped in terms of the knowledge of how this might work, and the skill sets and capabilities to go ahead and take that on. Some are, some are bringing it in-house.”

Hodges was talking primarily about the Australian context, where the media agency transparency story came to a head after the Mediacom saga in March 2015, when it emerged that staff forged campaign reports to clients and sold discounted TV ads given to them by media owners. The issue has been bubbling uncomfortably at the surface of Australia’s media scene ever since.

In answer to Mumbrella’s question about the broader implications of the transparency enquiry in the US, Hodges proposed that the issue is global, and applied to a certain type of client everywhere: one with a medium-sized budget, happy with discounted media and TV bonuses and a relationship that “feels good to them”.

There is another client cohort who are concerned about the issue, but “the problem is how to pay media agencies fairly for the job that they do,” Hodges said, adding that the issue is not new.


The role of the client is not the only unreported side of the media transparency story, Hodges said. What about the role of media owners, which give cash rebates to the media agencies, usually based on the amount spent on media, he wondered.

It should come as no surprise to anyone in the industry that the transparency issue has finally come to a head,” Hodges wrote in a recent blog post.

One solution to the problem, he said, was for marketers to stop paying agencies and publishers for input, and start paying for output.

“What about you don’t make it about what you’re buying, you make it about what you get. Once you do that, suddenly, magically, it’s a quick route to everything aligning,” he said.

The solution, he said, is “proper, motivating performance-based remuneration” for media agencies.


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.



Sign up to our free daily update to get the latest in media and marketing.