Advertiser association accused of conflict of interest over media agency funding
Media agency involvement in the Australian Association of National Advertisers is preventing the organisation from taking as firm a stance on media transparency as its overseas counterparts, a senior figure in the marketing industry has claimed.
The accusation of conflict of interest within the AANA came from Trinity P3 boss Darren Woolley who told Mumbrella he has withdrawn his strategic support for the organisation after it rebuffed a number of transparency initiatives he proposed.
In other parts of the world, similar industry bodies such as the Association of National Advertisers in the US, the Incorporated Society of British Advertisers, and the Association of New Zealand Advertisers do not allow media agencies to be members.
However, the AANA allows both media agencies and media companies to be members, charging up to $37,352 a year for a membership depending on size. Nearly 20 media companies and agencies are listed as members on the association’s website, generating potential membership revenues of more than $500,000 if the fees are paid at that level.
This week, the ANA published a bombshell report researched by K2 Intelligence that suggested widespread malpractice in the US as to how media agencies handle their clients’ money. However, the AANA has had little to say on the issue locally despite a furore over media transparency kicked off by revelations involving Group M’s domestic Mediacom agency.
GroupM is an AANA member while WPP AUNZ CEO Mike Connaghan is on the AANA board. Fellow media agency groups Publicis Media and OMD are also members of the association, along with media companies including News Corp, Fairfax Media, Nine Entertainment Co., and Google.
“What is stopping the peak advertising industry bodies responding and providing leadership on these issues?”, asked Woolley, in an opinion piece written for Mumbrella.
“Is it possible that – unlike the ANA in the US who have commissioned this report and ISBA in the UK who have developed their ‘best practice media agency contract’, practical advice and leadership – local association the Australian Association of National Advertisers is possibly compromised by the fact that its membership has both advertisers and agencies amongst its financial members?*
“It is difficult to represent the interests of your members when your members have possibly conflicting interests.”
Woolley: concerned by a conflict of interest with the AANA
Woolley alleges that value banks – using inventory given to agencies either for free or at a heavily discounted rate, by media companies in return for putting a certain amount of business their way – are rife in this market and that many in the industry have deliberately ignored the phenomenon.
“Whilst the (value bank) phenomenon went by various names it soon became apparent that this was a relatively wide-spread practice. We therefore exposed this trend on our website,” wrote Woolley.
“That is more than four years ago. We shared this with advertisers who appeared to not appreciate the scope of the practice or the implications.
“We shared it with the industry bodies that represent the advertisers and the agencies. And for four years nothing was done.”
In the wake of the ANA report, the AANA’s CEO Sunita Gloster pledged to review the report but also downplayed suggestions that Australia should look to commission a similar report, arguing the industry shouldn’t “reinvent the wheel.”
Gloster: AANA reluctant to reinvent wheel.
In response to Woolley’s remarks, ANA chair Matt Tapper denied that the body had a conflict of interest in letting media agencies into the body.
“The vast majority of the board and membership base of the AANA is comprised of major advertisers,” said Tapper. “Under our constitution, we allow agencies to join but they have limited voting rights. They are invited to participate so that advertisers have a wholly-informed view of the matters under discussion.”
Tapper: Denied the body had a conflict of interest
Tapper, who is managing director for global markets for Lion beer, cider and wine, also denied the AANA had failed to take a leading role in pushing the transparency debate, citing initiatives such as the one page transparency framework it launched last year and a recent session it did with academic Mark Ritson who addressed the transparency issue in a recent presentation.
“The AANA does not duck controversial topics irrespective of whether that makes agencies or media owners feel highly uncomfortable,” said Tapper. “You just need to look to our current Marketing Deconstructed video with Mark Ritson for proof of our determination to play a leading role in informed discussion about best marketing practice, irrespective of whom that may offend.”
Woolley also acknowledged that he was speaking shortly after with the AANA and MFA this week declined a proposal from him to create “a value trust metric” which would have been run by his company Calibr8or, a business which assesses the capabilities of media agencies.
He said: “Over the past four years we have approached the AANA with a number of initiatives regarding media and media transparency and each time have been rebuffed by their media committee, made up of media agencies and advertisers.
“This last time was no different in that we were told that they agreed with all of the points we made but did not wish to proceed. This pattern is also why, after many years of supporting the AANA as a Strategic Partner, we withdrew that support as it was becoming clear that our help and advice was not valued.
“Interestingly the (US ad association) ANA, (UK association) ISBA and (New Zealand association) ANZA do not have agency members, which is why I asked the question regarding a history of avoiding the issue by the AANA.”
Tapper insisted that the AANA was focused on the revelations contained in the ANA report, which found that media rebates, credits and value bank practices were “pervasive” in the United States.
“The AANA is providing leadership on all the issues that impact advertisers. In relation to the transparency issue, we are absolutely focused on ensuring that advertisers get fair value from the media buying process. “The Board of the AANA is united about how best to tackle the issue of transparency in media buying,” said Tapper.
“It should be noted that the ANA’s preliminary recommendations to marketers (following the publication of the K2 report) address the framework that marketers should develop for contract and remuneration agreements. This is precisely the area we have been concentrating on and it is absolutely the point at which attaining transparency must be thrashed out.”
From the AANA website, Matt Tapper is correct, that the AANA Board is composed of Advertisers and Marketers. But did any of the industry initiatives we have proposed even get presented to the Board? In almost every case it was rejected by the Media Committee, the composition of which is not apparent on the website. Yet we are led to believe that it is comprised of 50% marketers and 50% agencies. Matt Tapper is that representative of your membership?
In other news, the Australian Association of National Gamekeepers is now accepting membership applications from poachers.
Fees will vary depending on how many pheasants they shoot annually, starting at below 10. Then 10 to 200. Then above 200.
A spokesman for the AANG said that the body remains committed to helping gamekeepers stop poachers.
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Just because you have a product to sell to aana, and just because it might have some benefit, doesn’t mean the aana have to buy it Darren. Or even tell you why not.
It’s called business.. Get over the fact they said no.
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Dear Not Matt Tapper, the offer was made without any commercial consideration. In fact free of charge. Simply with the desire to address a major issue facing the industry as a united industry. Even then they again said no. Cannot help those that cannot help themselves.
Darren, couldn’t agree more that we should be discussing transparency. How about we start with Calibr8or and the fact that you charge media agencies $40k a pop (annually!) to be evaluated? You then further charge clients for your expertise in apparently knowing the industry. All fine I suppose except that you do not disclose which media agencies are bank rolling you $40k and which ones refused to be bullied into it. Surely it would be a much more transparent model to disclose this particularly if there is no favouritism shown to the agencies that pay? Oh but wait if there is no favouristism then why would any agency in their right mind pay for your evaluation? Yep, let’s talk transparency and let’s start with you!
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What about the conflict of interest in Calibr8or providing such a service to the AANA?
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In response to ‘Yes lets talk transparency’ there a few misconceptions in your post that need clarification.
The Calibr8or system covers all Agencies that provide a media service not simply those who subscribe to Calibr8or.
All Agencies are assessed based on the same criteria.
When the Calibr8or system is used by TrinityP3 in determining Agencies best suited for inclusion in a pitch process a full list of Agencies is used. This includes both Agencies that subscribe to the service and those that don’t.
With regard to those Agencies that subscribe to Calibr8or it remains the Agency’s decision as to whether they disclose this information or not.
Some Agencies have readily acknowledged participation and provided their opinions on the service in interviews that can be found on the website.
I am more than happy to meet with you to answer any further questions you might have regarding the service. My contact details are on the website. Stephen Wright – stephen@calibr8or.com
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To interested Bystander.
The proposed service to the MFA and AANA was for use of the Calibr8or software platform to assess the views of Advertisers, Agencies and Media Publishers in the areas of Trust, Transparency, Value, Relationship and Performance. Calibr8or was nothing more than a facilitator. I’m not sure how this could have been a conflict of interest.
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It is ironic and amusing that the supporters of the AANA and the MFA are choosing to attack the messenger with misinformation, under the protection of Mumbrella anonymity, perhaps to distract us from the real question. Yesterday in a meeting with the Global Head of Media for a large MNC here in London, we discussed the ANA Report and he was amused as they identified these media rebate issues for six years and have spent the last four years addressing it, so he cannot see why everyone is so shocked. But like wise the Australian market has had at least four years to address the issues and yet we see little evidence of this happening beyond some advertisers moving their accounts from one media agency to the next in a succession of pitches and the initial guidelines from the AANA and the MFA. My question is regards to the cause of the lack of a comprehensive industry response. Considering the AANA is in the tiny minority of a handful of Advertiser Association global who have agencies and suppliers as financial members (the AANA being the largest of htis group), I question if this is the cause. To date there has been no discussion here on this point beyond the denial of conflict from the AANA. If it is easier to shoot the messenger then so be it. But for four years we have been raising the issue to largely deaf ears. Perhaps this is how self regulation is meant to work?
$40k a pop – are you kidding me!
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‘It remains the agency’s decision to disclose it’. So when does the agency get the chance to disclose it? When you are giving your ‘independent’ evaluation in confidential meetings that the agency isn’t privy to? Surely if you are evangelising transparency then you would see the responsibility in being upfront with the clients you are consulting as to which agencies pay? Saying the agencies can disclose it is an absolute cop out!
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To “So, not transparent then..”.
All Agencies are presented to prospective Clients based on their merits.
This is no different to the way in which it has been done for years.
The difference with Calibr8or is that there is now a detailed assessment tool to marry specific client requirements with the most appropriate candidate Agencies.
The ‘best fit’ Agencies come through this process regardless of whether they subscribe to the Calibr8or service.
If you bother to go on to the website and listen to the Vox pops of Agency CEO’s you will hear from some of them that subscription to the service in no way influences the quality of their profile. We score them how it is based on a very granular and detailed scoring system.
There are subscribing Agencies whose profiles are modest and Agencies who don’t subscribe with very strong profiles.
Whether an Agency subscribes or not does not and should not influence the Agency selection process.
If you choose to venture out from behind the curtain of anonymity I would be very happy to take you through a demonstration model of the system and how it works.
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