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accusation of conflict of interest within the AANA came from Trinity P3 boss Darren Woolley who told Mumbrella he has withdrawn his strategic support for the organisation after it rebuffed a number of transparency initiatives he proposed.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.

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.”

Matt Tapper

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.”


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