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Marketing Maestros

Media Rebates/Incentives Require Full Transparency

By Bill Duggan, Group EVP, ANA
Posted: Jul 16, 2012 12:00am ET

The industry practice of media companies providing rebates/incentives to agencies for referring or influencing client spending towards that media company, and then the agencies not reimbursing those funds to the client, has long been acknowledged as a common practice outside the United States. However, a recent ANA/Reed Smith survey confirms that this practice also exists in the U.S.

Awareness of the industry practice of media companies providing rebates/incentives to agencies for referring or influencing client spending towards that media company, for the U.S. and then elsewhere in the world, is 28% and 32%, respectively. By rebates/incentives we are referring to money paid or volume discounts granted by a media company to an agency that are not reimbursed to the client.

In the U.S., television and radio were identified as the media where such incentives are most likely to take place. But all media identified in the survey — magazines, newspapers, online, outdoor, radio, television, and yellow pages — is believed to have some level of rebate/incentive activity.

For business here in the U.S., survey respondents overwhelmingly believe that agencies should not keep rebate/incentive dollars. Eighty-five percent of respondents believe that agencies should not keep any rebate/incentive dollars and should remit all such dollars to clients.

The majority of respondents (63%) also believe that agencies who accept rebate/incentive dollars from the media here in the U.S. may not be objective with their media allocation recommendations.

Thirty-four percent of respondents identified having specific language in their U.S. agency contract(s) stating that any rebates/incentives resulting from their business be returned to them in whole. One percent have language specifying that rebates/incentives be returned in part. Almost 40% don’t know or are not sure if their agency contracts have such language.

Thirty percent of respondents report that they conduct periodic audits to ensure that undisclosed rebate/incentive activity is not occurring with their agency.

Implications

Marketers need to be aware of this issue of media incentives/rebates and know that the practice isn’t limited to faraway places like China and Brazil — it is happening here in the U.S.

Barring any up-front agreement to the contrary, best practices suggest that (1) the entire benefit of media incentives/ rebates belongs to the marketer, and agencies need to be completely transparent regarding any incentives/rebates received; (2) marketers should have clear language in their agency contracts specifying how whatever form of rebate made on their business will be handled or allocated; and (3) marketers should consider periodic audits to ensure that unauthorized incentives/rebate activity is not occurring.

Contractual language should also be at both the agency and holding company levels to address “global” advertising arrangements and ensure the fair share allocation of total agency incentives/rebates, and outline the process to reallocate those dollars to a specific client.

This is an issue about transparency. Personally, I am surprised that media rebates/incentive activity, unreimbursed to the client, is happening here in the U.S. Clients need to be aware of this issue and have frank conversations with their agencies.  And agencies must be transparent with their clients.

The ANA white paper on this issue is available at www.ana.net/rebates.

 

 

ICANN vs. The World

By Caitlin Nitz, Knowledge & Research Specialist
Posted: Jul 10, 2012 12:00am ET

While ICANN’s expansion of top level domains has been an extremely unpopular move, the frequency of applied-for gTLDs can at least help solve some of the world’s greatest popularity contests:

.LOVE vs .WAR (7 to 0)

.SOCCER vs .FOOTBALL (4 to 2)

.WEDDING vs .DIVORCE (3 to 0)

.COWBOYS vs .INDIANS (0 to 1)

.WINE vs .BEER (3 to 1)

.ARMY vs .NAVY (1 to 1)

.DOG vs .CAT (3 to 0)

.ADULT vs .BABY (1 to 6)

.BASKETBALL vs .BASEBALL (3 to 2)

.NOW vs .LATER (6 to 0)

.BOOK vs .TV (9 to 1)

.TIFFANY vs .CARTIER (1 to 1)

 To see how these battles unfold and to read more about the ICANN “soap opera,” check out the Party of We’s insightful conversations

ANA Multicultural Excellence Awards Insights & Call for Entries

By Bill Duggan, Group EVP, ANA
Posted: Jul 10, 2012 12:00am ET

Recently the advertising industry recognized its best via the Effie Awards and Cannes Lions.  Congratulations to all the winners!  The industry awards next up are the ANA Multicultural Excellence Awards as the call for entries is now open.

The ANA Multicultural Excellence Awards celebrate the year's preeminent multicultural advertising campaigns. The awards were created 12 years ago to help raise awareness and recognition for the outstanding work being done in the areas of African-American, Asian, Hispanic, and LGBT advertising. This year's award recipients will be announced at the ANA's 14th annual Multicultural Marketing & Diversity Conference October 28-30 in Miami.

Just two years ago the conference offered a session that provided insights and best practices for developing great multicultural advertising based on reviews of past ANA Multicultural Excellence Awards winners and input from industry marketing and creative leaders.  Some highlights follow.

New Laws … And Who Designed that Outdoor Billboard?

By Bill Duggan, Group EVP, ANA
Posted: Jul 2, 2012 12:00am ET

There’s an interesting story on cnn.com titled “July 1 brings new, sometimes quirky laws.” 

Here are a couple of odd ones:

Relevant to the marketing and advertising industry, a new local ordinance in Virginia requires electronic messages on outdoor advertising to remain in place for at least eight seconds to avoid driver distractions.  I like that new law!

Today’s electronic outdoor billboards are terrific as the image quality is very good and they provide the opportunity to rotate multiple creative units.  But I do admit, sometimes the timing of the rotations can be too fast and that shortchanges the advertiser and is a distraction to the driver. Also, it's my personal opinion that billboard design is somewhat of a lost art – there are just too many outdoor ads with either too many words or type too small.

Now if only I could get an electronic message near a road construction site on route 208 in New Jersey to change that says, “Road construction to start on or about December 23.”  Why, on earth, has that not been updated more than six months later?  That’s what you call a driver distraction!

Rebate On A Global Holiday – Good! Rebate On A Global Media Buy – Perhaps, Not So Good!

By Bill Duggan, Group EVP, ANA
Posted: Jun 27, 2012 12:00am ET

The industry practice of media companies providing rebates/incentives to agencies for referring or influencing client spending towards that media company and then not reimbursing those funds to the client, has long been acknowledged as a common practice outside the United States.

The WFA (World Federation of Advertisers) recently released results of a survey on global media rebates. WFA based in Europe, is the only global organization representing the common interests of marketers and is a “sister” association of ANA.  Key findings of that research:

According to the WFA, rebates themselves aren’t the problem, and it’s a commonly accepted way of doing business in many parts of the world. The problem arises when agencies receive rebates, but don’t properly credit clients and keep the rebates themselves.

Stay tuned as ANA is in the process of conducting our own research on media rebates in the U.S. with results expected to be released later this summer. 

 

Is This Search Really Necessary?

By Bill Duggan, Group EVP, ANA
Posted: Jun 21, 2012 12:00am ET

One of the best-read pages in Adweek has got to be ‘Accounts in Reviews’ which is “a weekly listing of the major accounts up for grabs and who’s chasing them.” The current issue lists nine accounts in review including a major retailer, airline, CPG company, sports league (NASCAR!), and a number of financial service companies.

Before even deciding to conduct a search, marketers should seriously evaluate whether or not a search is required.  That perspective is provided in the joint ANA/4A’s white paper “Guidelines for Agency Search.”

Agency searches can be expensive (both for client and agency), time consuming, highly disruptive, and can drain company resources. Sometimes issues can be addressed with the existing client/agency relationship via a remediation process, a “last chance” warning given to the agency (as the agency may not even be aware of all the issues) or by simply switching the team at the agency.

There are many reasons for conducting a search, but when a client thinks a new agency is required for performance-related issues, the client should conduct a self-examination, asking questions such as:

Clients must be honest with themselves as well as with their agencies and should be careful not to rationalize previous agency failures or put the entire fault on the other side. Ask honestly, “Is there something we could have done better/differently?”

Again, agency searches can be expensive, time consuming, highly disruptive, and a drain on company resources. So sometimes the best search is no search at all as current relationships can be optimized and current business practices improved.

In-House Agencies – Fast, Cheap, & Good!

By Bill Duggan, Group EVP, ANA
Posted: Jun 13, 2012 12:00am ET

ANA In-House Agency Day, just held at the offices of Charles Schwab in San Francisco, attracted a crowd of over fifty marketers.  When we surveyed members a few years ago, we found that 42% had an in-house agency of some type.  And speculation is that the percentage has grown further as the primary benefits of in-house agencies – speed and cost savings – are more important than ever.  But in-house agencies can also offer terrific strategic thinking and creative work as well.

A presentation from the In-House Agency Forum led off the day and was focused on how to shift an in-house agency from an order taker to a business partner.  Two tips from that session stood out to me:

Schwab’s in-house agency has 132 staffers in four locations – San Francisco, Austin, Richfield (OH), and Chicago.  More recently the in-house agency has had a steady evolution to doing more digital work and has focused on providing a “digital experience” with interactive display, video, and mobile.

Blue Shield of California’s philosophy is, “If it doesn’t sell, it isn’t creative.”  The in-house agency works hard to be a strategic partner with its clients and continuously measures its success.  Metrics include purchase consideration, the quality of the work, and satisfaction rate of internal partners.  The agency has had over thirty marketing excellence awards since 2010!

Franklin Templeton has a truly global model with teams in the U.S., Canada, Poland, and India.  Over 4000 projects are completed annually, and 500 are active in any given week. Work is done in over 20 languages—not just English, Spanish, French and German … but also Chinese, Estonian, Swedish and Turkish!

Many of us have been schooled on the ‘triangle’ throughout our careers – “fast, cheap, good … pick two.”  In-house agencies have always been fast and cheap. One participant noted, “We operate at 30% of what it would cost to go outside for the same services, saving millions per year.”  But more and more in-house agencies are now challenging the triangle theory by being good as well.  Expect to see the use of in-house agencies to grow and become even more important going forward. 

What? … errr … Excuse me?

By Bill Duggan, Group EVP, ANA
Posted: Jun 6, 2012 12:00am ET

My teenage daughters still need constant reminders that the reply, “What?” to a question or comment that they need repeated or didn’t fully hear/understand is rude and unacceptable.   

“Excuse me?” is better.  “Excuse me, Mrs. Jones?” is best.

While we continue to fight this battle at home, I am increasingly aware of similar behavior in the business world. In the last week alone (a) a job candidate responded, “What?” to a colleague not once, but twice in an interview; (b) a new staffer on my team did the same to me in a member meeting; and (c) a retail clerk answered, “What?” to an initial question I posed.

With employees becoming an increasingly important touch point between marketers and the customer, the marketing community needs to remind employees of this proper, incredibly basic protocol.  A Ritz Carlton employee would never reply, “What?” to a customer question.  But this happens every day at other businesses, particularly with in-person interaction.  For some reason, we have better manners on the phone!  It happens with the retail sales associate, waiter/waitress, fast food cashier, etc., etc.  You can accuse me of being a bit old fashion, but “What?” is a bit rude and disrespectful.

Customers often form opinions and make judgments about companies based on interactions with a single employee.  I had a very positive experience last week with USAA when making a change to my auto insurance policy.  The associate on the phone was courteous, respectful, and helpful.  I already had a very positive opinion about the company before the call and it was enhanced by my experience with the associate during the call.  Like Ritz Carlton, USAA has an emphasis on customer service. 

So spread the word to your employees and teenagers – it’s always “Excuse me?” and never “What??”

Industry Interest in Brand-Specific Commercial Ratings

By Bill Duggan, Group EVP, ANA
Posted: Jun 1, 2012 12:00am ET

It’s now June (can you believe it!) and I’m proud that I’ve kept up with one of my primary New Year’s resolutions – to blog once a week.  That’s over 20 blogs in 2012 at this point, all on the Marketing Maestros series of blogs.   

Of those 20+ blogs, none received more attention and industry reaction than my May 18 post titled, “C7? How about Brand-Specific Commercial Ratings?” That blog provided a reminder of advertiser interest in more granular commercial ratings—brand-specific commercial ratings that would help answer the question, “How many people actually had the opportunity to see my spot?” I was delighted with the personal emails and conversations in response to that blog.  

Bruce Goerlich is chief research officer at Rentrak.  His industry credentials are impressive and include being the former chairman of the board of ARF.  Bruce told me, “At Rentrak we believe in accountability.    We have over 8 million homes, and 20 million TVs providing us with second by second TV ratings. This large footprint allows us to provide our clients with Exact Commercial Ratings today, ratings that only count viewership in the seconds in which the commercial aired.  Our clients can see how their schedules, campaigns, and individual pieces of copy perform, as well as how their competitors did.”

The legendary Jon Mandel is now CEO of Precision Demand, and formerly was at Nielsen and before that ran Grey’s Mediacom.  Jon says, “What is interesting about this, is we already do that and more. We can do it on a predictive basis. Our solution is also a lot simpler than the way people are going out trying to deliver it sometime in the future. And we are delivering it successfully to clients currently, not in some pipedream.”

Finally, George Ivie is executive director of the well-respected Media Rating Council.  George says, “Nielsen's meters are being consistently improved and they are getting closer to being fit for this purpose.  They need to make some fixes; the most important fix is a new Watermarks system (primarily to combat compression issues).  These fixes need to be implemented and validated by MRC.”

Those comments from Bruce, Jon, and George are very encouraging and ANA looks forward to the industry dialogue on brand-specific commercial ratings continuing and real progress made.

P.S. – ANA supports audited measurement and encourages all companies that provide television ratings and brand-specific commercial ratings to be audited by the MRC.

Marketing to Asian Americans and Insights from the 3AF Conference

By Bill Duggan, Group EVP, ANA
Posted: May 21, 2012 12:00am ET

I just attended the 3AF (Asian American Advertising Federation) Asian Marketing Summit in Las Vegas and came away with some terrific insights.

Dramatic Growth
The Asian American population is approximately 17 million and in the past ten years grew by double-digits in forty-nine of fifty states.  The Asian population was 5.6% of the total U.S. population in 2010 and is expected to reach 9% in 2050. Asian population growth is fueled by immigration, resulting in millions of new Americans that have not yet been marketed to here.

California currently has the highest Asian population at 5.5 million followed by New York at 1.5 million.  Other top states are Texas and New Jersey.

Asians are Extremely Active Online
This theme came up continually throughout the conference—Asian Americans are more active than any other group online.  Interestingly, because Asian Americans feel under-represented in mainstream media, they are going online for relevant content. 

Importance of “Heavy Voices”
In the opening keynote of the conference, Rishad Tobaccowala declared that “we are at the crossroads of the future” as the future is going Asian, digital, and different than what it was before.  According to Rishad, most companies focus disproportionately on their heavy users – often 20% of users and 80% of volume. When a customer is happy, he smiles.  When a customer is angry, he yells. So it’s also very important that a company focus on distractors too.  It’s not just heavy users, it’s heavy users and heavy voices.

Shopping Preferences for Asian Americans
Nielsen discussed the shopping preferences of Asian Americans and offered these insights.

  1. Asian Americans spend less per trip but shop more often, with total spending above average.
  2. They are more likely to buy on deal or with coupons.
  3.  They are more likely to compare prices and shop online.
  4. They shop less in supercenters, dollar stores or convenience stores; they like Costco.
  5. Asian Americans spend more on fruits, juices, baby items, and personal care.

Ad Drivers
Interesting insights on the ad drivers for multicultural segments, again from Nielsen.

Yahoo also offered good perspective for marketing to Asian Americans.

Twenty-seven percent of Asian Americans feel that many ads targeted to them are offensive.  Marketers need to avoid the stereotypes of the nerdy Asian guy who’s unattractive to women and the butt of the joke as well as someone “fresh off the boat.”

Toyota Case Study
A highlight of the conference was a presentation from Toyota, who at the 2011 3AF conference was named “3AF Marketer of the Year.”  Toyota actively targets Hispanics (started that in the 1980s), African Americans, and Asian Americans. Toyota’s Asian American program began in 2003, behind the Sienna mini-van.  Sienna is now the number one mini-van among Asian Americans and Toyota now markets the Camry (since 2005), Corolla (since 2006) and also the Highlander, Prius, and Rav4 to Asians. Toyota actively involves multicultural insights upfront in the process for product research and general market messaging.

The Rise of Mommy Bloggers
The conference offered a panel of “mommy bloggers” who started their blogs because they felt their experiences were not being heard in more mainstream media (a point offered by others at the conference as well). The bloggers offered these insights on how companies and agencies can work with mommy bloggers:

Miscellaneous
There were about 150 attendees at the conference – a mix of media companies, agencies, and clients. Client side marketers included Brown-Forman, Coca-Cola, Kellogg, McDonald’s, State Farm, Toyota, Verizon Wireless, and Western Union.

Verizon Wireless was named 3AF’s 2012 Marketer of the Year.  Congrats!

On the second day of the conference, USA Today’s primary front page headline was, “Minorities are now a majority of births.”  How perfect! And I will quote, “More than half of all babies born last year were members of minority groups, the first time in U.S. history.  It’s a sign of how swiftly the USA is becoming a nation of younger minorities and older whites. Hispanics, blacks, Asians and other minorities in 2011 accounted for 50.4% of all births.”

 


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About This Blog

To complement our two leadership blogs and build dialogue on the seismic changes happening in marketing, we launched Marketing Maestros. Our in-house citizen journalists will talk about everything from marketing technology to accountability and everything in between. This blog is written for marketers by ANA's marketers whose insights are drawn from the voices of the client side marketing community.