Media Transparency: Prescriptions, Principles, and Processes for Marketers - Overview
Overview | Press Release | Download the full ANA and Ebiquity/Firm Decisions Report
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Overview and Executive Summary
The K2 Intelligence study, conducted on behalf of the ANA from October 2015 to May 2016, reported that numerous non-transparent business practices were found to be pervasive in a sample of the U.S. media ad-buying ecosystem. The study identified several key findings:
- K2 Intelligence found a fundamental disconnect in the advertising industry about the basic nature of the advertiser-agency relationship. In general, advertisers expressed a belief that their agencies were duty-bound to act in their best interests. They also believed that this obligation, essentially a fiduciary duty, extends beyond the stated terms in their agency contracts. While some agency executives expressed similar beliefs, others told K2 that their relationship to advertisers was solely defined by the contract between the two parties.
- Pervasive receipt of non-disclosed rebates, not returned to advertisers, in the forms of cash, free media inventory, and service agreements were found.
- Potentially problematic agency conduct was concealed by principal transactions, resulting in media agencies sometimes acting on their own account and not always in the best interests of advertisers.
- Inconsistent and questionable media management practices by advertisers were found. This included poor contract stewardship, lagging business practices, and fundamental organizational management issues.
To address these concerns, the ANA and Ebiquity/FirmDecisions came together to craft the report Media Transparency: Prescriptions, Principles, and Processes for Advertisers. The report includes a framework to help advertisers and agencies address transparency issues identified in the K2 Intelligence study, create a code of conduct to guide the client/agency relationship, and restore trust — the core of an effective and beneficial relationship.
"We outlined specific actions marketers should consider to diminish or eliminate non-transparent and non-disclosed agency activities and to ensure that their media management processes are optimized," said Bob Liodice, president and CEO of the ANA.
In addition to the recommendations, the ANA, in conjunction with its General Counsel, Reed Smith LLP, has developed a media agency Master Media Buying Services Agreement which can be used by advertisers in developing their own agency agreement. The ANA would like to thank ISBA (the Incorporated Society of British Advertisers) and its legal counsel Fieldfisher, for their consent to use the ISBA Framework Agreement For Media Buying and Planning Services as a guide for some of the provisions in the ANA template.
Specifically, the report recommends that to achieve full transparency advertisers should:
- Establish overarching media agency management principles that can be easily understood and executed. These include requiring media agencies to ensure complete transparency in all transactions with parent companies, subsidiaries, affiliates, and third parties. Agencies should err on the side of communicating everything to marketers, the report said.
- Establish primacy over the client/agency relationship, and regularly re-evaluate and upgrade internal processes and practices. The report said it is essential that advertisers have a thorough understanding of the existing client/agency relationship and know when the agency is acting as an agent on behalf of the client, or as a principal representing itself.
- Create a uniform code of conduct between the advertisers and agencies. The code of conduct, between advertiser and its AOR, would be mutually agreed to, signed by both parties, and serve as an addendum to the master service agreement.
In addition to these three key pillars, seven strategic recommendations for advertisers are advocated to reduce or eliminate the potential conflicts identified in the K2 Intelligence study. They are:
- Where the agency is acting as a principal versus an agent, the advertiser should have a disciplined and reliable process for managing conflicts of interest.
- Advertisers should ensure contracts with the media agencies include robust language to deliver full transparency.
- Advertisers should insist on robust and far-reaching audit rights that include tracking contract compliance and measuring the media value delivered.
- Advertisers must implement disciplined internal processes to deliver contracts designed to ensure strict accountability, rigorous process governance, and senior management oversight.
- When it comes to data and technology, advertisers should take ownership and exert control over the decision-making.
- Advertisers are responsible for more active stewardship of their media investments and compensating their agency partners fairly.
- A culture of trust is needed between advertisers and media agencies, through the uniform code of conduct.
To learn more, download the full report.