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Media transparency: ANA report

Media Transparency Needed in the Ad Industry

August 12th, 2016   ||    by Todd Wasserman

Media transparency is badly needed as kickbacks and other under-the-table payment schemes are common in the industry, according to a recent report from the Association of National Advertisers (ANA). In response, the ANA has recommended that advertisers take a much closer look at their media agency partners and educate staffers about the extent of nontransparent business practices occurring in the industry.

How Bad Is It?

The ANA study, conducted by K2 Intelligence and released in June, was the result of an eight-month probe by the organization about media transparency. The report found, among other things, that it is a fairly common practice for agencies to receive cash payments based on the amount they spent on media. Those payments ranged from 1.68–20 percent of aggregate media spending. Marketers were largely unaware that these transactions were happening, according to the report.

Those payments were often disguised as service agreements for research or consulting. Ad tech vendors interviewed for the report said they also felt pressure to work with agencies affiliated with the same holding company. If they didn’t, one vendor said, then the agencies would not recommend the vendor.

Not So Black-and-White

Though to an outsider this might just seem like the way business is done, as AdvertisingAge noted, “The party line from agency groups up until now has been, ‘rebates do not exist in the US media market.'” For advertisers, kickbacks mean that their money isn’t being spent as efficiently as possible and media buyers aren’t pursuing the best possible placements but are instead placing buys based on financial gain.

The picture isn’t as black-and-white as it may appear, though. It was also noted that marketers also have had a role in the current environment. Their insistence on getting the best media deals has put pressure on buyers to swing deals. It’s not exactly clear whether marketers are, on the whole, paying more or less with these unauthorized deals. Perhaps the payments even out.

What Marketers Can Do

Whatever the case, the report will be a wake-up call to some clients who had been unaware of how the sausage got made. To such clients, the ANA offered a few words of advice to improve media transparency:

  • Take another look at all existing media agency contracts and read the fine print. If warranted, upgrade reporting and analytics, and expand audit rights in those agreements.
  • Educate employees about media buying.
  • Talk straight with your agencies and ask them to confirm that there are no conflicts of interest in their operations.
  • Check whether your contract allows you to “follow the money” by having full accountability for every dollar spent.

It’s clear many clients didn’t need such prodding. According to The Wall Street Journal, a July report from a group called Advertiser Perceptions found that 58 percent of marketers said they had planned to review their agencies within the next twelve months. That came after brands with a combined $20 billion buying power executed reviews in 2015, WSJ also noted.

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