Bill Bruno, CEO of Ebiquity, North America, addresses three potential misconceptions about the ANA initiative and restates the actions that marketers need to take to achieve transparency across all their media activities.
2016 was the year in which debate about media transparency moved out of the shadows and into the mainstream. First came the study for the U.S. Association of National Advertisers (ANA) from K2 Intelligence. This was followed by the ANA’s recommendations for members – the report written by Ebiquity and FirmDecisions titled ‘Prescriptions, Principles, and Processes’ (more details here) – together with a new, model, media agency template contract (see here).
The process by which the ANA’s members adopt these recommendations is still just beginning. Overall, advertisers seem to have considered the recommendations to be well balanced. What’s more, they highlighted advertisers’ own responsibility for managing their media agency partners moving forward, rather than relying on agencies to do this job for them.
It’s important for advertisers to address the wider issues associated with transparency to improve the return on their media dollars.
However, there was so much attention paid to the issue – in the media and in conversations between advertisers, their agencies, and their advisors – that, with some justification, many found it difficult when the term ‘transparency’ was brought up in conversation. This is unfortunate, because it’s important for advertisers to address the wider issues associated with transparency to improve the return on their media dollars: to become better clients and more effective advertisers.
‘The ANA review was all about media rebates’
While the reason for the market review was undoubtedly the contradictory viewpoints regarding the existence and extent of rebates in the US media market, both the K2 Intelligence study and the subsequent recommendations go much further and deeper.
The K2 Intelligence study clearly demonstrates that there are numerous media trading incentives in the market. However, one of the most important points in the entire study is the broader definition of media transparency (section 2.2.1). Essentially, advertisers need full oversight of all the factors that help them make well-informed media decisions.
This can take many forms. It includes access to the right research and data, the certainty that media plans are not compromised by conflicts of interest, and the best possible reporting on the effectiveness and efficiency of media performance. All of these can be adversely influenced by media trading incentives. And it’s impossible to measure the effectiveness of all marketing investments without full transparency into how budgets are allocated along the full length of the adtech and martech supply chain.
While the study was not just about rebates, it’s also clear that the word ‘rebates’ also covers a wide range of media trading incentives, including free media inventory. Globally, there has been a marked move away from cash rebates to other forms of incentive, and free or heavily discounted media space is in the ascendant. Media agencies’ practices are evolving to try to ensure that certain rebates can remain undisclosed to advertisers (and therefore not returned to them). In turn this provides greater flexibility and higher margin opportunities for the buying entities. So, the use of ‘rebates’ as a generic term can also lead to an understatement of the wide range of trading mechanisms in the market, many of which are described in the K2 Intelligence study and which advertisers should know about.
Lack of transparency is also fundamentally a data issue, as demonstrated by the difficulties experienced by both Dentsu (see this Financial Times article) and Facebook in 2016. For Dentsu, lack of transparency over trading led to hundreds of suspected cases of overcharging more than 100 advertisers, while Facebook was forced to admit it had overestimated average viewing time of video content by as much as 80 percent, over two years.
As the data-rich customer journey continues to increase in complexity, advertisers need to have confidence in and ownership of the data which their marketing activity generates. If they can’t be certain about the accuracy of the data, and if they don’t have the freedom to interrogate it using the technology platform of their choice, they will be unable to properly understand the impact and effectiveness of their media choices. This is the reason that data is increasingly viewed as the true currency of the advertising industry.
‘Transparency is only a US issue’
Since the release of the study and recommendations, there has been a tendency outside of the US to understate the relevance of the ANA exercise to other countries. This is partly because media trading incentives have been more commonly discussed and known for many years in other markets.
This is also because of the misconception that the review was only about rebates. The reality is that the ANA’s recommendations for advertisers are relevant right around the world. They describe the steps advertisers should take to take control of media governance, improve accountability, and achieve transparency. These principles are universal, and advertisers need to focus on internal housekeeping to ensure that they are properly protected.
Some in the industry suggest that the historic presence of rebates has led to tighter and more up-to-date contracts and audit rights in other markets, although it is true to say that those markets still lag best practice as described in the ANA’s guidelines. This is well demonstrated by recent data from FirmDecisions showing that contracts are frequently incomplete or unsigned right across the world.
Fundamental issues such as the advertisers’ free choice of auditor and audit scope also occur throughout the world. The new media agency template contracts from ISBA in the UK and the ANA go beyond former standards in helping advertisers achieve the accountability and transparency they need, and other countries should consider adopting similar standards.
‘The ANA review has harmed client/agency relationships’
There has been significant coverage of the differences between the approach taken by the ANA and the transparency initiative conducted by the Association of Advertising Agencies (4A’s) in the US. As widely documented, the ANA and 4A’s had diverging views on the contents of a mutual media transparency protocol. The 4A’s issued a statement that suggested that the ANA recommendations document was at odds with the agencies’ own experiences with clients, but any individual client/agency conversations are self-evidently between the two contracting parties.
It is not surprising that the agencies’ experience of talking to clients varies from the ANA’s new recommendations and draft media agency template. The purpose of the ANA review was to establish the facts as an essential basis for normalizing and improving relationships between advertisers and their media agency partners.
So, the K2 Intelligence study was not intended to be ‘anti-agency,’ but rather was designed to help provide the foundations for an open dialogue. This is a result that should benefit all parties, and is in the interests of the industry as a whole.
The recommendations produced by Ebiquity and FirmDecisions aim to provide the ANA’s members with a best-practice guide to how they should manage their media investments. The emphasis in the document is on the advertisers’ responsibilities, and underscores the need to have clear terms of engagement with agencies via a mutually agreed contract and a Code of Conduct. More details can be found here.
Moving forward, advertisers now have the opportunity and the blueprint to build better and more effective campaigns with clear measurement, governance, and accountability for all parties involved.
Ultimately it is important to remember that the K2 Intelligence study and the Ebiquity and FirmDecisions recommendations were designed to reveal facts and to provide a way forward in order for the ANA’s members to improve their media management at a time when it is sorely needed, given the scale and speed of industry change.
The aim is to create more stable, clearer relationships. Such partnerships have always been at the heart of good advertising.
However, now that the industry dust has settled, it will be for each advertiser to decide how to take advantage of the ANA’s initiative for its own purposes. The outcome should be that more honest and frank discussions can take place between clients and their media agency partners, supported by clearer rules of engagement. They will be enshrined in better, more up-to-date contracts that are more suitable for today’s media market.
The aim is to create more stable, clearer relationships. Such partnerships have always been at the heart of good advertising. They are necessary for the industry to address, collectively, the new challenges which face all parties in the advertising ecosystem, such as ad fraud and ad blocking.
Perhaps most importantly, in moving toward a better industry, data is the new currency. If you own the data, you own the industry and thus your own destiny as an advertiser.
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