This year will justifiably be remembered as one where the subject of media transparency dominated the headlines. In fact, it is now firmly on the advertisers’ radar.
In May, the UK Advertiser Association (ISBA) issued a new ‘gold standard’ template contract for UK advertisers to consider using with their media agency partners.
In June the Association of National Advertisers (ANA) in the USA published their ground-breaking and much-anticipated study into media buying-related incentives, which exposed a wide range of market practices that distort the US media market.
This was followed in July by the recommendations from the ANA as to how their members should improve their management of media investments. This document (‘Prescriptions, Principles and Processes for Advertisers’) lays out seven actions that advertisers should take to derive the maximum value from their media spends. Ebiquity and FirmDecisions supported the ANA in drafting these recommendations.
Accompanying the recommendations was a new gold standard draft media agency template produced by Reed Smith in the US for the ANA’s members to consider using. This template put the recommendations document into legal form.
The subject of media transparency features in client meetings, agency pitches, the pages of the trade press, at conferences and private conversations. It is the dominant industry subject in 2016, but it isn’t just about rebates. The lack of transparency takes many forms, including the inability of advertisers to fully evaluate the technology being used in their brand communications and the data being applied.
In fact, media trading incentives distort the entire market, can lead to sub-optimal and inefficient planning and ultimately a loss of advertising effectiveness.
Armed with so many new assets, this is a good time for advertisers to reassert control over their media affairs, as prescribed in Ebiquity and FirmDecisions’ recommendations for the ANA’s members.
However, these don’t just apply to the US. They have universal application, even in those markets where rebates have existed for decades. It could even be said that they are even more necessary in markets which have become used to rebates; the true effects of media trading incentives have become standard in some markets to the detriment of effective media planning.
The global extent of these issues was clear from a webinar held last week by the World Federation of Advertisers (WFA), who invited their members to hear Ebiquity speak on the subject of the ANA’s media transparency initiatives.
The delegates for the webinar came from all over the world and it became abundantly clear from the audience’s reaction that the issues exposed by the ANA work reflect the global picture. A series of polls during the webinar exposed the widespread relative concern among advertisers over media transparency issues.
When asked ‘How confident are you that you are currently achieving your required level of media transparency?, 77% of respondents replied that they were either ‘not at all’ confident or ‘not very confident’. The sample results suggest that the world’s advertisers are simply not comfortable with the current state of affairs.
In a similar vein, in response to the question ‘How well do you understand the business models of media agencies and how they generate their revenues?’, 69% of respondents replied that they understand them ‘not at all well’ or ‘not very well’, so there is still a widespread lack of knowledge of how the media agency business model works.
One of the dominant themes of the ANA program was the confusion among advertisers as to different ways that media agencies now operate, sometimes as ‘agent’ (with appropriate fiduciary duties to the client) and sometimes as ‘principal’ (essentially selling media to the client).
The WFA webinar reflected the ANA’s findings. When asked ‘Do you know when your media agency is acting as Agent and when as Principal?’, 46% replied ‘no’ but a further 27% were ‘not sure’, so 73% in total were unclear.
So the issues of media transparency exist at a global level and are just as profound as the US study showed. It follows that advertisers everywhere need to take the appropriate action to manage their media, even in those markets where rebates have existed for decades.
It is the responsibility of each advertiser to manage their own affairs, and the right course will vary by advertiser and by country, but the seven actions set out in the ANA’s ‘Prescriptions, Principles and Processes’ document are a useful starting point. Advertisers should:
- Understand where their media agency is acting as Agent and where as Principal, and have the right protocols in place to manage any conflicts of interest
- Review and refresh their contracts with their media trading partners to ensure high performance and full media transparency
- Secure robust and far-reaching audit rights with comprehensive measurement and compliance requirements
- Implement strong internal governance processes which ensure accountability and contract compliance, with high-level oversight
- Take control over all data and technology being used on their behalf
- Pursue active stewardship of their media affairs, reward their media partners appropriately and have responsible payment terms, and consider appointing a Chief Media Officer
- Establish and implement a two-way Code of Conduct that delivers a clear engagement process and helps ensure mutual trust through clarity
All of these actions are defined fully in the ANA’s recommendations document here and should be considered as a package of measures to improve return-on-investment, not just transparency.
And perhaps the most important outcome of this entire process is to restore the strong bond of trust between advertisers and their media partners that is vital to effective communications, as stated by David Wheldon, the President of the WFA.
The time is now. Given how high profile the subject of media transparency is, this is the ideal opportunity for advertisers to take control of their media affairs and review the best practice guidelines set out above.
The WFA and other advertiser associations, such as the ANA and ISBA, are taking a lead in helping their members understand the issues at stake, and no doubt other local associations will follow. But ultimately each advertiser will need to decide the extent to which they need to follow that lead.
When the industry looks back on 2016, it will be seen as the year when advertisers capitalized on the opportunity to restore certainty and therefore trust to the market.
View the full WFA webinar below and to register for a forthcoming Ebiquity webinar on the ANA recommendations click here.