Is Advertising's Dirty Secret Out Of The Bag?

Do the huge media agencies have a dirty secret they're trying to hide -- and if so, will it be outed by an investigation by the Association of National Advertisers (ANA)? The body that represents advertisers in America started an enquiry into media agency practices this week, shortly before something else caught my eye. First Omnicom revealed a 1% decline in revenue for the latest quarter and then Publicis Groupe revealed that revenue was lower than expected and revised its forecast for annual growth down from 2.5% to 1% for the current year.

Could it be that the remnants of a broken engagement, doubtless currency fluctuations -- which never seem to be thanked in good figures -- could be part of the problem too? Could the reason be related to issue the ANA is looking into?

It just seems odd that in the same week as the IAB and AA/Warc have published figures showing huge growth in digital marketing -- particularly mobile -- Publicis would be out there revising down growth figures, saying that clients are spending less. Doesn’t it?

The murky waters ANA will be bravely stepping into have long needed investigating. Rebates have always been a contentious issue. On the face of it, a discount for bulk buying makes perfect sense, and that is why so many brands consolidate their global media spend in to a single agency. Economies of scale means media rates come tumbling. However, the question on everyone’s lips is whether they are tumbling by more than agencies are admitting. Are rebates being acknowledged and passed back to advertisers or are they being pocketed by the agency giants? Those working within the industry have assured me that not all media agencies will like the outcome when this thorny issue is investigated properly.

There’s also another side to the rebate issue. There has long been a suspicion that agencies are prioritising the publishers which give the best rebates and that signing volume-based deals can lead to the agency’s interests being prioritised over advertisers. There was potentially the case in the UK recently, when Omnicom had a very public falling out with Channel 5 (now owned by Viacom), which led to the agency’s brands not being able to advertising alongside the channel’s shows. It meant several brands were unable to be associated with the station’s reality tv hit, Big Brother.

Only Channel 5 went public with a reason for the shift to ITV. In a letter to affected advertisers, it suggested that brands should question Omnicom’s motives in switching spend to establish if it their interests or an agency chasing a rebate were the true answer.

So we already have a row rumbling away between media agencies and their clients and we have not even had to mention ad fraud, viewability or data.

If the media agencies have been up front and sent rebates back to advertisers or have shared them in a transparent way, then all will be well and good. However, if that is the case, it would seem an ANA investigation would not have needed to have been called.

At the very least there is a suspicion that media buying might have a dirty secret -- a strong suspicion.

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