For decades, rumors swirled around, and some actual cases came to light in Europe. And then last March Jon Mandel, former CEO of Mediacom, spoke at the Association of National Advertisers (ANA) Media Leadership Conference.
He lobbed bombshells, mentioning “a media agency agreeing with an unnamed media vendor to an industry-standard 2% commission, but as much as 9% in volume-based incentive.” He also asked, “Have you ever wondered why fees to agencies have gone down and yet the declared profits to these agencies are up?” and noted, “They (the media agencies) are not transparent about their actions. They recommend or implement media that is off strategy or off target if it works for their financial gain.”
The ANA, shocked by the allegations, and perhaps on the advice of its legal department, did a bit of back-pedaling. It stated a week later: "Statements were made which suggested that material agency transparency issues (i.e., undisclosed rebates) were a considerable concern in the industry. While ANA cannot specifically identify the breadth and scope of such practices, we regret any impression that agencies in general are engaged in questionable activities and apologize to those who were offended. It was certainly never the intent of the ANA to make any sweeping statements of widespread agency participation in any questionable practices. ANA will continue to investigate and work to bring greater understanding to the media marketplace regarding transparency concerns."
True to its word, the ANA announced the formation of a joint task force with the 4A’s (the American Association of Advertising Agencies), hiring media auditors Ebiquity and K2 Intelligence.
K2 is no small potatoes. Its website explains its business as “providing intelligence and addressing risk across the strategic, operational and reputational landscape,” and it employs “former prosecutors, law enforcement officials, journalists and academics.”
It all became a bit much for the agencies, so last week the 4A’s launched a set of guidelines with an announcement that was sufficiently vague enough to suggest this was what we all had been waiting for: Clarity! Transparency! The truth!
Errrmm… nope. The one-sided initiative from the 4A’s was immediately denounced by the ANA as “incomplete” and “rogue.”
Apparently, the breaking point in the relationship -- at least for the agencies -- had come when the ANA suggested that the language coming from the joint task force would become the blueprint for client-agency contracts. The agencies say that this is not the role of umbrella organizations.
I have looked at the guidelines the 4A's released, and I have to side with the ANA: The guidelines are full of language that give the agencies a lot of leeway to continue doing what they allegedly have been doing, but now within a framework that makes it somewhat transparent.
And the guidelines put the onus of understanding agency finance on the marketers, with clauses like “It's critical that there is a deep understanding of the business model by both clients and agencies and the terms of the contract, particularly for opt-in services. As media becomes more complicated, so do the business models and contract arrangements.”
Most importantly though, this set of guidelines is intended for the future, and leave the past completely unaddressed -- a past that will only become clear once Ebiquity and K2 report their findings.
Who needs the primaries when you’ve got this continuing controversy!