It’s nearly a year since I went to Phoenix to watch GroupM’s global chief Irwin Gotlieb talk about the culture gap between agencies and advertisers at the ANA’s Advertising Financial Management conference.
In that time the ANA has hired K2 Intelligence and Ebiquity to investigate the industry’s business model. The agencies, via their own trade body the 4A’s responded with their own set of – woefully weak – transparency guidelines and the row over rebates and the trust gap between two sides that should be fostering a business partnership has sadly grown wider, illustrated by the current stalemate between the ANA and the 4A’s.
ID Comms recently conducted a survey into media transparency among global advertisers. We polled marketing and procurement leaders managing around $20 billion in media spend globally and found that 70 per cent of all respondents felt that the way a media agency manages rebates was the most important factor affecting the level of trust that advertisers have in media agencies.
Having recently spoken to the K2 Intelligence team, I’ve been impressed by their approach and feel that the output of their assessment has the potential to reshape the debate on both advertiser and agency sides.
But the problem for me is that the whole process is taking some time. The rebate crisis has dragged on for more than a year already and any solution is still some way off. Media, a half trillion-dollar industry is too important to languish for too long in this slack-water state.
The ANA has an ambition to help its members and promote greater transparency, which is great, but we need to get to the action phase of the debate, the moment where real positive change is possible.
The positive side of this recent focus on financial practice and rebates is that US marketers have become more realistic about what media involves and are no longer simply blindly trusting their agencies.
The scale of the attention on rebate practice has been a wake up call for some and forced them to improve their knowledge and understanding of the complexity of the media market. As a result they’ve become both more pragmatic and more realistic, while also being more confident to voice their concerns.
The way for agencies to rebuild the missing trust is to be much more open to work in transparent ways and help advertisers by simplifying the marketplace for them. Their approach – which started long before the current crisis – has perhaps been to see a commercial opportunity in creating complexity rather than simplicity.
By creating and encouraging a digital advertising ecosystem where it’s incredibly difficult for clients to follow the money, where it isn’t clear who’s really adding the value (and should get paid more as a result) and where multiple salami slices of commission and fee whittle down the working media spend, they have contributed to this unsatisfactory situation.
It’s time to say enough is enough and for marketers to work with agencies and partners who are willing to agree to more transparent terms, while in exchange be willing to reward them fairly for their efforts and successes.
As the media landscape grows ever more complex, so there are an increasing number of competitive options available to advertisers, from independent agencies through to the myriad technology companies, management consultancies and accountancy firms. None of these solutions is perfect but any ongoing lack of trust in media agencies is creating an environment where marketers will increasingly be willing to test and experiment with new solutions.
Agencies are privately wary about the many competitive threats they face. If agencies don’t want their lunch to be eaten by new rivals or for more marketers to consider in-housing key services, they have to get to grips with the trust gap. There is surely a competitive advantage for an agency to be had in taking this bold position.
Advertisers will have to play their part too, taking more control and setting a tougher framework for agencies that makes it clear what is expected, tracking their performance and rewarding compliance and performance.
Whatever the ANA reports back to its members from its rebate study – something we expect in late May – fundamental change will only happen if advertisers are brave to take collective, assertive action. That requires them to improve their own behaviors alongside any demands for improvements from their agencies.