Many don’t agree,mbut Curtis Smith, Accenture’s North America Media Lead, told a MediaPost marketing conference this week that for the most part, marketers trust their media agencies. And they do so despite allegations in a recent report from the Association of National Advertisers that many agencies in the U.S. are accepting rebates and other forms of payment from media companies in exchange for volume business without disclosing the payments to clients.
Smith was part of a panel (moderated by Ciceron CEO Andrew Eklund) at the conference that discussed the ANA “Transparency Report,” and the client-agency relationship.
But Smith did acknowledge that there are strains on the relationship, particularly when an agency sells inventory to a client directly without disclosing particulars in granular detail. “Clients want full visibility on profit margins,” he said, as well as full disclosure about where inventory is coming so that they can determine whether “decisions are being made for the right reasons. If [such transactions] aren’t transparent it is hard to know.”
Stacy Vargas, manager digital marketing, PGA Tour, said the ANA report confirmed for her what she already intuitively believed was true. Her division doesn’t use an outside media agency, she said, because she believes it’s much more efficient to plan and activate digital media in-house. And it’s not just a trust issue, although that’s part of the reason, Vargas said. Also, no agency can know the intricacies of the golf profession as well as people inside of the PGA Tour organization. “An agency is another step that would slow us down” when certain decisions have to be made in near real-time, she added.
Agency Veteran David Song, now managing director at New York-based independent agency Barker, said trust is clearly an issue with some clients. He said he has always believed that the commission-based compensation model is flawed. And throughout his career, he told the conference crowd, he has experienced up close how the model has been abused.
“If you’re paid on commission you are motivated to buy more expensive” channels, he said. “It makes no sense.” In previous agency jobs, he added, “I was told again and again, ‘we’re losing money on this client, make it up in broadcast.”
For that reason alone, Song said, he was glad to see the ANA put a spotlight on some of the sketchier practices ongoing in the industry.
Smith added that the report “caused a stir. People are going back and assessing contracts.” But he stressed that not every agency is a bad actor and that “those that are clean were offended” because the report didn’t identify abusers by name, thus tarring the entire industry with the same brush.