Commentary

Media Trading Transparency: Where There's Smoke...

In March 2015, former Mediacom USA CEO Jon Mandel dropped a bomb at the Association of National Advertisers (ANA) conference, stating that media agencies and their holding companies were significantly involved in what, at best, could be described as “questionable” trading practices across all media.

As a result, the ANA commissioned K2, forensic investigators, and Ebiquity, one of the leading media auditors, to investigate. The report that the ANA released was, depending on whether you are an advertiser or an agency representative, either a seismic event that exposed many of the unsavory things long rumored — or it was a toothless report full of unfounded and anonymous falsehoods.

It now seems the U.K. has its own Jon Mandel. Scott Moorhead, former head of digital trading at Havas Media, dropped a truth bomb last week, stating that — surprise! — agencies make tons of money on all kinds of deals that favor their income, but aren’t necessarily in the interest of their clients.

advertisement

advertisement

The industry response was immediate and predictable. The ISBA, the U.K. counterpart of the ANA, said Moorhead’s statements were “significant” and call “for scale change in the media industry.” The agencies said Moorhead’s allegations were only made for his own benefit, since  he had just launched himself as a consultant to help advertisers with agency trust issues.

ISBA has been on the agencies’ case for a long time. It published their recommended contract template for its advertiser-members at the beginning of this year, well before Moorhead’s revelations. And in an article from a good few weeks ago, ISBA’s Director of Media and Advertising Mark Finney stated that the only way the gaping trust gap will ever be addressed is by having an honest dialogue and open debate about how agencies and advertisers want to trade and treat each other.

In my simplistic vision, both sides must come to terms with the current state of the media industry, and must be willing to compromise. It’s undoubtedly true that advertisers have cut back on the fees they pay agencies for their services. There is a chicken-and-egg question here: Has this happened because agencies seem to be making large sums of money? Or are agencies being forced to find new sources of income, because advertisers have been cutting back?

It’s also undoubtedly true that digital advertising specifically has created a very large source of opportunistic income through mark-ups and fees, as well as an enormous pool of straightforward waste and loss of advertising impact through fraud that simply has not been addressed adequately to date.

So if we can accept these two issues as facts, then we have, I believe, a basis for conversation. In a world where more and more agencies are paid for the performance of the advertising they create and place, it would be in agencies’ interest to address the murkiness of digital advertising. And in a world where advertisers want openness, fairness and trust with the agencies that manage their budgets, advertisers must not only call “foul” but must also be willing to talk about fair payment for work delivered.

If 2016 has been the year of naming the issues, then perhaps 2017 can be the year of building a new trust. Call it The New Deal? Who steps up first?

4 comments about "Media Trading Transparency: Where There's Smoke...".
Check to receive email when comments are posted.
  1. Paula Lynn from Who Else Unlimited, November 28, 2016 at 3:43 p.m.

    Fraud, waste and theft is nothing new in WWA as in any other business, just sometimes easier to hide. Falsifying affidavits with cut, paste and wite-out was one way back in the day (first hand knowledge). Now, the joke is stoked by layers of complications no one understands. Technology has not made life easier at every turn.

  2. Ed Papazian from Media Dynamics Inc, November 28, 2016 at 4:24 p.m.

    I suspect that the largest number of cases where agencies have padded their incomes in ways that their clients claim they didn't understand are in digital ----not traditional media. Also, in the circumstances, described in this article---Scott Moorehead---we must be careful to evaluate the "whistle blower's" motives. This does not mean that advertisers shouldn't conduct whatever audits that they deem necessary of their agency"s media performance. They should. But why not include audits of their own performance in this area---the kinds of direction they give, the insistence on "must buys" that are known as such by media sellers, the lack of interest by marketing and top management in media, etc.? That way a more complete and fairer picture may emerge.

  3. Nick Buchet from Yoostar, November 28, 2016 at 4:57 p.m.

    Thank you for a well informed article and it's important that these debates continue. It seems that we have yet to clearly hear  what clients think? Why are the world's top advertisers hiding from this debate? Some have tried and failed to build their own solutions. Which clients are prepared to stand up and discuss this matter in public further? Can someone give us a reason. The weight of evidence is clearly pointing to the fact that agencies are 'at it'. But does anyone really care. 

  4. Guido Juliano from Appnext, December 4, 2016 at 6:38 a.m.

    Thank you for the article, very informative. I'd like to raise a point were direct advertisers (i.e the developers themselves) are getting on top of these issues much faster these days because they grew and became smarter. Understanding exactly what happens in the Digital sphere (from IMP to Click to install) every step is complicated. Luckily, the attribution and tracking compamies are getting more involved which in turn brings more clarity.  

Next story loading loading..