Last year, the Department of Justice started an investigation into production practices at agencies that implicated all major holding companies. This was apparently driven by suspicions that Uncle Sam’s wallet had been raided unfairly by the agencies.
The Association of National Advertisers started its own investigation similar
to its media transparency investigation published in 2016.
As a result, agency holding companies are feeling the pinch of clients who have already, or who are in the process of, renegotiating their media contracts.
One of most vocal proponents of the transparency clean-ups — especially in digital media — has been Marc Pritchard, chief brand officer of P&G. He also serves as ANA chairman, so he is wearing two powerful hats that have helped to get the industry moving at long last.
P&G and Pritchard have not only made noise about the need for change, they have actively changed the way P&G invests in digital. In its last earnings call, P&G CFO Jon Moeller said “almost all” of P&G’s $100+ million of cuts in advertising spend had occurred in digital.
“What it reflected was a choice to cut spending from a digital standpoint where it was ineffective, where either we were serving bots as opposed to human beings or where the placement of ads was not facilitating the equity of our brands,” he told The Wall Street Journal.
P&G CEO David Taylor added: “We got some data that said either it was in a bad place or it was not effective. And we shut it down and said ‘We’re not going to follow a formula of how much you spend or share of voice. We want every dollar to add value for the consumer or add value for our stakeholders.’ ”
It was quite telling that another ANA investigation into digital placement practices earlier this year was severely hampered by the fact that most of the ANA’s members found their contracts with their (digital) media agencies contained language expressly blocking access to the very data that would shed light on the practices being investigated. I guess marketers just sign their agency ToS just as easily as the ones we sign daily when we buy apps, get a new phone, order from Alexa, etc.
And now the ANA has completed its investigation into allegations of bid-rigging and shady commercial practices in agency advertising and content production (the full report can be downloaded here.
Production cost and process management is important at a time when the volume of content that marketers produce across all platforms is ever-increasing. The findings indicate that marketers must professionalize the way they manage production contracts and bids — they can’t just leave it to the brand manager to review and approve a production cost proposal.
The findings help marketers and marketing procurement professionals by shedding light on the kinds of practices that are out there. In exposing these, advertisers can now follow the same path as they have done with media: Time for a contract clean-up.
P&G: Your move!