• by Joe Mandese , Yesterday

The most genuine thing I can say about Bill Duggan’s legacy at the ANA is that it demonstrates how much he was “made-for-advertising.” And I mean that in the good way.

In fact, if it wasn't for Duggan, the industry might never have addressed the impact of not-so-good MFAs, much less mitigated them the way the ANA membership has since Duggan began shedding light on the shady practice.

Other shady practices, too.

On Wednesday, Duggan’s final main stage ANA act was moderating a “Media Town Hall” discussion wrapping up the ANA’s Advertising Financial Management Conference in Orlando, during which he addressed several other media-buying practices that, if not unsavory, were at the very least, not-so-transparent, including:

• The non-transparent "issue of the year," principal-based media buying.

• The blowout between the ad industry's default demand-side platform (DSP), The Trade Desk, and Publicis and others over its own non-disclosed mark-up fees.

• And of course, the massive shift toward non-transparent deals between agencies and their media suppliers, kicking back billions of dollars in rebates based on their clients' media buys.

During the town hall discussion, Duggan noted that it's the 10th anniversary of the ANA’s “infamous” Media Transparency Report, which among other things exposed how some non-disclosed “kickbacks, rebates and cost-of-doing-business."

That exploded into what was arguably the biggest rift between clients and agencies I've seen in my career covering media-buying. But it ultimately contributed to a more transparent and healthy dialogue between advertisers and their agencies.

“The primary takeaway was the contract," Duggan reminded ANA members, adding: "I still remember these words from the report, that the ‘agency says that the relationship with the client is defined by the contract.’ When I heard that I said, ‘Geez, that just sounds so cold.’ But it’s true and it led to the key recommendation of make sure you update your contract…”

As important as the initial bombshell findings of the so-called "K2 Report" were, I think a follow up analysis conducted by Kroll and published by the ANA really got to the heart of the matter by identifying two essential elements disconnecting advertisers and agencies when it comes to modern day media-buying:

• Information asymmetry

• Misaligned incentives

If you haven't read it, or even if you already have, I recommend going back and reading or re-reading it again, because it really is the crux of the media disconnect between advertisers and agencies: that they often are not on the same page, and are focused on different sets of information and different incentive models.

That was clearly articulated in my previous coverage of the town hall discussion focusing on principal media-buying, which identified the paradox between two different org cultures: Clients are cutting agency fees; and agencies offsetting that by generating new margins based on marking up the cost of the media they buy for their clients.

Need I remind you that this is how the ad business originally started? It was early ad agencies like N.W. Ayer and J. Walter Thompson that started as newspaper reps taking a 15% commission for the ads they sold to advertisers in local newspapers. Over time those agency services expanded into creative, research, strategy and a more sophisticated way of buying the right media -- planning -- but for nearly a century the 15% commission model persisted. Ultimately, it was seen as a fat margin area for big agencies making a few, expensive TV commercials and running them in millions, sometimes billions of dollars in commissionable media spending.

The ad industry ultimately replaced that with new fee structures tied to staffing costs, outputs, and sometimes even outcomes, but as noted in this week's town hall, clients have been doing away with even those, inevitably leading to the often less-than-transparent paradox of non-transparent media-buying, principal-based media-buying, etc.

"It's not new," Duggan reminded town hall participants. And that reminded me of some conversations I had with independent media-buying services in the 80s and 90s when I was surprised to learn that their clients also did not pay them fees for their services, but allowed them to mark-up the cost of media they bought for them.

Those buying services often acted like principals by cutting agency deal directly with TV and radio stations, advancing them cash to secure future "unsold" inventory that they would then effectively resell to their clients at a profitable mark-up.

They called them "time banks," but you get the idea. It was just another way of clients paying an agency for its services, albeit an indirect and less-than-transparent form.

And don't get me started about barter media deals -- sometimes called "reciprocal trade" -- in which an agency disposed of a client's own unsold goods and services and turned the liquidation into media credits used to fund their advertising buys.

That practice has been notoriously even less transparent than the ones articulated here so far, but for some reason has never gotten the light shined on it the way the ANA has focused on MFAs, principal, and other forms of non-transparent media-buying.

For what it's worth, I was once told by a knowledgeable executive at a big agency holding company that about half of all its profits came from its barter media division.

Not that there's anything wrong with it, as long as the client and the agency are both on the same page -- and the page is one that actually exists in their contract.

"You're ahead of the curve," Duggan told the advertising financial management execs in the room Wednesday, reminding them that they often are the first -- and perhaps the only -- ones in their organizations digging into these contractual details, probing less-than-transparent clauses and practices, and ideally coming up with a fair and balanced relationship for clients and agencies.

Duggan then confessed how "surprised" and even "disappointed" he was about how many of the ANA's members are still behind the curve, because they "don't pay attention" to what's going on.

And if they haven't been paying attention for the past ten years of the ANA's transparency initiatives, what will they be paying attention to now that Duggan and his ANA boss Bob Liodice are moving on?

I certainly hope their successors continue probing and publishing what's really going on, because -- and this is self-serving -- I believe publishing plays an important role in keeping good things from dying in the darkness.

Lastly, I want to thank Duggan for shining some additional light as a regular contributor to this publication.

He didn't have to do it, and only did it because he genuinely wants all sides of the ad industry -- demand-, supply-, client- and agency- -- to be informed so they can function symmetrically and with more aligned incentives.

Like I said, Duggan was made-for-advertising.

I hope advertising can make another Duggan.