• by Jared Lake , Yesterday

It’s been over a month since WPP filed to block the lawsuit that highlights how client rebates are propping up the company’s margins. 

After the next-day reporting, it’s been crickets.

That says a lot about where we are as an industry. 

The court documents in this case make it very clear that revenue from non-transparent buying practices are keeping WPP afloat. 

Consider the scale of that for a second. Then consider that WPP is hardly alone. 

The practice of arranging kickbacks with a list of preferred partners, sometimes even channeling them through shell companies, has polluted the business model for most agencies -- including many independents.

Yet we still have so many agencies and ad-tech partners touting transparency. As in, we’re transparent because we provide placement reporting. Or we’re transparent because we have dashboards. 

That’s not good enough. But it’s what transparency has come to mean. 

We don’t have a transparency problem. We have an integrity crisis. 

Integrity requires absolute accountability. Full disclosure of everyone who has a hand in the cookie jar and what they have taken. It’s shameful that only a select few are willing to hold themselves and their partners to this ultimate standard.   

Clients can begin to restore the integrity of media by taking concrete steps, starting with contracts. So the next time you engage with a new agency or media vendor, test their integrity with a few hard questions. 

What are your agency fees and margin? Beware of the low number. If you’re not spending $100 million or more in media, a low- to mid-single-digit commission rate (whether direct or as a fee basis) has to be hiding something. The agency can’t cover its costs, much less make a profit, on that fee alone. 

Do you have any preferred vendor relationships -- and do you receive any rebates or discounts from them? Ad tech is often largely an arbitrage business. It’s loaded with hidden fees and rebates that are tough to track and account for (e.g., aggregate quarterly payments to agencies months after the fact). Ad-tech companies will only divulge margins if agencies and clients explicitly require it. 

Do you require managed service media vendors to disclose their fees? Anything other than yes with proof raises a red flag -- yet a surprising percentage of agencies let this area slide. 

What are my audit rights? More than ever, clients need to see exactly where their entire media budget is going. Too many presume they can, but this has to be spelled out in the contract. The agency, along with all vendors and subcontractors, need sto keep complete records of orders and transactions. You also need the ability to audit at will, given appropriate notice (e.g., a month).  

Change has to start somewhere. Brand marketers are the obvious agents. When a few clients stop writing checks before the full chain of action and money is revealed, others will take note. That’s how a new standard emerges.