The advertising industry admits it has a big transparency problem and it's about to find out just how big of an issue it is | ||
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The Association of National Advertisers (ANA), the US advertiser trade body, has put out a call for a research agency to conduct an industry-wide media transparency study. In its RFP (request for proposal), the ANA says it hopes to: "demystify the landscape;" understand the practices and processes of holding companies, suppliers, vendors, and media companies; assess marketers' processes; and develop practical industry solutions in order to elevate trust and confident across the entire media-buying supply chain. Earlier this year Business Insider took a deep dive into the media transparency issue. Despite the fact that has been a huge talking point amongst the industry this year, none of the big advertising agency holding groups have wanted to admit there is a problem. And that's even after Pivotal Research analyst Brian Wieser downgraded all the advertising agency holding groups he covers, citing "emerging concerns among marketers" around "misleading" payments and different forms of volume rebates in the United States. While almost everyone in the industry knows practices such as kickbacks and rebates have been going on for years, the transparency issue was thrust into the spotlight at the ANA's 2015 Media Leadership Conference in March this year. There, former MediaCom CEO Jon Mandel said media agency kickbacks were so widespread in the US, it was what forced him to leave the business. Most people usually thought the practice was something that only still happened overseas, and that it didn't really affect the US any more. At the heart of the issue is also how clients and agencies view contracts differently. An agency may say its contracts contain complete disclosure over its practices (including whether it receives rebates, or bonuses), but a client may believe that disclosure doesn't go deep enough. Contracts can contain ambiguous wording, and clients may be unclear exactly what it is they are paying for. Just the other day, AdAge unearthed a contract between Havas Media US and two ad tech vendors. The vendors say the contract they were asked to sign required them to pay fees to a Havas entity in Spain. But the vendors didn't know what the entity in Spain actually did for the fees (the contract just said "planning services.") Havas Media Group global managing director Dominique Delport told AdAge the contact "has nothing to do with rebates" and that the Spanish entity only charges for appropriate services. The ANA hopes to receive applications from research agencies looking to study the transparency issue by July 24. The trade body says it has "elevated media transparency to one of its top priorities" and it has already set up a task-force of senior marketing and agency executives focused on developing industry codes of conduct and improved media contracts. Last year the ANA ran a survey of members, conducted by research agency Forrester, to poll marketers on how concerned they were about several areas of media transparency. The results showed there were growing concerns around transparency across a wide array of business practices within the media buying industry, as the chart below shows.
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The advertising industry is not only admitting it has a problem with transparency over agency practices, such as receiving rebates from media companies and not disclosing them or passing those back to clients, but it is looking to outside help to try to solve the issue.
The advertising industry admits it has a big transparency problem and it's about to find out just how big of an issue it is | ||
| | ||
The Association of National Advertisers (ANA), the US advertiser trade body, has put out a call for a research agency to conduct an industry-wide media transparency study. In its RFP (request for proposal), the ANA says it hopes to: "demystify the landscape;" understand the practices and processes of holding companies, suppliers, vendors, and media companies; assess marketers' processes; and develop practical industry solutions in order to elevate trust and confident across the entire media-buying supply chain. Earlier this year Business Insider took a deep dive into the media transparency issue. Despite the fact that has been a huge talking point amongst the industry this year, none of the big advertising agency holding groups have wanted to admit there is a problem. And that's even after Pivotal Research analyst Brian Wieser downgraded all the advertising agency holding groups he covers, citing "emerging concerns among marketers" around "misleading" payments and different forms of volume rebates in the United States. While almost everyone in the industry knows practices such as kickbacks and rebates have been going on for years, the transparency issue was thrust into the spotlight at the ANA's 2015 Media Leadership Conference in March this year. There, former MediaCom CEO Jon Mandel said media agency kickbacks were so widespread in the US, it was what forced him to leave the business. Most people usually thought the practice was something that only still happened overseas, and that it didn't really affect the US any more. At the heart of the issue is also how clients and agencies view contracts differently. An agency may say its contracts contain complete disclosure over its practices (including whether it receives rebates, or bonuses), but a client may believe that disclosure doesn't go deep enough. Contracts can contain ambiguous wording, and clients may be unclear exactly what it is they are paying for. Just the other day, AdAge unearthed a contract between Havas Media US and two ad tech vendors. The vendors say the contract they were asked to sign required them to pay fees to a Havas entity in Spain. But the vendors didn't know what the entity in Spain actually did for the fees (the contract just said "planning services.") Havas Media Group global managing director Dominique Delport told AdAge the contact "has nothing to do with rebates" and that the Spanish entity only charges for appropriate services. The ANA hopes to receive applications from research agencies looking to study the transparency issue by July 24. The trade body says it has "elevated media transparency to one of its top priorities" and it has already set up a task-force of senior marketing and agency executives focused on developing industry codes of conduct and improved media contracts. Last year the ANA ran a survey of members, conducted by research agency Forrester, to poll marketers on how concerned they were about several areas of media transparency. The results showed there were growing concerns around transparency across a wide array of business practices within the media buying industry, as the chart below shows.
Join the conversation about this story » NOW WATCH: Two models in Russia just posed with a 1,400-pound bear  | ||
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10 things you need to know in markets today | ||
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Good morning! Here are the stories you need to hear in markets today. The Eurogroup is meeting, and Greece is at the top of everyone's list. The eurozone's finance ministers gather today for one of their regular Eurogroup meetings — the last one before Greece's next debt repayment deadline and potential default on June 30. Neither Athens nor other European leaders are positive about the chances that a bailout deal will be reached. The Fed held rates where they are. The Federal Reserve unanimously held the US central bank's benchmark rate at 0.25% at the June meeting, with many analysts expecting the first post crisis increase in September. And Fed chair Janet Yellen still seems to be pointing to a hike in rates this year. The latest "dot plot" suggests that the Fed will raise rates at some point this year. The Fed's latest statement kept more or less the same language with respect to interest rate increases, while the Fed's economic outlook downgraded GDP expectations for this year and indicated a slightly higher range for the unemployment rate in 2015. UK retail sales are coming. At 9:30 a.m. London time (4:30 a.m. New York), retail sales figures for the UK in May will be released. Analysts are expecting no month-on-month increase after a strong April, which would still leave sales up 4.8% year-on-year. US telecoms giant AT&T is getting a huge fine. The FCC is planning to make AT&T pay $100 million (£63.14 million) for "misleading" customers about their unlimited data plans, it announced Wednesday. AT&T slowed down the data speeds for customers who were on the unlimited plan, but never told them they would be receiving slower-than-normal service, the FCC's investigation reportedly found. It's what's known as "throttling" a connection. Latvia says relations with Russia are at a 50-year low. Russia's nuclear "sabre-rattling" and refusal to abide by the terms of a ceasefire in Ukraine have dragged East-West relations to their lowest level since the 1962 Cuban missile crisis, Latvian Foreign Minister Edgars Rinkevics said on Thursday. EU Parliament President Martin Schulz says David Cameron's plans for EU treaty change won't succeed. Martin Schulz, speaker of the European Parliament, said on Wednesday that British Prime Minister David Cameron's demand to amend the European Union's pre-amble has no chance of success, the Guardian reported. US hedge fund Elliott is piling pressure on Samsung to raise the price of its restructuring. Activist hedge fund Elliott said on Thursday South Korea's Samsung Group should make a fair offer to Samsung C&T Corp shareholders in seeking to combine the firm with Cheil Industries. Asian markets are mixed. Hong Kong's Hang Seng is up 0.29%, while Japan's Nikkei is down 0.89%, followed by the Shanghai Composite Index, which is down 0.74%. The CEO of Lloyds is about to back ring-fencing which has been unpopular with many bankers. Lloyds Banking Group's Chief Executive, Antonio Horta-Osorio, will on Thursday call for British banks to accept new rules designed to protect their domestic retail customers from riskier parts of their operations. Join the conversation about this story » NOW WATCH: Forget the Apple Watch — here's the new watch everyone on Wall Street wants  | ||
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