ANA releases marketer guidelines to address transparency issues

Sarah Homewood
By Sarah Homewood | 19 July 2016

A month after the release of a damning report into media transparency, the Association of National Advertisers (ANA) and Ebiquity/FirmDecisions have released a set of guidelines aimed at marketers to help them tackle the issue head on.

This new report builds on the previously commissioned investigation done by the ANA and K2 Intelligence, which found non-transparent business practices, including cash rebates to media agencies, were pervasive in the US media ad-buying ecosystem.

Released in June, the report highlighted that there is a "fundamental disconnect" between how agencies and clients view their relationship. However, the six major agency networks were broadly dismissive of the report.

The new report titled: “Media Transparency: Prescriptions, Principles, and Processes for Marketers", recommends that in order to try and address these issues, marketers should require their agencies to disclose all potential conflicts of interest and allow thorough audits of the agency, its parent company, affiliates, and subsidiaries to ensure full transparency and contract compliance.

"The purpose of these guidelines is to provide marketers with prescriptions for addressing transparency issues specific to the K2 Intelligence study," Bob Liodice, ANA president and CEO says. "We outlined actions marketers should consider to diminish or eliminate non-transparent and non-disclosed agency activities and to ensure that their media management processes are optimised."

As part of this new report, the ANA also released a recommended contract template and urged marketers to use it as the foundation for their master services agreements with agencies.

The contract template includes provisions such as a requirement that revenue earned by the media agency and agency-related parties should solely be the fees and commissions set out in the contract, unless otherwise expressly agreed upon by the advertiser. As well as outlining that all financial and other benefits should be returned to the advertiser unless expressly agreed otherwise by the advertiser, the template stipulates.

The report also recommends that clients create a chief media officer role with this person being tasked with overseeing media strategy, partner with external agencies, and work with third-party suppliers to optimise the media mix and share best practices across teams.

The ANA believes that having this role within an organisations would diminish “considerable media management deficiencies among marketers”. It's not clear how many local clients currently have someone specifically in this role with most marketing directors handling the function. Because of scale of most Australian businesses, it's likely that only the largest advertisers would have a dedicated head of media.

See the reports key recommendation below:

  • Establish overarching agency management principles that can be easily understood and executed. These include requiring media agencies to ensure complete transparency in all transactions with parent companies, subsidiaries, affiliates, and third parties. Agencies should err on the side of communicating everything to marketers, the report said.
  • Establish primacy over the client/agency relationship, and regularly re-evaluate and upgrade internal processes and practices. The report said it is essential that marketers have a thorough understanding of the existing client/agency relationship and know when the agency is acting as an agent on behalf of the client or as a principal representing itself.
  • Create a uniform code of conduct between the advertisers and agencies. The code of conduct between advertiser and its AOR would be mutually agreed to, signed by both parties, and serve as an addendum to the master services agreement.

In the local market, both the MFA and AANA have released statements and they can be read below. When it comes to local agencies, they are unable to comment directly on it.

Sophie Madden, CEO of the MFA, said: "The MFA has worked closely with the AANA through our joint AANA MFA Media Forum Group on the issue of transparency and fairness and this continues to be one of our top priorities. This resulted in the release last year of the MFA Transparency Framework supported by the AANA – a collaborative and unique outcome that has not been achieved elsewhere.

THe AANA also issued a statement today from CEO Sunita Gloster: "We welcome any recommendations that aid and benefit transparency in media advertising. The need for transparency in media buying is not a new issue and it is one that requires ongoing attention from advertisers. Although these recommendations have come out of the US, it is clear that they are relevant globally so many businesses may find the guidance useful.”

“What is key for advertisers is to be able to make informed decisions and the ANA recommendations form part of a wider mix of guidance for advertisers to draw from. Advertisers are ultimately responsible for ensuring they are able to put in place processes that give them fair value and transparency and in talking to our members we also recognise that every advertiser’s contractual relationships are unique and commercially and competitively sensitive. We will certainly be sharing this report with our members.” 

One party locally noted however that the report is merely a set of recommendations coming from one supplier - not a mandate for US agencies and clients.

GroupM globally, which is part of WPP, is certainly likely to shake off the report. Sir Martin Sorrell, CEO of the world's largest media and communications company has openly criticised Firm Decisions and its owner Ebiquity and is currently in the midst of legal action against the company for mishandling information.  

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