Gloster: AANA refutes transparency 'blanket approach' claims

Arvind Hickman
By Arvind Hickman | 1 November 2016
Sunita Gloster

The Australian Association of National Advertisers (AANA) has hit back at claims it is adopting a ‘blanket approach’ to addressing media transparency and client-agency contracts.

Yesterday, media agency bosses expressed concerns that a 52-page contract template would be unworkable and undesirable to clients that have differing demands.

AANA chief executive Sunita Gloster tells AdNews the concerns are misplaced and that guidance states every contract template, which is not prescriptive, needed to meet the individual needs of advertisers (see full guidance notes intro below).

“We explicitly state in the introduction that we do not expect anyone to adopt the contract template ‘carte blanche’ or the industry to implement it as a 'blanket approach' precisely because every advertiser’s requirements are likely to differ,” Gloster says.

“The template and guidance notes provide a very detailed base on which, by asking the right questions, advertisers can build and adapt their contracts for their own needs."

In the AANA’s Master Media Planning and Buying Services Agreement Guidance Notes, it states that advertisers, as the buyers of media, need to take responsibility to ensure they have the transparency over how advertising dollars are being spent.

This follows a standard contract law principle of caveat emptor, which places the onus on buyers to ensure they are receiving value.

Gloster says the AANA makes no apologies for taking a lead on transparency and encouraging its members to ask difficult questions across complex areas, including rebates and incentive, privacy and data, fees and expenses and technology.

“AANA members asked us for guidance on contract development and capability training in media contract negotiation,” she adds.

“On this basis, the Guidance Notes are a good place to start to understand the context that these two documents were written in. The format of a long list of considerations and questions should be the focus for advertisers if they're to reduce or eliminate non-transparent and non-disclosed practices that relate to their media spend.”

Gloster says the AANA is open to collaboration with other parties, including media agencies, to ensure guidance is up to date and considers the challenges facing different parts of the media buying ecosystem.

AdNews will be dissecting the guidance notes document over the coming days to garner reaction from industry players.

To kick things off, here is an introduction to the Guidance Notes that provides context. 

The importance of greater transparency of media dealings

The AANA has acknowledged that transparency in the Australian media market is not where it should be.

A significant concern is to ensure that media agencies and all parties in the transactional chain are motivated only to make recommendations on spend that deliver the best outcome for the brand owner.

The ability to ‘follow the money’ is crucial for advertisers seeking greater transparency. Media is traditionally the single largest marketing expense for a brand owner but understanding how the rationale for allocating an advertiser’s investment has been arrived at has become more unclear.

The introduction of programmatic trading desks further exacerbates the problem.

The themes of impartiality and objectivity form part of this debate as commercial conflicts of interest are now commonplace and can lead to ineffective planning.

 It is important that advertisers know that their media partners (including all entities in the buying chain) are operating in the advertisers’ best interests at all times, especially those generating the research and data that is used to provide both recommendations and reporting.

Advertisers need to know that all media is being accurately and objectively assessed and that no media vehicle is being artificially favoured.

Whilst these themes are not the most obvious contractual issues, there is good reason to address these areas during contract negotiations and no reason why these items cannot be included in contractual undertakings.

The overarching objective is to achieve full disclosure. This includes understanding the role of opt-in agreements and the implications on audit access and data ownership.

Each advertiser should ascertain the value that may be derived by knowing exactly the breakdown of the investment the agency makes on its behalf i.e. what proportion of its investment is flowing through to the media owner and the media intermediaries, and whether this ratio varies significantly between different media types and individual media outlets. If so, why?

A key question the advertiser must address is: should it demand this breakdown from the agency partner and make disclosure an ongoing contractual obligation?

In short, advertisers need to satisfy themselves that the terms of their contractual agreements meet their overall transparency needs.

Advertisers are in the driving seat to shape the industry

Every brand owner is striving to contribute to their company’s profit goal and ideally help grow their bottom line each year.

Advertisers should respect that their agencies are no different in this respect. In striving to obtain greater transparency over media dealings, it is important for advertisers to acknowledge their part in helping their media agency to meet their legitimate business and profit targets.

“Doing more with less” has been a constant refrain for both brand owners and their agencies for some time now.

Those advertisers who increase their demands of agencies while pressuring agency margin structures through reduced fees and extended-term negotiations should understand the impact this subsequently places on the agency’s ability to deliver quality services.

This includes developing the systems and skill set to be truly agnostic about its media buy recommendations, which should also be considered in contract negotiations.

Each advertiser requires different services from their agency to complement their own marketing team so, clearly, the final contracts will necessarily vary to meet the particular requirements of that client-agency relationship.

That said, good practice dictates that the advertiser performs an appropriate amount of due diligence and executes their media contract.

As the buyer of services, the advertiser should at the very least begin the contracting process with a version of a contract template that helps deliver the required level of disclosure to achieve their desired level of transparency.

The AANA intends for the AANA Media Contract template and Guidance Notes to be a helpful starting point for advertisers in facilitating a final contract that adequately defines the parameters of value allocation in the media buying flow and reflects the values of the partnership advertisers seek with agency partners. 

AdNews welcomes all views on this topic. If you would like to contribute to this debate, please email: arvindhickman@yaffa.com.au 

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