Transparency: Action is louder than words

Stephen Wright, Programmatic Media
By Stephen Wright, Programmatic Media | 6 April 2017
Stephen Wright

Transparency has already earmarked itself as the issue to dominate in 2017, the debate that was rocketed into headlines by Marc Pritchard of P&G in late January seems to escalate each week.

Discussion on transparency and disclosure are focused on the area of programmatic where in Marc’s words the practices of the supply chain to advertisers have been ‘murky at best and fraudulent at worst’

In managing this supply chain on behalf of advertisers, agencies have provided very limited transparency and disclosure.

There are two clear losers from this lack of transparency and two clear winners.

The losers

  1. Advertisers lose by paying excessive charges for advertising inventory.
  2. Media vendors lose because the share of advertiser revenue they receive is eaten into by middlemen in the supply chain and media agencies. They may get only 40% (or less) of the sum paid by the Advertiser.

The winners

  1. Media Agencies because without having to disclose margins many have been overcharging and making a handsome profit in the area of programmatic. 
  2. Middlemen in the supply chain who haven’t needed to fully justify their participation and retained their place by kicking back commissions to agencies or entering into partnership with them.

Understandably advertisers and media vendors are keen for transparency to be delivered, but since the issue emerged last year agencies have been reluctant to engage on the issue and remarkably silent in the months following Marc Pritchard’s statements in January.

Some multinationals have even suggested that no such problem exists.

Most have been hoping the whole matter will just go away but it is now clear that the ANA and AANA, who represent advertisers in the US and Australia, will ensure it does not. This was driven home locally by a recent AANA event focusing solely on the issue.

So finally after an agonisingly long wait, late last week the first of the multinationals finally poked their head out from the safety of the trenches.

Henry Tajer, the home grown global CEO of IPG Mediabrands has called on his media agency colleagues to come together and get serious about transparency.

Congratulations Henry, an excellent start.

It will be interesting to see how readily this invitation is embraced and the willingness of the other multinational media agencies to come to the party.

The implication in Henry’s message is ‘come on guys, I’m not going to do this on my own’.

In theory the agencies here in Australia already have an agreed position. The media agency representative body the MFA issued a transparency framework in November 2015, but this is non binding for its members and falls a long, long way short of the AANA guidelines on disclosure.

The AANA guidelines to full disclosure and transparency are comprehensive and clear. They provide agencies nowhere to hide.
There has yet to be a multinational agency openly declare they will meet these guidelines in full. So currently it is only a small handful of independent agencies offering true transparency.

Some agencies, such as Bohemia last week, are working on producing their own transparency charter. That’s admirable but to ensure clarity in the area of transparency there should be a single standard and the advertisers through the AANA should be the ones to set that standard.

Where an agency has a transparency charter or position they should indicate where it complies or fails to complies with this standard.

Otherwise we are left with a multitude of different charters that advertisers will need to dissect and interpret.

Every agency currently has a position on transparency and in some cases these are carefully worded to offer little transparency.

Agencies are now being forced to the table in this debate but it would be optimistic to assume that a solution is close at hand.

Transparency and full disclosure aren’t actually that hard to deliver.

It’s just making available numbers, agreements and margins of which the agencies have full knowledge.

The sticking point is the ramifications of this disclosure.

It’s a lose, lose situation for the agencies.

Some advertisers will be less than pleased when they see how much they have been charged relative to the price paid to the media vendor. The recent AANA event highlighted that some advertisers believe the percentage of the sum paid by them that goes to the media vendor was 80% when the real figure would be more like 40%.

And then there is the simple fact that in the vast majority of cases disclosure will require agencies and middlemen with whom they operate to take lower margins.

In recent years the digital and programmatic areas have been the ‘cash cow’ for most agency groups and transparency would necessitate a significant hit to profit.

Henry’s call is most welcome but I have yet to hear other agencies rally behind him and in the area of transparency it will be actions that speak far louder than words.

comments powered by Disqus