AANA guidelines are starting point on media transparency, not the finish line

Arvind Hickman
By Arvind Hickman | 31 October 2016
Arvind Hickman

The Australian Association of National Advertisers’ (AANA) guidance around agency contracts offers an important, non-prescriptive starting point to promote better media transparency. The industry should unite to chart a sensible way forward.

Amidst concerns over transparency and the inherent complexity, the AANA should be given credit for trying to get advertisers to ask the right questions about contracts. The important part of their release is the guidance notes that provides 12 pages of hard questions advertisers should ask of media partners.

Agencies have raised concerns that it offers a "blanket approach" but that misses the point of the AANA's purpose.

All contracts will be different and tailored to a client’s individual needs and the 52-page contract template is designed to provide the 40% of marketers who don’t have their own contracts with a reference on what could be included - not a one-size-fits-all solution.

In the past, the advertiser body has been criticised for adopting weak positions on media transparency and being ‘beholden’ to media agency interests – this criticism cannot be applied anymore.

Better scrutiny around contracts, remuneration models and where media agencies deliver value can only be a good thing for the industry - on both sides.

While media agency bosses have questioned why they weren’t consulted in developing the guidance and contract template, there is a concern agency push back could dilute the very detailed base advertisers need to start asking difficult questions.

The aim is to ensure media partners are operating in advertisers’ best interests, especially when generating the research and data used to provide recommendations and reporting. It also aims to provide advertisers with an understanding about complex opt-in agreements and the implications on audit access and data ownership.

The document clearly states advertisers need to take ownership of this under the contract law principle of caveat emptor, or buyer beware.

Pay agencies fairly

An important caveat the AANA makes clear is that advertisers need to pay agencies sufficiently and fairly to carry out the job expected of them, and must also understand the repercussions of screwing down media partners on cost.

This is one point that has been made clear to me by agency contacts – advertisers can't expect complete transparency if they are bleeding their media partners dry.

Without fundamental changes to the way many advertisers (and their procurement departments) value and remunerate media agency partners, it’s hard to see a seismic industry shift in non-transparent trading practices.

I’ve been told by several agency heads in this market that they’ve won pitches on the basis of client scorecards only to be subsequently told they had lost the business because they weren’t the cheapest on price. Then there's the agency that wins business as a loss leader in the hope they can add other services and fees down the track.

Not only does this devalue what agencies bring to the table, it puts a massive strain on resources by constantly having to pitch for inauthentic reviews and ultimately this affects profitability.

This ‘race to the bottom’ mentality may have eased a bit recently but it highlights the cancer of short-termism that plagues marketing and the way many larger companies are run.

For media agencies to remain viable businesses in such a cut-throat environment, they inevitably look to find profit elsewhere, building margins into holding group DSPs, value banks, and so on. Until the industry tackles this remuneration squeeze, progress on transparency will be token at best.

While the AANA’s guidance is a tool to help marketers better understand complex media contracts and transparency, it also recognises that brands are contributing to the problem and, as Maxus global CEO Lindsay Pattison says, clients get the agencies they deserve.

But, above all else, the AANA is finally taking a proactive approach to addressing an industry-wide problem.

It’s now up to advertisers, media agencies and media owners to play ball. Put to one side respective agendas, comb over the proposals and come together to create a healthier media buying and planning ecosystem. The MFA would do well to be on the front foot and play ball.

At very least, these measures should drive more scrutiny – but advertisers take note, scrutiny is not a one-way street.

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