Sparks Fly Over Media Transparency Report

For about a year now, there has been focus on media transparency between brands, agencies and media companies. The biggest issue at hand is that brands are concerned that they are not being told how their money is being spent, nor do they know exactly how much media they are buying.

This all stems from a talk from a notable advertising figure who claimed that “rebates”, money a media company gives back to an agency, has been going on in the industry for decades.

And the sirens in BrandLand went off.

So then, the Association of National Advertisers (ANA) and the American Association of Advertising Agencies (4A’s) created a joint task force to see what could be done to make sure the partnership stays honest.

At least, as honest as it can be.

That’s pretty much as amiable as it got.

Towards the end of January 2016, the 4A’s released a “Transparency Guiding Principles of Conduct” article, which it believed satisfied much of the arguments over transparency and ceasing the actions of rebates.

The ANA was not pleased. So much so, the ANA quickly demanded the 4A’s to remove all ANA association with the article.

The 4A’s aptly did so.

Now the good stuff. The ANA released the final report done by K2 Intelligence on the prevalence and scale of rebates and media transparency.

The 62-page report is, in short, pretty damning.

Naturally then, the 4A’s promptly parried with its own article saying how one-sided and shadowy the report is the day it was released.

The fact that the ANA and the 4A’s are going at each other only confirms the disconnect the K2 Intelligence team refers to at the end of its executive summary:

K2 found evidence of a fundamental disconnect in the advertising industry regarding the basic nature of the advertiser-agency relationship. In general, advertisers expressed a belief that their agencies were duty-bound to act in their best interest. They also believed that this obligation – essentially, in their view, a fiduciary duty – extends beyond the stated terms in their agency contracts. While some agency executives expressed similar beliefs, others told K2 that their relationship to advertisers was solely defined by the contract between the two parties.

After the 4A’s released its statement of disapproval, the Chairman of the ANA released a letter to the ANA membership defending the report, and countering the 4A’s opinions of the report.

It is about time we have a strong conversation about the client/agency relationship. Though people may view this as conflict, this can actually help the relationship grow stronger if the sides are willing to hear everything out.

Conflict isn’t a bad thing, unless we choose not to do anything about it.

So the ANA has this report, and the 4A’s has its Guiding Principles of Conduct. Based on the K2 report, it seems that we all have to take a step back and lay down a foundation.

First, when a brand and an agency work together, what behavior is expected?

Once that question is answered, then they can revisit their positions, and start ironing things out. Because it seems that the agency world believes that its hired to do the work, do the work well, and call it a day, while the brand world wants more commitment and wants to ‘see behind the curtain.’

If that’s the case, then no wonder there’s mistrust and the question of transparency. In this scenario, agencies don’t believe that transparency is part of the game, while brands are wondering when agencies are going to start playing.

It seems like the ANA and the 4A’s are on different pages. But now that they know that, they can start working towards a common goal.

Will the U.S. Actually Pass the Ad Tax?

There has been plenty of speculation that the U.S. Congress, amid a presidential election, may try to push through legislation that will make them popular amongst their constituents.

Unfortunately attacking the ad industry ranks near the top of the list.

In case you are not aware, advertising costs incurred by businesses and corporations in the United States are not taxed, because it is- and rightfully so- considered as a cost of doing business.

But now, more than a few legislators want to take that classification away. Why? We haven’t been able to find a legitimate reason. Perhaps it is due to advertising being a multi-billion dollar industry? Or perhaps it would prove to consumer advocacy groups that legislators can be “tough” on business?

Who knows the reason why, but the fact remains that the adding of this particular tax on business is not a good idea.

There are dozens of reasons why, with the biggest one being that it will hurt smaller businesses’ ability to compete. With a tax on advertising, these SMEs (small and medium-sized enterprises) have even FEWER funds to compete against the big dogs.

We agree that businesses should pay more into the tax system. And we are hoping more advertising professionals step up to the negotiation table to figure out a better alternative.