This is a follow-up to a story we reported back on June 7 where the Association of National Advertisers issued a scathing report about how agencies deal with advertisers. The report stated, among many other things, that there are many non-transparent business practices taking place, including “cash rebates to media agencies.” As a result of that study, the ANA has followed it up with a list of recommendations to help advertisers and agencies address transparency issues identified in the study. So what did the organization come up with?
ANA CEO Bob Lodice says, “We outlined specific actions marketers should consider to diminish or eliminate non-transparent and non-disclosed agency activities and to ensure that their media management processes are optimized.”
The ANA has also developed a media agency Master Media Buying Services Agreement which can be used by advertisers in developing their own agency agreement.
Here are a few key recommendations from the ANA. The report recommends that to achieve full transparency advertisers should:
– Establish overarching media 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 advertisers 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 service agreement.
In addition, seven strategic recommendations for advertisers are advocated to reduce or eliminate the potential conflicts identified in the K2 Intelligence study. They are:
– Where the agency is acting as a principal versus an agent, the advertiser should have a disciplined and reliable process for managing conflicts of interest.
– Advertisers should ensure contracts with media agencies include robust language to deliver full transparency.
– Advertisers should insist on robust and far-reaching audit rights that include tracking contract compliance and measuring the media value delivered.
– Advertisers must implement disciplined internal processes to deliver contracts designed to ensure strict accountability, rigorous process governance, and senior management oversight.
– When it comes to data and technology, advertisers should take ownership and exert control over the decision-making.
– Advertisers are responsible for more active stewardship of their media investments and compensating their agency partners fairly.
– A culture of trust is needed between advertisers and media agencies, through the uniform code of conduct.
You can download the full report HERE
