Non-Transparency in Digital Media – What Can You Do

At ProcureCon Marketing last week we heard from Martin Albrecht, Managing Partner at media agency Crossmedia. He talked about ‘Procuring Trust,’ - transparency in the digital marketplace or rather the damage that can occur without it. He took us back 10 years or so to what he called ‘media in crisis’ through lack of transparency. The big news at the time was the CEO of Aegis Media, arrested and imprisoned (alongside suspension of other media execs) as a possible flight risk while allegations of embezzlement were investigated. It was estimated that up to $26 million was defrauded through free advertising spots from German TV stations, given to a company he owned, then sold on to his own agency at a ‘discounted’ rate.

10 years later, a long-investigated report from the Association of National Advertisers found that the likes of rebates and other non-transparent business practices were still "pervasive" in US media ad-buying particularly — despite agency groups persistently saying they don't take rebates in the US. Agency groups jumped up and down and said this was unfounded.

The study found "evidence of fundamental disconnect in the advertising industry regarding the basic nature of the advertiser-agency relationship." And evidence of "potentially problematic agency conduct concealed by principal transactions; an agency (or its holding company or associated company) purchases media on its own behalf and later resells it to a client after a markup."

Some non-transparent practices take the form of rebates from media companies not being disclosed to clients. “Advertisers and their agencies are lacking ‘full disclosure’ as the cornerstone principle of their media management practices,” said CEO of the ANA. “Such disclosure is absolutely essential if they are to build trust as the foundation of their relationships with their long-term business partners.”

He wasn’t picking on the US particularly, just bringing to light that it is as rife there, as anywhere. And with only 6 holding companies in the world placing 95% of adverts, the media industry needs an alternative. There’s no other source of making money for the agency, except what the client pays them, and we do keep squeezing them. So methods are found, sometimes kickbacks, double dipping in programmatic buying, proprietary tools white labelled from off-the-shelf products. His point was, you need to be able to see what you’re buying. An agency should be buying media for you, not selling media to you. And there are independents that offer 100% transparency – right down to the x% fees taken here and there along the way, as shown in his ‘triangle of doom’ - Media Supplier supplies to Agency at $100. Agency pops a 4% fee on and sells to Advertiser at $104.

We fall into a trap of over vexing on price, as it’s hard to quantify value - and then everyone suffers.

So what’s the remedy?

  • You must draw your own line on transparency. Every agency says it’s transparent. Decide what you are comfortable with (can you live with a double-sided business model?). And what are you not comfortable with? And Put It in the Contact!
  • Audit the auditors. Do they give you real objective advice? Of every $ you invest in programmatic, there’s a long line of steps in which companies take a cut of your money – take a closer look. We still tolerate self-reporting in digital media - don't let the fox guard the hen house! get a third party.
  • Squeeze your agency for ideas – not just profit. It’s their role to give you that. And move away from the traditional trading (and its kickbacks) – programmatic is the future, your agency will already be connected. Take full control. (Not everyone agrees – see our article next week).
  • Finally – he recommends watching this short video

If you’d like to hear this presentation ‘live’ - ProcureCon Marketing On Demand Digital Event is coming soon on July 11th, 2017. Watch out for more details.

 

Discuss this:

Your email address will not be published. Required fields are marked *