Following up on a report alleging widespread “non-transparent practices” by agencies and media outlets, the ANA has issued a set of guidelines for greater transparency.
In June, the Association of National Advertisers (ANA) ignited a heated debate on the state of advertising when it released a K2 Intelligence study alleging widespread, “non-transparent” practices by media agencies and publishers. Recently, the ANA has released a set of guidelines designed to achieve media transparency developed in association with Ebiquity and its subsidiary FirmDecisions.
Revenue from U.S. advertising is expected to reach almost $112 billion in 2018, so widespread fraud is a big issue and means big money. Of that revenue, around $67 billion is for digital advertising, which is mainly prone to ad fraud and lack of transparency. A recent report from another industry body, the World Federation of Advertisers (WFA) said that ad fraud is a form of “organized crime” and could cost the industry more than $50 billion a year by 2025.
The recommendations from the ANA are found the in the new report, “Media Transparency: Prescriptions, Principles, and Processes for Marketers.” The report makes a number of specific recommendations to improve transparency, including signed “codes of conduct”; full disclosure of potential conflicts of interest by agencies, their parent companies, and their subsidiaries; regular agency audits; and the creation of a new role of “Chief Media Officer” within organizations to monitor agencies and the media supply chain. To support the recommendations, the ANA also released a recommended contract template for marketers to use with agencies.
The report follows closely on the heels of the ANA commissioned K2 Intelligence report, “An Independent Study of Media Transparency in the U.S. Advertising Industry.” The K2 Intelligence report found evidence of widespread, “nontransparent business practices” in the media environment.
These practices included the use of cash rebates to create a kickback system from publishers and ad sellers to media agencies. Meaning media agencies received rewards for buying ads for clients but failed to share information about them. Also, the report found that these practices had “systemic elements” meaning they were known to senior executives and not the actions of a few bad apples.
“The purpose of these guidelines is to provide marketers with prescriptions for addressing transparency issues specific to the K2 Intelligence study,” said Bob Liodice, ANA president, and CEO. “We outlined 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.”
While the K2 Intelligence report in June outlining how agencies were taking advantage of clients, the new Ebiquity/FirmDecisions guidance places greater responsibility on brands and advertisers to take charge of their relationship with agencies and maintain constant vigilance.
“Advertisers are now experiencing a unique environment where demands for financial accountability and ROI are increasingly high, while transparency in media spending is difficult to achieve,” said Michael Karg, Group CEO, Ebiquity. “We’re at a turning point in the U.S. advertising industry. With these recommendations, advertisers have the opportunity to pave the way towards greater transparency while laying a strong foundation to manage future complexity.”
The new guidance emphasizes the role marketers and advertisers can play in monitoring their agency partners and holding them accountable. On the agency side, the new guidelines are being approached with cautious approval and optimism.
The American Association of Advertising Agencies’ chief Nancy Hill has said the group is reviewing the report and will update its members with recommendations after the review. Meanwhile, individual agencies have had a more welcoming response. “We anticipate some initial pushback from agencies and their holding companies on this level of
However, those who embrace it soonest stand to benefit most,” Thomas Bridge, founder, and CEO of media auditing firm Media Management Inc., told MediaPost, “If agreements are specific and adhere to best practices, then agencies and holding companies have nothing to lose by embracing this additional level of transparency.”