Debate around the transparency and ethics of media agencies has never been hotter. Darren Woolley and David Angell deliberately assume opposed positions to explore the different sides of the issue.
Media transparency has always been a problem, now it’s worse
Darren Woolley is founder and global CEO of TrinityP3 Marketing Management Consultants, and was previously a chair of the Australian Marketing Institute, a medical scientist and a creative director.
The irony of media agencies being quick to deny there is a media transparency problem is that there has always been a transparency problem in regards to media buying.
The growth of digital media and the technology platforms required to deliver the associated transactions has simply made it easier for all involved to make additional revenue from the process at the expense of the advertiser.
Yet it is not as if the old media commission system was any better.
The fact is that media buying has been rife with rebates and kick-backs, beyond the agreed and declared media commission rate.
In fact, in the heyday of the media accreditation system there was significant money to be made for the media agency to make significant additional margins on volume rebates and the like. Is it any wonder that media buying is open to corruption when so much money passes through increasing numbers of parties?
MK1216 cover issueThe difference today is that the very technology that makes this a dynamic and growing multibillion-dollar marketplace is what also makes it the ideal way for everyone involved to make money on the side.
The digital media market is incredibly complex and fragmented, and the technology allows huge numbers of transactions across billions of websites.
In fact, there is evidence that the digital media market has attracted the attention of organised cyber crime groups, as they have discovered opportunities for significant profits through creating fake audiences.
So how could marketers ever think that a media buying system that was already corruptible would not immediately embrace the opportunity to make infinitely more money when the technology enabled it to do so?
The difference is that the number of individual media buying transactions has increased exponentially and now are occurring in real time, meaning that the advertiser currently relies on the integrity of their media agency more than ever before. But could advertisers ever rely on their media agency?
So what is the solution? The first thing is for advertisers to recognise that they have always been ultimately responsible for their media investment.
Their media agency is a contracted adviser and has never acted, and is no longer acting, as their agent. Therefore, it is up to the advertiser to take responsibility for the performance of the media investment.
Practically, this means that they may need to completely rethink their media buying process and explore options to decouple media planning from buying, or to bring media buying in-house, perhaps with a media-buying platform like Blackwood Seven or, more likely, renegotiate their media agency contract to focus on and reward the agency for delivering media value and performance in a more transparent way.
It could be that you need to engage additional third-party players to monitor and ensure that value is being delivered and to monitor the performance of your media agency.
Of course, advertisers could continue to ignore the whole issue and carry on being increasingly ripped off by their media agency and the other players in the digital media value chain, or they could face up to the fact that this has always existed. But the problem has been accelerated through the technology platforms developed for the digital media process.
With recent estimates claiming ad fraud costs advertisers more than half of their media investment, the question is can you afford to continuing ignoring this issue?
Yes, media buying and media agencies have been around for more than 175 years, so why now?
Because the evidence is in and to continue to ignore it and do nothing is simply negligent.
It’s time to redress the balance of this debate
David Angell is general manager, media lead at Trinity T3 Marketing Management Consultants, and was previously a media agent practitioner for 15 years.
Portraying the media agency as the evil character from a bad play has existed for years. But characters in bad plays aren’t balanced. They aren’t nuanced, developed or realistic. It’s like this with media agencies, the pantomime villains of marketing.
We should look beyond headlines and redress the balance. While recent ANA (Association of National Advertisers) backed reports are concerning, painting the whole industry as rotten – as if the sole focus for the agency is to unethically screw the advertiser – is simplistic.
Commissions, rebates. Yes, they exist. Yet agencies work within agency-advertiser contracts. The agency is a business. Like most businesses, it explores contractual positions and additional revenue streams, within lawful boundaries.
This argument gains potency when we consider that agencies have for many years been financially squeezed. Advertisers want better agencies, doing more complex work, for less money. This is unsustainable.
Advertisers also want cheap media. Everyone talks strategy, but cheap media is always a core objective. Do naysayers consider that media agency trading models are necessary to maintain competitive cost? That to be ‘transparent’ about deals would compromise sensitive market positions, reducing agency leverage?
With digital media, it gets more complicated. There are numerous intermediaries involved in the process
of media trading, necessary to success. Do we expect them to perform without profit, or openly share details of commercial agreements?
The cost to agencies of doing business has never been higher. It’s not just the requirement for multiple intermediaries; it’s technology, people, training. Yes, agencies profit from digital media – but they’re investing ahead of the curve, retraining workforces and maintaining traditional trading practices.
It’s worth noting that some of the biggest ‘non-transparency’ challenges, such as bot-net fraud, are industry issues, and not the fault of agencies.
Agencies invest heavily in technology to prevent fraud, improve viewability, agnostically model campaigns and drive innovation. In short, the pace is unrelenting: agencies have to balance the Now, the Next and the Later in a way that few comprehend.
For clients who think they can improve by going in-house – good luck. It’s possible, but will it generate the same leverage as a media agency?
Will the advertiser access the same breadth of inventory, competitively?
Will an advertiser negotiate competitive agreements with technology and inventory providers?
Will an advertiser attract and retain the best people?
An advertiser may be able to do it all, but will the effort in be worth the reward out? I seriously doubt it. In fact, I think most will realise that the line between the ROI an agency brings and the importance of ‘transparency’ is not actually as clear as is supposed.
Agencies don’t open the innermost workings of their operation to public scrutiny. Name me one business that does. Like any commercial entity, they pursue various avenues designed to increase their revenue streams.
In Australia, the AANA (Australian Association of National Advertisers) has released extensive transparency guidelines to help advertisers. The AANA board includes many media agency leads.
My point is that while media agencies aren’t perfect, they are making efforts to improve. They aren’t pantomime villains.
To treat them as such does not only do a disservice to the thousands of agency employees working hard for their clients without ‘fraud’; it also deters future talent – surely critical to improvement, longer term.
This article has been re-published with permission from Marketing Magazine.
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