The ANA Report – Considered

16 June 2016

It’s been about a week since the ANA’s report into transparency hit the best seller lists. Lest we forget (and judging from some of the less temperate comments flying around some seem to have forgotten) the report was titled: ‘An Independent Study of Media Transparency in the U.S. Advertising Industry’. It was not titled ‘Why Advertisers Hate the Holding Companies’, nor ‘We Name the Guilty Parties’.

The report was about transparency in media placements in the USA. People who it must be assumed knew what they were talking about were interviewed, as is very common anonymously. The findings have been released. Either respondents were uniformly mistaken or there’s something in what they had to say.

The two key players – namely the agencies and the advertisers do not come out of the report too well. The agencies because they’ve been found not to be any too transparent; the clients because they drove fees ever lower and then agreed to contracts that in effect let the agencies do whatever they wanted.

It’s a little strange that the holding companies have expressed so much pained surpise, given that on at least two comparatively recent occasions AdAge has reported on practices subsequently highlighted within the K2 report.

The ANA report is not only about rebates; it also speaks (in 4.4.1) of the difficulties arising when agencies hold equity in supplier companies.

As reported in AdAge, Laura Desmond, then CEO of Publicis company Starcom held a Board position at Tremor Video from January 2012 until resigning her post in September 2013. Her role on Tremor’s Board had been vetted and approved by Publicis.

In 2012 18% of Tremor’s revenues came from Starcom clients, again according to AdAge. 18% seems a big number.

Then there’s rebates dressed up as service agreements, considered by the ANA in 4.2.3.1. This is the practice of ‘selling’ the supplier research, or some other service at a hugely inflated price – in fact so inflated often the buyer never gets to see any report, or indeed any benefit.

In June 2015, AdAge reported two adtech vendors being ‘offered’ this exact ‘service’ by Havas. One of the ‘buyers’ reported that no service was ever forthcoming from this arrangement, involving a Havas company in Spain.

The Cog Blog in March 2014 reported on WPP buying the ad network 24/7, and putting it in with their then-trading desk Xaxis, thus putting Xaxis in the position if it chose to do so of buying from itself. Not that anyone would have known as Xaxis then considered it un-necessary to tell clients where it was placing their digital budgets.

Back then (in February 2014) Bill Duggan from the ANA wrote: “Our business has historically been built on trust and relationships. But this transparency crisis is causing trust to break down and ultimately that will affect the relationships marketers have with their agencies and the media”.

The press focus on the ANA report to date has been on rebates. But this is a far more nuanced and complex issue than did ‘A’ take cash from ‘B’.

There’s the whole issue of influencing plans. If an agency has a volume deal with a preferred supplier, the agency’s planners are told to use those suppliers, regardless of what’s best for the client.

This happens, everyone knows it happens, and it’s very tough to spot unless someone talks (as happened when K2 and before them Jon Mandel interviewed those at the heart of the process).

This is a serious issue as it gets right to the heart of undermining trust. If your agency recommends Title A or Website B how can you be sure that they’re doing it because it’s best for you, or because it’s best for them? More significant is if (as is widely believed happens) an agency proposes digital channels on the basis that they make a far higher margin that way regardless of whether or not the channel works for the advertiser.

No holding company has yet come out and said their buys don’t influence their plans.

At least there is one executive from a holding company who has contributed a named piece to the discussion, even if some of it is (by the author’s own admission, at least in the edit on LinkedIn) somewhat self-serving.

GroupM’s Rob Norman published a piece on MediaVillage.com pointing out the investments made by his company in adtech, and data analytics. He also made the valid point that some companies, including GroupM have moved the game forward when it comes to such online topics as viewability and verification.

Suggesting that WPP/GroupM have made these investments for any reason other than because they’re good for WPP/GroupM is somewhat disingenuous, but no less useful for that. It is true that GroupM has pushed further than most to try to understand the complexity of the market, even if one might take the cynical view that they have in part created and have certainly benefited from the complexity.

Rob doesn’t pretend to address the fundamental issue of transparency raised by the ANA, rather he suggests that the balanced view should take account of the efforts WPP and others have put into steering advertisers through a time of great change. He’s right to make the point, even if no-one has suggested otherwise.

Last week we said here that collaboration and discussion was the way forward, not throwing around remarks like ‘My CEO wants (ANA CEO) Bob Liodace’s head’ (a charming comment made anonymously (oh the irony) by a holding company executive).

You might take issue with some of Rob Norman’s argument, you might think that he’s deflecting the discussion away from the real issues raised by the ANA’s research but what cannot be criticised is his tone of voice. He is trying to advance the discussion. More holding company media agency managers should follow his lead.