Transparency Bites Aegis

06 October 2017

Disclosure – I worked at Aegis from 1994 – 2000

‘Transparency’ as a topic isn’t going to go away, despite the holding companies (in particular) doing the corporate equivalent of sticking their fingers in their ears and dancing around going la-la-la.

Following the original speech by Jon Mandel, last year’s ANA report, and good follow-up work by both the WFA and ISBA, the latest survey of WFA members still shows almost half (47%) of those questioned still consider transparency in relation to media agencies to be their number one priority.

The major holding companies still seem to be in denial when it comes to public utterances, preferring to lecture advertisers on how to run their businesses.

One CEO, Aegis’ Jerry Buhlmann did at least raise his head above the parapet and comment on the ANA’s report. His conclusion? “Following that report, we didn’t get any feedback from clients. I’m not sure it’s a particularly big deal in the real market.”

The inference being that all us moaners and out-of-touch commentators have been talking to ourselves in a bubble of irrelevance to those (like Jerry) operating in the ‘real market’.

Well, events over the last two weeks seem to be proving Jerry wrong.

First, one of Jerry’s own, an ex-Carat executive, broke cover. Martin Cass, one time head of Carat USA and sometime leading light of Carat in the UK went on a panel at Advertising Week in New York to discuss amongst other things the decline in holding company performances.

Here’s what he had to say on agency revenues:

“Dentsu in North America which is basically Carat was down 6.7%. Yet they’re winning new business. So, the question is: if you’re winning new business and yet your numbers are going down, that must mean the money you were making before wasn’t out of the effective commission. Where was it coming from?”

“Because what it means is you’re running a business that isn’t profitable unless you’re able to make it on the side.”

In other words, forget the convenient excuse that large advertisers are spending less, the real reason driving poor holding company performance is that they can no longer rely on unofficial income via kick-backs, arbitrage and the rest.

Martin Cass now runs the independent MDC Media Partners, and so he undoubtedly has some skin in the transparency game. He did though work at Carat in various guises for around 20 years, so he can certainly claim to know them well from the inside.

Then Mark Ritson, writing in ‘Marketing Week’ picked up and expanded upon Cass’ comments (which to be fair were critical of all the holding companies, not just Aegis) in a piece entitled: ‘Media buying’s deadly sins – and why agencies are too late to save their souls.’

Of course, media agency transparency isn’t the only game in town. There’s ad fraud, measurement and other issues at Google and Facebook, programmatic placements onto inappropriate sites, and fake news, to name but a few.

None of these can be uniquely and directly laid at the media agencies’ doors. Transparency in buying, and management of the digital supply chain on the other hand can. Which leads to another event that seems to contradict Jerry Buhlmann’s ‘nothing to see here’ comment.

This week the UK Government’s £140m media buying account which moved to Aegis from WPP (amid a flurry of threats of legal action from Sir Martin Sorrell) in 2014 has been placed into statutory review, with the process beginning in February 2018.

The head of Government Communication, Alex Aiken in ‘Campaign’ has quoted Marc Pritchard of P&G’s comment that ‘the digital supply chain is murky at best and fraudulent at worst’ in his desire to place transparency at the heart of the review.

One huge step forward in that direction is that the Government will use the ISBA’s media agency contract framework in the review.

It is said in the ‘Campaign’ piece that the Government will approach all 6 holding companies – which seems to miss a golden opportunity to consider the (transparent) independent sector.

It was in December 2016 that the US-based media consultant Cliff Campeau described Dentsu Aegis as ‘the poster child for the industry’s transparency concerns.’

Martin Cass’ comments confirmed Cliff’s foresight. We’ll see if the UK Government agrees.