SPOTLIGHT ON MEDIA BUYING
Will the ANA report affect the Middle East media market?
US advertisers have criticised media agencies after an investigation into their practices. Will they do the same here? L ast month, the Association of National Advertisers in the United States said it would issue new guidelines for US advertisers to beef up their media agency contracts after publishing what it called a “troubling report” that found “non-transparent business practices” are “pervasive”.
The US trade body did not identify any agency groups or individuals but suggested all the big agencies are implicated. The investigation found: practices” and these were found to exist “across the spectrum of media agency entities”. provided to agencies with payments based on the amount spent on media. Rebates also took the form of free media inventory credits or “service agreements” in which media suppliers paid agencies for low-value research or consulting. ecosystem were aware of, and mandated, some non-transparent business practices. receive rebates or were unaware of any rebates being returned. problematic agency conduct” concealed by principal transactions where the agency or its holding company acts as principal to purchase media on its own behalf and resells it to a client after a mark-up. There were mark-ups of between 30 per cent and 90 per cent in some cases. ANA chief executive Bob Liodice said the body wanted its report by corporate investigators K2 Intelligence to “begin a transformative approach to rebuilding client-agency trust”.
Meanwhile, the American Association of Advertising Agencies described the report as “anonymous, inconclusive and one-sided”.
The US has been historically known as a non-rebate market – unlike the Middle East, the United Kingdom and many other countries, where rebates are fairly common practice. By contrast, some US advertisers evidently appear shocked after learning of their agencies’ behaviour. Although the ANA report only looked at the state of the US advertising industry, many of the advertisers and agencies are global, so it seems highly likely that there could still be fallout in the Middle East and North Africa. Marketers outside the US are certain to take a close interest in murky issues such as mark-ups and agencies trading as principal.
In the UK, Debbie Morrison, director of consultancy and best practice at ISBA, said: “It will cause all advertisers to examine their media agency relationships and should act as a catalyst for dialogue on the issues outlined. Every advertiser should seek assurances on their business and ensure their contractual terms reflect their best interests.”
Jenny Biggam, co-founder of the 7stars, added: “It’s naïve to think the problems highlighted by the ANA report are unique to the US market – brands in all territories will sit up and take notice. This is a real opportunity for agencies to change business models and offer clients greater transparency.”
Tom Denford, chief strategy officer at IDComms, went as far as asking whether the current media agency model needed to be ripped up. “Advertisers need the facts in order to make more informed choices about what kind of media agency model they want to work with,” he said. “The choice is now between an agency that works as a trusted advisor and entirely in the interests of its clients for its income, or one that will act as a broker and make its income from the vendor community.
“The latter scenario is a legitimate business practice, but only if clients hire those agencies in • “Numerous non-transparent business • Cash rebates from media companies were • Senior executives across the agency • Some advertisers told the ANA they did not • There was evidence of “potentially