The recent ANA report into media rebates in the US is an important moment for our industry and could be a positive catalyst for change if we work together to find solutions, says WFA President and RBS CMO David Wheldon.
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I have been in advertising for a number of years and worked across many great agencies and brands. At times, our industry has made me immensely proud. At others, less so. We are facing numerous challenges (ad blocking, ad fraud, declining consumer trust) and it’s vital we work together to uphold our industry’s integrity as we confront them.
I am currently CMO for RBS. I have seen first hand what happens when trust breaks down between counterparties, customers, regulators and lawmakers and how long those relationships take to recover. I do not wish advertising to go down the same path.
The report from the ANA, a WFA member, has shed light on how media agencies operate. The practice of rebates and other ’earned media income’ will not come as a surprise to many based in the industry, even in the USA. However, there is much in the report that will concern advertisers, notably the widespread issue that agencies are “planning the buy rather than buying the plan”.
"Rather than disregard agencies, as some industry professionals have suggested, we need to keep them at the forefront of our thinking. Collaboration between agencies and advertisers is vital."
- David Wheldon, CMO, RBS
A market exists for good reason: both parties have expertise, talent and economies of scale that makes the overall process work efficiently.
Yet I see four areas where we can improve:
1. Clarity of roles and responsibilities
It could be argued that clients were masters of their own fate. They encouraged media agencies to split from creative and, in many cases, pushed them too hard on cost, terms and conditions. Do clients spend enough time upfront setting out the criteria they are working to? Are they realistic on their investment expectations? The answer to these questions is ‘could do better’.
Agencies also need to be clear about their role. Agencies acting as brokers may be accepted in some markets but it should never be done in an underhand and opaque manner. When agencies quietly change their legal status to principals rather than agents-at-law, clients are right to be concerned. When agencies cross this line and join buying units there is hardly ever a direct link back to a reduction in fees for the client.
In the majority of cases, agency employees see themselves as an extension of their client teams. They are dedicated, professional and talented people with a passion for what they do. Yet the practices outlined in the ANA’s report serve to undermine their hard work.
2. Discipline on contracts and compliance
Clients need to be more diligent when it comes to contract updates and compliance. There is a shared responsibility here to set clear rules of engagement. This is an opportunity to deliver on promised values rather than just another way to drive out more savings.
The ANA’s report explains that agencies are using bullying tactics with ad tech companies by forcing them into service agreements. This is wrong. It is, however, a welcome reminder for clients not to do the same thing to their agencies.
We also need to apply more common sense. I remember a pitch in the not-so-distant past where a global agency network offered to work on our business for free. I responded by taking that agency off the consideration list.
When an agency offers to work for nothing there will be problems. When a price seems too good to be true (see ad fraud), it probably is.
3. Incentives that align clients and agency interests
As advertisers we need to recognise that we do not own our agencies; they are commercial entities with shareholders. Of course, they will incentivise their staff to promote and use their own services. That’s what commercial organisations do. We need to find ways to incentivise agencies so that ‘buying the plan’ becomes more attractive than ‘planning the buy’.
4. Transparency between clients, agencies and auditors
Just as we need to ensure our people are onside and believe we are doing the right thing, agencies need to review their own approaches to regain the trust of their clients.
From a brand owner’s perspective, I am not fully convinced that agency holding companies offer value for money or, indeed, their buys do not influence their plans. To mitigate this, it is important to have guarantees of unrestricted access for our media auditors.
For many years, the WFA has been globally tracking rebate activity and other sources of earned media income. When the WFA was set up in 1953, media transparency was one of its three founding pillars, alongside measurement and advertising ethics. While the landscape has changed dramatically, the underlying values have not.
That’s why WFA, and our network of national associations in 60 countries, including the ANA, need to provide continuity in promoting our values and ethics in the industry.
We need to help marketers achieve their goals and deliver effective and efficient advertising. The agencies we have today add tremendous value and undoubtedly boast some of the best and brightest talent.
But, ultimately, we need to be able to trust and work closely with agencies because there are other, bigger, battles we need to fight together. Ad blocking and ad fraud, to name but two, represent existential threats to both our business models.
Ultimately our challenge is to regain the trust of an audience, which is increasingly becoming disengaged and disenfranchised.
Rebuilding trust within our own supply chain should be the first step in enabling all of us to focus on and tackle the bigger challenges ahead.