The Media Federation of Australia will assess the implications for the Australian market of an explosive report that alleges non-transparent business practices such as cash rebates are rife in the US media ad buying ecosystem.
Released this week by the US Association of National Advertisers in conjunction with K2 Intelligence, the report contains evidence of a “fundamental disconnect” in how agencies and advertisers view their relationship and “systemic elements” to some non-transparent business practices outlined in the report, some of which senior executives are aware of or mandate.
Other findings include mark ups on media sold through principle transactions ranging from around 30 to 90 per cent, with media buyers sometimes pressured or encouraged by their agency holding companies to direct client spend to them regardless of whether it is in the clients’ best interest.
The MFA would not comment further on the ANA report or its contentions until it has been fully reviewed.
However chief executive Sophie Madden said the MFA and the Australian Association of National Advertisers had worked closely through the joint AANA MFA Media Forum Group on the issues of transparency and fairness and this continued to be one of their top priorities.
This co-operation culminated in the November 2015 release of the Transparency Framework which came in the wake of a misreporting and value bank scandal involving GroupM agency Medicom.
The AANA also said it would review the report, any forthcoming recommendations from the ANA and monitor how the US and other key markets respond.
“Any best practice guidelines or initiatives that emerge are likely to have universal application, so we will aim to share them with our members here,” AANA chief executive Sunita Gloster said.
“Whilst the US report reminds advertisers to remain vigilant, it is important that we remember these principles of transparency, disclosure and fairness are central to the reputations of all parties involved. Equally importantly, adherence to these principles is crucial to achieving our common goal which is to show the link between advertising and business growth. Businesses need to have confidence in the integrity of their media spend allocations.”
AANA chair Matt Taper said advertisers are ultimately responsible for ensuring they were appropriately equipped to put in place agreements and processes that deliver fair value to all parties involved.
Mr Tapper also noted that the need for transparency in media buying was not a new issue.
“It is a perennial challenge, one that will only get more complex,” he said.
“New media platforms and technology developments mean new trading arrangements are springing up all the time. This US report is a timely reminder that advertisers cannot be complacent about these conversations.”
“This US report is a timely reminder that advertisers cannot be complacent about these conversations”
The report was based on information gathered from150 anonymous interviews with marketers, media suppliers, ad tech vendors, current and former ad and media agency professionals, trade association executives, industry consultants, attorneys, barter company employees and post-production professionals.
An additional 131 interviews were requested of which 61 were declined with the remaining 70 failing to respond. Five of the six major agency holding companies and their affiliate companies declined formal request to make any current executives available.
The ANA is now developing suggested contract language to address the issue of transparency and has commissioned Ebiquity and FirmDecisions to develop guidelines and recommendations for ANA members to consider based on the findings.
Agencies, however, have since hit back at the report, some greeting it with hostility and others ruling out their involvement in the dubious practices outlined in the report.
In a statement to Ad Age, Publicis Groupe said they would have co-operated if the ANA had been willing to have an open dialogue with the industry.
“By refusing such a dialogue and choosing a sensational approach, it seems clear that the ANA is not trying to find a solution to the alleged problems, and instead is acting with other goals in mind,” the statement reads.
“The ANA has failed its members, advertisers, agencies and the entire industry by releasing a report that relies on allegations about situations involving unnamed companies and individuals to make broad, unsubstantiated and unverifiable assertions.”
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