Five听years ago,听a seminal report from听the Association of National Advertisers听found evidence of 鈥渘on-transparent business practices鈥 by听US media听agencies that needed addressing. It was widely acknowledged that the problems identified and the report鈥檚 implications stretched across the Atlantic.
However, if you ask us,听five听years on,听whether听things have got better,听we would reluctantly say no.听In听some respects, we believe things have听got worse.听
While we have seen positive change in many areas听鈥 and industry bodies on both sides of the Atlantic have worked to tighten up processes 鈥撎齱e have听also听seen the market move in the wrong direction in others.
It is important not to generalise. The US market, where the ANA carried out its investigation, is different from, say, the UK or Germany or Spain. But these practices generally cross borders (in fact, in most cases, they originated in Europe) and most of the big media buying groups operate globally.
One area that was identified at the time was agency holding companies purchasing media and then reselling it at a mark-up to their clients. In our view, this practice has not only increased since 2016, but for some of the media buying groups it has now been industrialised.
This essentially means some media agencies are taking advertising space from media owners, marking-up the price, then recommending, marketing and selling it on to their clients.
This creates a fundamental conflict of interest.听Media agencies have to decide whether they are an agency, independently advising clients on the best communications plans, or if they are a media owner, making their money from selling advertising space to their clients. You cannot credibly be both.
To be听clear, as previously stated, we are not talking about all media agencies, but the handful听who have taken this route in response to their large holding group masters.听
The problem is this 鈥渉andful鈥 represents the majority听of advertising spend in the market.
The simple question is what is the role of a media agency?
Agencies present themselves as a trusted partner of the advertiser, providing objective advice as to how a brand should plan and buy media. We believe that is what they should be. It is also what their clients and the overwhelming majority of people that work in media agencies want them to be.
However, some buying groups听have听accelerated the change听from听being objective听media advisors听into scaled media听vendors.
For many clients, the media agency is now earning more through reselling media than they are in direct fees and commissions. Some UK agencies have passed a tipping point where they generate more revenue from selling media than they do from agreed client fees. Does this then make them a media owner first, an agency second?
Media bought this way has acquired a name 鈥 鈥渋nventory media鈥.听听Agencies will say they fully disclose when they are using inventory media in a product that they sell to a client, but this is often in the small print and not always clear to each advertiser.
Regardless, this kind of disclosure only provides听some transparency of the agency鈥檚 role in the media supply chain.听It does not provide transparency of the recommendation to the client.听
The key question then is how can any advertiser expect an independent recommendation when the听advisor听is also the seller?听听
The well-rehearsed argument is that these group positions and products do not impact individual advertiser plans,听but we don鈥檛 believe that is true.
Ask the people that work day-to-day in one of these holding groups鈥 agency brands and they will tell you they are听routinely听instructed, sometimes even targeted, to favour inventory media products over all else.
This model is听soul-destroying听for the media agency planners and buyers who are held back from the great work they would like to do, because the solution to any client brief is already prescribed.
The situation is not helped by听some听legacy media auditors who do not seem to understand inventory media. They simply rubber-stamp an ever-decreasing fraction of buying prices, failing to scrutinise whether the strategic recommendation was right in the first place.
There is a double whammy for the advertisers. The buying groups could be using the scale of their clients鈥 combined advertising spends to drive even better deals for the advertisers.听
Instead, some of them are using that scale to negotiate with media owners with a primary objective of securing inventory that they听can听re-sell at a mark-up to those same clients.
We know that many advertisers reading this, certainly clients of particular holding groups, will recognise how much these products are pushed on them by their 鈥渋ndependent鈥 agency partner.听If they do opt in and buy, how can they ever be confident that there was not a better alternative that could have been put forward?
There is another way. The Aperto Partnership believes that there are no circumstances under which a media agency should sell advertising space to their clients.听
Instead, we advise clients to create commercial and contractual frameworks that remove this conflict of interest. By doing this, clients are set up to get the very best from their agency partners.
The role of the media agency is at a crossroads and it must be time for a proper debate. Perhaps the advertising industry鈥檚 combined Reset 2021 conference today is the time to start that conversation?听
Scott Moorhead and Andrew Mortimer are co-founders of The Aperto Partnership
北京赛车pk10 is interested in your views about the role of the media agency in 2021. Please email Omar Oakes, media & technology editor: omar.oakes@haymarket.com听