A month after a scathing report detailing the pervasiveness of non-transparent agency practices last month, the Association of National Advertisers released a new transparency guidelines for marketers and agencies yesterday.
Digiday spoke with Bob Liodice, president and CEO of the ANA, who said that he felt “relieved” to have the guidelines out there.
“We’ve always wanted to get to a place where we felt that we had both sides of the equation: the facts about what really is going on and intelligent prescriptions of what to do,” he said. “It’s a good place to be.”
Here’s more from that conversation, lightly edited for clarity:
Do you truly believe that the transparency issue is “eminently solvable,” especially when everyone stands to benefit, to some degree, from the current arrangement?
Definitely. I don’t know if it’s a sign but I read the other day that WPP was actually starting to adjust some of its media agency contracts. We’ve been getting a better feeling from the agency community that they want to talk. I am more convinced now than ever that is solvable, the only thing I don’t know is when. It’s not like flipping a light switch. It could take six months or six years.
The initial agency response was defensive though. Do you think they were rightfully upset?
I can understand that certain agencies might have been upset because if you look at the definition of “pervasive,” there may be some out there that don’t fit within it. There might have some whose actions may have been wholly transparent.
You also got criticism for providing confidentiality.
There were major trade-offs. If we did, in fact, not provide confidentiality and anonymity and preserve that, then we wouldn’t have gotten any insights whatsoever. We had to do that to get a good read on what the situation was like. Some may feel a bit burned but I think for a vast majority, it was a wake-up call to do better.
Isn’t this the inevitable result of clients making it nearly impossible for agencies to make money?
Have you looked at the holding company P&Ls? They’re making quite a bit of money and their bottom line figures are growing each and every year. One could argue and say, well, they’ve only been making that much money because they’ve been engaging in a lot of non-transparent behavior, which would only prove my point.
So clients aren’t to blame?
There is no question that some marketers are probably engaging in difficult practices. For example, they may have extended terms for up to 180 days. That’s challenging, and no client should ever expect their agency to finance media transactions, or anything for that matter, outside of a normal set of terms. But those I think are the exceptions rather than the rule. If someone can come and show us that majority of the contracts are unfair, then there is something to be done.
Isn’t the fact that some agencies have started to act as principals also the problem?
For an agency to act as a principal, the client has to opt-in to that agreement. And that’s up to individual clients. That is a one-on-one relationship, and if they find that such a relationship is valid and imperative to the growth of their business, I can’t tell them that’s not in their best interest. We can’t regulate that. It’s buyer beware.
Yesterday’s report seems to put the onus more on marketers themselves. Why is that?
Well, it’s their money. And if their processes aren’t rigorous, then it opens up the doors for non-transparent behavior. Their money is their asset, whether it’s millions or billions. If I was a senior marketing officer, I would accept the fact that my responsibility is to provide the best stewardship for those assets. If we disregard that stewardship mantle, then candidly, shame on us.
And that’s not what you found.
What we found were prevalent processes and practices that were inconsistent with optimal behavior. There are things we’ve gotten lax on. One of my board members told me that he’d just pulled out his contract after five years. Just think about what’s happened to the media landscape in five years. You could probably drive a truck through his contract.