Transparency is high on the list of advertiser concerns when it comes to their agencies.
Clients wonder if they have full knowledge of whether their agencies are fully disclosing rebates, inducements, investments and other financial instruments related to their spending of client money. The issue was pushed to the fore at an Association of National Advertisers (ANA) conference earlier this year when former Mediacom chief Jon Mandel said that agencies are completely non-transparent about what goes on behind the scenes with clients. The ANA is now investigating rebates.
Speaking yesterday at the Digiday Agency Summit in Key Biscayne, Florida, Bill Duggan, group executive vp at the ANA, described the current situation as “the most opaque and the least transparent period” between marketers and their agencies.
We caught up with him for a follow-up Q&A:
Has the complexity of ad tech contributed to less transparency for clients?
Absolutely. There’s complexity, there’s murkiness and confusion. Just look at the Lumascape. In programmatic buying, for every dollar a client spends, maybe 35-40 cents gets into the hands of the publisher. And then there are those various intermediaries between the client and the publisher. I believe that many marketers don’t know who the intermediaries are and what their respective goals are and how much of that 60 cents or so everybody is getting.
What’s your first thought when you see the Lumascape?
My first thought is, “How many of these companies are really necessary?” Who is adding value, and who isn’t?
Are agency trading desks double-dipping?
Yes, absolutely, some. The whole issue of transparency started five years ago with trading desks. Agency trading desks are a model that many agencies introduced without input from the clients and without providing the opportunity to opt in at the time. Agency trading desks can be interpreted as double-dipping in that the agency is making money and the trading desk is making money.
Were agencies right to be upset by the implication that all media agencies are taking rebates?
This has gone on for quite some time in the industry. It may be widespread, but we don’t really know that. The word I’ve heard is “pervasive”; I’ve heard that word dozens of times as it relates to rebates, but we just don’t know.
Are you looking for more whistleblowers in this space?
That’s a strong word. We’re looking for more people that have something to share.
Are you concerned that agencies are moving further away from their traditional role of unbiased agents of a client’s interest?
At our Advertising Financial Management Conference, Irwin Gottlieb said in front of 700 people that agencies may need to rethink their models. Right now, agencies are primarily agents acting on behalf of their clients, but there are some relationships with agencies where they do take a principal stake in business. What’s important, if and when that happens, is for that be transparent and that the client has the opportunity to opt in to that model or not.
Agencies often point to procurement as the root cause of many agency problems.
There are good procurement people, and there are not-so-good procurement people. They can’t always be about the price because it gets to a point where the agency can’t do any work.
Do you think marketers bear any blame for the rise of ad blocking?
The entire industry has the responsibility for the rise of ad blocking.
Talent is also a recurring issue within agencies.
I’ve heard that agencies cannot attract talent. Google’s only been around for 10 years; it seems like it can. So can Twitter and others. I have heard that tale of woe from agencies. Agencies just need to figure out how they can be competitive.
But often agencies don’t have the resources to attract and train talent because they need to bill hours for clients. What can clients do in order to alleviate this?
Clients have a role to play in getting the best talent in an agency to work on their business. The best clients create an environment where the best people want to work for them. But personally, it’s not the client’s problem to make sure that the agency is staffed with the right talent.