The ANA released its much-publicized report about non-disclosed agency practices in the U.S. and as expected, agencies are on the defensive.
The report, released Tuesday morning by the trade group, found that non-transparent practices including rebates and kickbacks were “pervasive” in a sample of the U.S. media ad-buying space. The study, done by research group K2 intelligence, said that senior executives at agencies were aware of and, in some cases, mandated business practices that were not disclosed to clients — included cash rebates provides based on the media dollars spent, rebates as inventory credits or “service agreements” for non-media services like consulting or research. Buyers are also pressured in cases by holding companies to direct client dollars to certain media regardless of whether this was what the client wanted. And in some cases agencies also acted as advisors or stakeholders in vendor companies without disclosing those stakes.
As expected, the report did not specifically identify agencies or individuals responsible.
“At the ANA’s insistence, this has never been about pointing a finger at any individual or company,” Richard Plansky, executive managing director of K2 Intelligence said in a statement.
One of the big findings of the report was that out of the 150 sources interviewed, 117 were involved in the media-buying space and 59 reported “direct experience” with any opaque practices and 34 reported that undisclosed rebates existed.
Even before the report was released, media reports suggested that the ANA was readying to release such a document, causing agencies and the people who work within them plenty of problems.
In a blog post on June 4, Marco Bertozzi, global chief revenue officer at Performics and formerly of Starcom MediaVest Group and VivaKi, saying these accusations make it hard for the 99 percent, the young digital planners who are working “their socks off.”
“Trouble is that is going to get very hard. It’s going to get very hard for a few reasons. The first is the blanket accusations aimed at agencies. To be clear, if there is anyone at fault, I guarantee you it is not the kids working their socks off, it’s not the 99%+ percent of people in agencies. By the way these are the very same you want us to bring into the business, the ones you want to pull away from other industries and wow the clients. But no one is thinking about that. Everyone is rushing to shout as loud as possible about how corrupt agencies are, how they are not trustworthy. When you say ‘agencies’ who are you aiming that at?”
It was never about corporate malfeasance — won’t someone think of the planners?
Of course, the current talent crunch agencies are in is brought into the debate. Motivating young talent to enter and stay in the agency world is hard, but executives say blanket reports like this will only make it harder.
Executives are also against the ANA’s methodical rollout of information — Business Insider said back in May that the report was coming out based on anonymous sources, and the Wall Street Journal then wrote last week that the probe would reveal widespread rebate practices.
Nice counterpoint to the ANA trolling. https://t.co/28FKyqK7Pg
— Ari Paparo (@aripap) June 4, 2016
In the holding company realm, Publicis chief Maurice Levy, sent out a memo in response to initial reports that said the ANA was wrong to create a report that won’t name specific companies and said it was an “unfair and an unwarranted attack on the entire industry.” After the report went out, the company said in a statement that the industry has been “diminished and maligned” by the ANA.
The 4A’s echoed that: “A healthy and constructive debate about media buying can only happen with a bipartisan, engaged, industry-wide approach, and that is precisely the opposite of what the ANA has pursued,” it said in a statement.
And Omnicom, in a statement provided before the report went wide today said that it was “disappointing” that the group was tarring all agencies with the same brush. The company also said Tuesday that it does take seriously its obligations to investigate and redress any credible allegation of misconduct by its companies or personnel. “Our outside legal counsel has asked the ANA, K2 and Ebiquity to provide specifics on any information their investigation has uncovered relating to Omnicom agencies and they have provided none.”
The ANA report is the result of an eight-month-long investigation by the group after former Mediacom CEO Jon Mandel went on stage at an ANA conference last year saying that media agencies were definitely collecting kickbacks on deals made here. The report can be downloaded here.
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