How Advertisers Can Solve For Transparency (at least in programmatic media)
Thoughts on the ANA Media Transparency Report
The big ANA report on media agency transparency came out yesterday, and did not disappoint.
The report is thoroughly researched, and entirely accurate. If you haven’t read it, you should do so, and not get distracted by the very expected rebuttals coming out of the holding companies.
The holding company defense amounts to the following two-part argument:
1. “The report isn’t legitimate because it doesn’t name names”; and
2. “We follow our contracts to the letter of the law”
The first argument is just silly. The purpose of the report was to inform advertisers about widespread practices in the industry, not to prosecute specific agencies or holding companies. It has detailed those practices as promised, and now advertisers know what to look out for. The absence of a naughty list doesn’t make the report less true, especially when anyone that has spent any amount of time in the programmatic space knows well that this behavior is in fact widespread.
The second argument is, oddly, almost an admission of guilt as it relates to one of the main issues identified in the report.
The report goes into detail about one of the biggest tricks out there: language buried in Master Service Agreements that technically gives agencies/holding companies the legal justification to become principals in media transactions, which leads to hidden markups. So, yes, contracts are being adhered to, but those contracts were shady to begin with, and certainly not transparent. The contracts were crafted to take advantage of the fact that clients and their legal teams didn’t know what to look for, until now.
The good news if you’re an advertiser is that there is a very simple answer to the problem, at least as it relates to programmatic media: you should have direct, contractual relationships with the buying platforms that are placing your media.
When you have a direct business relationship with the buying platform you know what the actual technology cost is, and because it is your platform, not the agency’s, you’ll always have full and unfettered access to every dimension of your spend. Many clients are familiar with the pushback from agencies when they ask for direct access to the platforms: there is a reason they don’t want you in there, and it has everything to do with hidden margins. When the platform is yours, this isn’t an issue.
Next, advertisers should pay the platforms directly. If you want to make sure you aren’t being ripped off, don’t get separated from your money. In the past it may have been convenient to have agencies handle billing and reconciliation, but it’s just too big a risk today. Invoices can (and are) manipulated, and the only true guarantee an advertiser has that they are paying what they should is to pay their bills directly.
None of this means that advertisers have to build out a programmatic media team, by the way.
You can still use agency partners to manage campaigns for you, but the directionality changes: instead of the agency running your media spend through their platform relationship, you are granting agency employees the right to manage campaigns in your platform.
Programmatic media and marketing have changed the industry in many ways over the past few years, and with the ANA report the next change is clear: advertisers can and should take more direct control over platform relationships. Once that happens, transparency takes care of itself.
P.S., just make sure the platforms you’re using are transparent on their fee model. The good ones all are.