Radical Transparency

Josh Engroff
May 20, 2017 · 3 min read

“Trump seems to have not yet developed a theory of mind. Other people are black boxes that supply either affirmation or disapproval. As a result, he is weirdly transparent.”

— David Brooks, The New York Times

In medieval Latin, the word “transparency” means “shining through,” and in most modern contexts the word has a positive connotation, even in negative situations.

The wafer-thin intellect of a President, for example, by letting the light shine right through, reveals neither the madcap stratagems of a next-gen Richard Nixon, nor the hard outlines of a consistently pro-business ideology, but a vast and vacillating willfulness.

In this political context, transparency has exposed a yawning chasm between the actions of a national leader and the interests of his nation.

We are watching a show we forgot we had tickets to, but now desperately want to leave, except someone’s locked the theater doors. We’re not alone, however; the rest of the world has been forced into the theater too, and so we watch together, in slack-jawed horror, as the new King Richard III commandeers the magnificent vessel USS United States, smashes it through the turbid seas of domestic and foreign policy like some boryeyed Jack Sparrow, finally plowing it, mast-broken, straight into an iceberg.

— —

Transparency is a hot topic not only in politics, but also in the media business. Media agencies have the obligation to act in the best interests of their clients, and, in this sense, transparency is less a business tactic and more a fundamental demonstration of the agency’s alignment with its clients’ interests.

For any agency, economic transparency is predicated on not doing any of these things:

1. Marking up the cost of media to clients

Funneling programmatic buys through a trading desk at a fixed CPM, and adding costs to non-working media platform license fees are two ways to mark up the cost of media. An agency can avoid this by buying all programmatic media directly with its own team using self-service platforms, and then passing that cost on to its clients with zero markup. An agency can also give its clients audit rights to all billing and invoice info related to their campaigns.

2. Accepting rebates from publishers

One year ago, the ANA published an independent study that found rebates and other non-transparent practices to be pervasive at many U.S. media agencies. These include cash rebates from media companies to agencies that are never passed on to the advertiser, as well as dual rate cards and non-cash rebates. Every radically transparent agency welcomed this report for exposing a pervasive practice long in conflict with the agency duty to act in its clients’ best interests.

3. Basing agency fee structure on media commissions

When a media agency’s compensation is based on media commissions, that agency can’t help but be biased toward those media channels with the highest commissions. Better to base the fee on the scope of work performed, especially as agencies including provide non-media services like technology consulting and data management. The best way to align an agency’s fee with the agency’s work is a retainer structure. Everything else is just mathematical Kabuki theater.

— —

In any fiduciary relationship between two parties — President and populace, for example, or agency and client — transparency is the lens through which the alignment (or misalignment) of interests can be consistently gauged.

As misalignments are discovered, they get corrected — through pressure exerted externally (client complains to agency; entire cities boycott the President) or internally (agency proactively fixes something it realizes is broken; President suddenly becomes reflective, attentive, and self-aware).

This assumes, of course, that both parties are equally empowered to influence the relationship between them.

If there is a fundamental law of physics to be divined here, it is this: all major misalignments get corrected over time. The correction might be seamless and peaceful — the result of introspection, say.

Or it might be ugly and contentious, as one party, heedless to counsel and blind to all but its own needs, eventually collapses under the weight of its own incompetence.

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