Industry figures share their views on the latest issues. If you have an idea for a guest column, email email@example.com
The ANA guidelines will disrupt brand-agency relationships in more ways than one…
Ronan Shields, The Drum's digital editor, observes advertiser-agency dynamics in the US where the Association of National Advertisers (ANA) published guidelines following last month’s controversial K2 Report, which recommended the creation of the role chief media officer in every brand marketing department.
The main thrust of the advice was to ensure that transparency in the US media landscape, especially with regards to the issue of media rebates – a practice more commonly ‘accepted’ in the UK, but much more controversial/unspoken of on the other side of the Atlantic.
Critics of the K2 Report
The initial K2 Report itself was not without its own controversy; critics (ie agencies) were quick to bemoan the fact it was based on anecdotes, plus unattributed testimony, as opposed to evidence-based fact. The Drum sought comment from multiple US-based agency representatives post the publication of last week’s guidelines, but all declined the opportunity, although the trade body representing media agencies there (the 4A’s) has said it will review the document with the ANA.
However, later in the week I participated in one of The Drum’s first panel events covering the digital media trading sector in the US, with the issues of transparency in the landscape where debated at length. You could be forgiven for thinking the juxtaposition of the two events was deliberately timed (it wasn’t); rather the issue of trust and transparency in the digital media landscape (plus the subsequent disruption they produce) are all pervasive in the industry – to use ANA parlance.
Breakdown in trust is complemented by the rise of martech
Other than the 4A’s statement, little else has been stated publicly since the publication of last week’s guidelines, although they did help frame a week of interesting conversations between myself and various industry luminaries during my time there.
One notable conversation I had was how some agencies came up with imaginative ways of evading the charges of participating in the rebate culture (while still receiving a monetary benefit from third parties in the ecosystem). One source told me how one ad tech outfit sponsors the CRM system of one of its biggest agency clients on the understanding that the pair will continue to trade together. All evidence of such an arrangement would likely evade the detection of an auditor, and is strictly in keeping with the letter of the law, but is it exactly in its spirit?
Another source noted how this seeming breakdown in relations between advertisers and their traditional agency partners has been complemented by the increased prominence of enterprise IT players in the marketing space – an additional source of tension.
It’s well noted the discomfort most agencies feel over the increasing influence of such players (think Adobe, IBM, SAP, etc) in the upper echelons of brands’ marketing departments. Not only are such companies often loath to play the rebate game (unlike many ad tech players, such as DSPs, as well as some of the industry’s larger digital media owners), but they are often well entrenched in the marketer’s operations when it comes to things like CRM systems, etc.
Business consultancies are another threat to the brand-agency model
With both martech and media agencies briefing brands against one another (this can take shape of the them saying their respective tech stacks are incompatible), many marketers will turn to management consultancies for a third opinion.
This will, of course, inevitably raise questions over the in-housing debate, but when you consider the additional trend of companies such as Accenture, Boston Consulting Group, Deloitte etc getting interested in the digital space, then it pressures the agency model further.
So regardless of whether they participate in the rebate culture or not, last week’s ANA guidelines are a harbinger of the need for change in the traditional relationships between network media agencies, and their associated trading desks, especially as brands increasingly weigh up the alternatives.
The future of the agency model?
Agency networks that can deliver enterprise technology, IT consultancy, plus assistance in helping brands onboard/integrate different pieces of technology will be fit for the road ahead. Those relying on the traditional model of profiteering on margins made from media trading will soon be found out.
Have your say
Do you have a strong opinion on a topical industry issue? To submit a comment piece, please send a short summary of your idea to firstname.lastname@example.org. Views of writers are not necessarily those of The Drum.