THE ANA’S REPORT IS ON TRANSPARENCY, BUT ISN’T THE ISSUE REALLY ABOUT INTEGRITY, AND LACK THEREOF
I read the ANA’s report on transparency, the 4A’s follow up with the guiding principles, and the many editorials and blog posts that ensued over these past few months, and find it interesting that no one has spoken out about what is really the core issue here – Integrity, and the lack thereof.
The bottom line is that most agency holding companies breached the trust of numerous clients, either directly or by setting up subsidiaries or agency affiliates to take rebates and in many instances to take principal ownership of media inventories to be sold at significant margins. Moreover, there were directives to media planners and buyers to tap into these media inventories when buying media for their clients while acting as agents with no formal agreement in place to describe remuneration or how the agency or holding company participants profited. Did they do this in the best interest of their clients? No one can say categorically. Nonetheless, it is clear this was done to enhance the profit margins of the holding companies.
If you listen to the lunch and cocktail conversations, which can be very insightful, holding companies were tired of the lack of client loyalty and saw too many clients jump ship because another agency would do the same work for lesser fees. So instead of Holding companies holding the line on fee negotiations, they simply decided to put their integrity aside, take rebates from vendors after spending their clients’ money, or take a principal position in media, buy low and sell high, and all they told their clients was “it’s a good deal” and not much else.
Perhaps it was a good deal for the advertisers who were used to paying higher costs for media schedules. Nonetheless, a “good deal” for an advertiser does not excuse media agencies that were supposed to be providing their clients with the best possible deal when purchasing media, to then offer a better deal because they were able to gain a greater profit margin for themselves. And, according to the ANA report, it was often done to an unsuspecting client who was simply working with their Agency Of Record for planning and buying while another affiliate of the holding company acted in stealth fashion to increase the holding company’s take from the client / advertiser.
The lack of transparency as it relates to profit margins of individual transactions is common practice. Companies do not generally expose their profit margins to their customers, nor should they. Do media companies like CBS, or Viacom, or Time Warner and many others discuss margins on their individual transactions; no! Profit margins are proprietary and if a customer is happy with the business they are receiving and there is no breach of trust all is well. That is an acceptable lack of transparency because there is no expectation to the contrary.
It shocks me to see some of the people in the Ad agency industry that do not see this as an issue. Has issues of character and integrity become so unrecognizable that it can’t be seen, and is lost on the unsuspecting planner / buyer following the dictates of management?
I was brought up to understand that silent deception of the truth is “lying through omission” as my parents used to say, and I like to think that integrity will always be held sacred because, in the end, integrity is the only thing we have in our possession that cannot be taken away, it can only be given away. Maybe after 36 years in the business that I have always loved because of the constantly evolving nature of media and advertising, my thinking has become a vestige of the past. I can only hope that is not true
The ANA report highlights more than the lack of transparency in business practices. It highlights the lack of integrity and a breach of trust among business partners that is simply unconscionable. Shame on those who gave away their integrity in order to increase margins.