Tom Denford
By Tom Denford
Jul 28, 2016 10:44:26 AM

Advertisers Dropped The Ball On Media

 

A year ago, the US was still in denial. Many advertisers did not believe that media rebates existed. They have now received a violent wake-up call.

What many have alleged over the years has now become accepted fact thanks to the ANA and K2 Intelligence. We now know that some media agencies have not been acting wholly in the best interests of advertisers.

One reason for this is that agency business models are complex and confusing. Part of that problem is that media agencies do not always clearly differentiate between the different types of service they offer and whether they are acting as agent or principal.

But perhaps the biggest thing that we’ve learnt is that brands share a huge chunk of the responsibility for allowing this state of affairs to develop.

Put simply, media was not high enough on the corporate agenda when the scale of investment was taken into account.

Companies developed an attitude that it was acceptable to spend hundreds of millions of company marketing dollars by simply handing over the responsibility to their media agencies.

The bottom line is that some advertisers became too trusting of their agencies. They gave up control and decision-making power and didn’t understand the complexity and risks of the media process.

Their lack of oversight on media investments allowed agencies to operate without accountability and abuse clients’ trust.

The key reason that they had to do this is because at too many companies internal media capability has been so poor.

So if that’s what we’ve learnt, here’s what brands should do about it:

First step is to invest in implementing better governance over their media investments. This involves having sufficient talent internally as well as a commitment to continuous improvement through a program of training.

The second step is to update their contracts with agencies. Right now these have far too many loopholes. It’s now simple to upgrade the contract language thanks to the template that the ANA has developed – with credit to ISBA in the UK. But actually implementing the upgraded contract is far harder and creating the right climate for re-negotiation will be the biggest challenge for most advertisers now.

The third step is to ensure clear processes are in place on how the brand works with agencies and that there is a robust program of agency performance evaluation to keep all partners accountable.

Delivering all this requires both a mandate from the board and internal leadership. The Chief Media Officer role, as recommended by the ANA, needs to make a welcome comeback, providing not just corporate leadership and accountability for the large investment but also developing a manifesto for the role of media within the company. This needs to detail how media can deliver growth for the company and will be bespoke to each sector.

A year on, brands must invest in the knowledge and tools to make their media agency a trusted partner once again.

What every marketer needs to consider is a plan for change. It has to be a plan that recognises the new reality, the existence of rebates, non-transparent practices and the complexity of the agency model. Most importantly it has to commit the marketer to a change of behaviour.

This will be a journey to a better agency relationship. One that ensures media delivers for the business, with the tools in place to monitor performance.

Inertia will simply lead to disadvantage.

This article was published on MediaPost on July 25, 2016.