Four Days In Florida: A View From The ANA Advertising Financial Management Conference
The ANA’s annual gathering of 700 marketing procurement leaders is the largest such event in the world. As such it’s a great place to take the temperature of the latest thinking around marketing, media, agencies and procurement.
Last year, at the same conference, I reported back that it was alive with talk of media rebates. This year too, rebates were on the menu, although the main dish – the results of the ANA’s investigation into whether they actually exist – won’t be served up for some time yet.
Bob Liodice, the ANA’s president and CEO, highlighted that the much-anticipated report would now come in two portions. Firstly there would be a factual – what’s really going on – report from K2 Intelligence which will present the findings of their investigations. Secondly there will be a companion report authored by US media auditors Ebiquity, which will be a set of guidelines for marketers to establish “transparent trading relationships”.
We expect it will be highly likely that one of the major outcomes of this ANA initiative is marketers looking to improve the quality of their contracts with media agencies, with Liodice noting that there is an “uneven playfield” here.
He stated that marketers will need to invest in good quality media training to improve their knowledge and behaviors and ensure they have the ability to follow their media money in more transparency ways.
Liodice made it very clear, however, that the ANA is not planning to create a best practice contract, but he did praise the UK trade body ISBA for its new media contract template as something that all marketers, be they in the UK or the US should look at.
The big agency name on the conference agenda was Michael Roth, chairman and CEO of IPG, who was typically charming and refreshingly open about the approach his holding group had taken on rebates and media transparency generally since it recovered from its own awkward accounting scandals some 11 years ago.
Roth insisted that at IPG agencies, rebate management processes were clearly outlined in contracts that had existed for over a decade and was adamant that where there is ever any ambiguity over media rebates, they automatically go back to the client. This was a crystal clear message to the conference delegates at a time when the conversations around media trading practice have tended to involve many shades of grey.
“You shouldn’t be the agent and the principal at the same time”
Interestingly, he said that IPG didn’t take a position on inventory and resell to clients. “I can look client in the eye and say we are representing you,” he said. “You shouldn’t be the agent and the principal at the same time. We are sticking to that model until the market dictates differently,” he said, before adding that the IPG barter business stood outside these principles.
Away from rebates and relationships there was also lots of great content from companies who are getting the procurement marketing relationship right.
Target, Coca-Cola and Mondelez all had lessons that other brands could benefit from. Jeffrey Jones, CMO of discount retailer Target, highlighted the way that everyone at the company was aligned, with shared goals and identical incentives for marketing as for finance. That gives the company a unified set of metrics, helping to create a strong sense of common purpose.
Over at Mondelez, Deb Giampoli, director of global strategic agency relations, talked about the company’s approach to innovation, dubbed Fly Fearless, which is changing the way it selects agencies, often without a pitch.
The company selected five small brands and five hand-picked agencies, looking to develop creative over a 10-week period but not production.
Each Mondelez brand taking part in the pilot was then given an option, either to stop or continue into a deeper relationship with that agency. Four out of the five continued and developed into bigger projects and the approach was designed to develop a framework to make closer collaboration with agencies and make them better business partners for Mondelez.
For her, this new approach reflected the fact that agencies are changing as the ad market changes too.
“If you’re going to build an agency today it’s not going to look like the big global agencies any more. You will see agencies that are more fluid in the ways they access talent. Some of the biggest agencies now are not traditional Madison Avenue agencies,” said Giampoli.
The final highlight for me was Christina Ruggiero, Coca-Cola’s chief procurement officer for North America. One of the “Red People”, her approach is that marketing procurement should be developed by procurement but sit under marketing in order to support the marketing function.
By contrast to Pepsi, which recently abandoned procurement for marketing, at Coke, which clearly feels it has made it work, marketing procurement now reports into marketing.
“I find it curious, as a leader and a procurement professional I find that experience in procurement makes a better business leader,” commented Ruggiero about the “blue people”. “If an organisation decides that ‘procurement is not for me’ then I think it’s not procurement done well.”
Coke remains committed to incentive based compensation but her definition was nuanced.
“As a leader and a procurement professional I find that experience in procurement makes a better business leader”
“How do you measure value (versus cost saving targets)? The goals at Coca-Cola are operating income, margin and cash, same for the CFO. We need to generate added value to be able to reinvest that in building brands, that’s a subtle thing but very different to saying I need to save money and find 5%,” she said.
It was another valuable ANA Advertising Financial Management conference. What we may have missed in terms of media transparency and rebate discussions was made up for with some great case studies from leading CMOs and CPOs on the recipe for getting procurement and marketing to work better together.
With an impending fall-out from the published K2 report into US media rebate practice, marketing and procurement are going to need to stick close and tackle media transparency together in the coming months.