Recently, the Association of National Advertisers (ANA) sent an RFP to professional auditors, research firms, agency search specialists and management consultants to undertake a study of how media is bought in the U.S. with an emphasis on the practice of AVBs or rebates. Separately, the American Association of Advertising Agencies (4As) announced the formation of a task force to address the issue of media rebates, with the goal of issuing new “Best Practices” and “guidelines” governing this area.
The good news is that both industry groups have taken to heart advertiser concerns regarding the use of rebates and the reporting of non-transparent revenue.
Sadly, a collaborative effort between the two industry associations would have been ideal if the goal was to clearly identify the appropriateness of this practice, the extent to which it does occur and to formulate guidelines that both the ANA and 4As constituents could agree to.
Ultimately, both advertisers and agencies benefit from the identification of practices that could impede trust and potentially mar client-agency relations. Further, a timely joint resolution regarding the use of rebates in the U.S. market would also send a clear message to the other side in this discussion about what is and is not acceptable and that would be the media sellers.
After all, there is a precedent for the two organizations to marshal their resources to address issues of importance to their constituents. Two obvious recent examples are the “Trustworthy Accountability Group” or TAG alliance and the “Making Measurement Make Sense” or 3MS task force both of which include the ANA, 4As and IAB that are tackling the issues of digital media fraud and digital media audience delivery measurement respectively.
One might argue that nothing is more important than the need to restore trust between advertisers and agencies. One need look no further than the recent spate of media agency reviews taking place by advertisers such as; P&G, Volkswagen, Sony, Visa, L’Oréal, Johnson & Johnson, Sears, Unilever, General Mills, Coca Cola, Daimler and Citigroup to name a few to understand the need to restore both transparency and confidence.
Therefore it would seem that removing any obstacle which hinders that goal would be expedited if both the ANA and 4As were teamed up to tackle the issue. Of note, the number and size of the aforementioned relationships which are in review comes at a significant cost to advertisers and agencies. Both the time and out-of-pocket expense associated with conducting the reviews and the transition and integration costs associated with onboarding a new media agency partner.
As many astute industry followers believe, the ultimate answer to the issue of rebates will be rooted in a broader conversation around agency remuneration and what is considered fair and appropriate. In order for this conversation to occur and to bear fruit, both sides will have to come to the table in the spirit of full-disclosure and be prepared to engage in open, honest dialogue. Thus, a joint approach on rebates could have set the tone for ultimately addressing one of the root causes of the problems.
As New York Times best-selling author Patrick Lencioni so aptly stated:
“Great teams do not hold back with one another. They are unafraid to air their dirty laundry. They admit their mistakes, their weaknesses, and their concerns without fear of reprisal.”
Either way, we wish both the ANA and 4As success with their efforts in resolving the questions surrounding the use of rebates. We believe that putting the topic of rebates in the industry’s rear-view mirror sooner rather than later will allow advertisers, agencies and publishers to move on to the more economically damaging issue of digital fraud, which according to the ANA will cost advertisers $6.3 Billion globally in 2015 alone.