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Nadia ShchipitsynaAug 03, 201615 min read

#MediaSnack - July 2016

 

Each week we will give you a tasty, bite size tour of some of the most interesting stories, letting you know just what you need to know and providing our expert perspective where we can.

ID Comms #MediaSnack - Get your fill each Friday, in just enough time it takes to eat a sandwich. Enjoy

#MediaSnack Ep. 32: Media agencies & auditors go to war

On this rather meaty #MediaSnack 32 we review 3 big stories each likely to have a significant impact on the global media industry.

First off we can't escape the Brexit UK referendum decision and its potential impact on the UK marketing scene and how it might affect marketers behaviours in the coming months. We try not to get caught up in the general negativity and whilst managing Brexit certainly has its challenges from a political perspective, if its going ahead then agile and ambitious companies will already be figuring out their best next moves to make the most of the opportunities. Those opportunities in media are likely to be significant, the rejection of the political status quo by UK citizens could set some precedent for marketers’ rejection of the status quo when it comes to the current media landscape and ways of working. There was already some appetite for change and re-invention in the media industry, which we have discussed before, but perhaps this may accelerate somewhat with the referendum decision. David and Tom consider how different kinds of marketers might react and hope their reaction will be largely proactive, optimistic and brave. This is the time to adopt a challenger mindset, think in leaner and more agile ways and consider how positive disruption might benefit your marketing organisation. Things are going to be tough, we all need to plan to survive and then flourish, to make change and innovation better than the status quo.

Next we report on a fascinating story coming out of the US, the Chase retail bank has launched a deep audit of their media agency Zenith in the US and have hired corporate investigations firm K2 Intelligence and media auditor Ebiquity Firm Decisions to execute this. You will recall that these are the same two firms who have also provided the analysis for the Association of National Advertisers (ANA) recent investigation into media rebate practice in the US. The fact that the CMO of Chase sits on the board of the ANA could suggest that this might be just the tip of the iceberg and we may see other ANA members follow suit with big audits of their media agency practices.

Finally, Firm Decisions is in the news again, this time they are being taken to the High Court by the world’s biggest media buyer GroupM. The claim lodged by the agency group accuses Firm Decisions of potentially misusing privileged data sent to them by mistake. Firm Decisions is yet to respond to the claim. We have reviewed the court papers and GroupM’s requests seem logical and reasonable, to request Firm Decisions prove they have deleted materials and account for how they came into possession of them. The alarming element is that this has ended up in court in public view, its very rare for agency and auditor to end up in court and is not reassuring for advertisers at a time of uncertainty to have the integrity of a leading auditor called into question. All at the same time Ebiquity Firm Decision are imminently about to publish their part of the ANA report into media rebate practices in the US….

All of today’s stories are just the beginning, all will run much further so we will keep an eye on their progress in the coming weeks.

 

#MediaSnack Ep. 33: Brands preparing 2017 media pitches

On #MediaSnack 33 we provide a little update on the 2016 media agency pitch market. As you will recall it was a busy 2015 with fun-sounding MediaPaloozas and scary-sounding MediaTsunamis at every turn. This year has been a little quieter so far, perhaps because brands have been holding back a little to see how big events like the ANA #RebateGate reports resolved and if #Brexit would materially change the UK and global economy. Now those events are passed, but the implications still becoming clear, we expect more brands to be preparing to launch media agency pitches in Q4’16 or Q1’17.

We have seen this week IKEA announce the conclusion of their global framework pitch (read more in AdAge, AdWeek, The Drum, Horizon, Campain or M&M Global) with Diageo and BT are still in progress. We encourage ID Comms clients to consider pitches carefully and try to avoid pitching solely with a financial objective to cut costs, this is typically a short-sighted tactic which affects business performance in the longer term. A race to the bottom on costs and pushing agencies just to save money creates many of the transparency issues we have been discussing for years. We find these days marketers are more keen to discuss their own behaviours and how they can evolve their media management processes, which deliver better value for their media investments.

Next, we report on some highly-charged accusations by Sir Martin Sorrell, CEO of agency group WPP. His target today is ‘media auditor’ Ebiquity and their contract compliance division called Firm Decisions. Sir Martin’s accusation is that there is a conflict of interests for the same company (Firm Decisions) performing forensic financial audits of agency book and then reporting back to clients who could (in theory) instruct Ebiquity to pitch that agency. It is a logical conflict of interest potentially but in practice it is probably low risk. SMS taking time out to raise this is probably another indicator of the tense relationship between agency and auditor; the two companies were featured on last week’s Episode because they’re currently battling in the High Court in London. As a client of WPP, Ebiquity or Firm Decisions you’d be right to be growing a little impatient with the pettiness of these fights and wondering why these smart companies can’t collaborate their resources to tackle marketers’ many challenges and stop briefing against one another.

Whilst Sorrell's conflict of interest accusation may be overblow, we do think that a potential conflict of interest lurks within the ‘auditor and advisor’ industry though, which Sorrell doesn’t highlight, and that is where auditors are receiving income from agencies and vendors. We think it is critical for marketers to be assured that they know exactly where their auditor, consultant or advisor has ANY commercial relationship with media agencies or media vendors because any preference this creates could affect their objectivity and advice, especially with regard to guiding complex, high-profile media agency reviews.

As you know, at ID Comms we are very proud of our 100% neutrality and objectivity - we have zero commercial relationships with agencies or vendors anywhere in the world. This keeps us 100% focused on what’s right for our clients' businesses, not ours. Can you say that about your current auditor or advisor?

Finally, we report on the launch of "Digital/McKinsey" - the management consultant has packaged up its digital assets under a new (cleverly titled) brand. Another step into the agency domain, surely now any remaining aspiration that the agency groups may have had as being the go-to for digital transformation is stunted by the total dominance of the consulting groups to own deep digital scope for the world’s leading CEO's?

 

 


#MediaSnack Ep.34: Ads are funding organised crime

On #MediaSnack 34 things are getting serious in the US as two Democrat senators, Mark Warner and Chuck Schumer, have co-written a letter to the Federal Trade Commission (FTC) asking for clarification on what the FTC is doing to tackle the menace of ad fraud, which is expected to exceed 10% of the US digital market this year. They suggest that means some $7 billion annually is being siphoned off to fund organised crime. No wonder there is now serious political and FBI interest in the advertising industry, the concern is that ad-fraud will be the second largest income stream for organised crime, behind drug trafficking. Not good.

ID Comms founders Tom Denford and David Indo discuss what might be the implications of political interest into ad fraud, and whether this will force a change in the industry. Will this provide the pressure needed to clean up this mess and giant loss of value from client budgets. We also consider what happens when these interested and proactive Senators get round to reading the ANA (Association of National Advertisers) report into US media rebate practice, also known as #RebateGate. Stand by….

Some of the very questions the Senators ask in their open letter include:

Is the FTC observing a trend that favors one particular type of advertising fraud over another? If so, what factors are leading to the prevalence of that particular type of fraud?
What is the projected economic impact of this degree of data and revenue leakage amongst media owners and publishers?
What steps is the FTC taking to protect consumer data and mitigate fraud within the digital advertising industry? What regulatory agency currently provides oversight of mobile advertising platforms?
What steps can be taken to reform opaque advertising exchanges?
What can be done more closely align the incentives of ad tech companies with publishers, advertisers and consumers?
To the extent that criminal organizations are involved in perpetuating digital advertising fraud, how is the FTC coordinating with both law enforcement (the Department of Homeland Security or FBI) and the private sector to formulate an appropriate response?

Next, in this epic episode, we quickly review news that Walmart has handed a bunch of marketing service duties to Publicis group, consolidating a lot of their roster into one group. However, this is only bitter-sweet as Publicis US (MediaVest agency) lost $1bn of Walmart's media account earlier this year. Nobody seems to know who is managing it now... It's not easy to hide (or lose) a billion dollar media account so someone must know where it went. Please let us know.

Finally, we tackle a thorn in the side of media agencies around the world. E-auctions (software which requires media agencies to input competitive media pricing guarantees) have become a more common feature of new business pitches in recent years and this week a media agency leader, Mediacom global CEO Stephen Allan blew his top over the impact these auctions can have. Mediacom recently lost long-standing client Volkswagen Group ($2bn+ global media billings) which was handed to rival PHD. Stephen Allan's complaint was that VW ran a "blind" auction for media pricing which required agencies to bid ever-lower without knowing what target they were trying to hit. Now, if you're the incumbent agency like Mediacom you already know the existing pricing levels and so your bids should be more accurate, however, according to Allan, VW's methodology encouraged agencies to undercut each other in a race to the bottom on media price. His suspicion was that the business was awarded to the winning agency based on unrealistic pricing being input to the client’s blind e-Auction system.

We discuss the impact of this approach, how it damages the clients business prospects (buying crappy media inventory cheaply and by the ton is not a sensible marketing strategy, or a sensible procurement strategy for that matter) and what happens to quality, strategy and planning when a client indicates that a race to the bottom on pricing is how to win their media account.
Finally, as we record #MediaSnack on a Thursday we didn't have a chance to review Pokemon Go, which released in the UK whilst we were filming…. Pokemon GO is the breakthrough Augmented Reality gaming app that's taken the US by storm. It has some interesting implications for marketers trying to reach a mobile-first audience and is making a sensible shout for AR marketing used to target people in gaming environments. Very clever, we will save for next episode!

 

 


#MediaSnack Ep. 35: Get a Chief Media Officer

On #MediaSnack 35 we devote the whole episode to reviewing the ANA’s Media Transparency Guidelines which were finally published this week after some delay. This draws to a conclusion the Association of National Advertisers’ year-long project to identify the scale of rebate and other non-transparent practices amongst US based media agencies and offer guidance to those advertisers (pretty much everyone) who may have been exposed to this practice or was entirely unaware of the risk.

We look at the main points of ANA’s advice to marketers, including a strong suggestion that most marketers don’t currently have sufficient capabilities to oversee media management internally. They recommend appointing a Chief Media Officer, someone internally who can champion the role of media within the company, have more accountability for media as an investment for growth and someone who can define the relationship with the agency beyond just buying cheap media.

We expect that the guidelines will now trigger many brands into action to upgrade their media skills and capabilities, to take back some control of media management from their agency if they have overly delegated this away. This, as regular viewers will know, is what ID Comms have been recommending for many years; marketers need to have control (ANA calls is “primacy”) over their own media investments. Those brands which do not will be at a serious disadvantage to those who decide to do the hard work to take back some control.

For any brand looking to understand how to upgrade their own media behaviours, start by reviewing ID Comms 7Ts principles, the 7 media behaviours of successful marketers. This simplifies the major tasks and responsibilities of the Chief Media Officer, allowing them to benchmark their organisation and create a roadmap for improvements over time.

One pleasant surprise as part of the ANA’s release was the inclusion of a media agency services contract. A template to guide marketers in creating the best media agency contract. This is a great asset, built on the good work that ISBA (the UK's marketer trade body) executed earlier in 2016. ISBA created a best practice media agency contract, ID Comms was heavily involved in the drafting of the contract and supporting guidelines so we can attest to its quality and robustness. The ANA have used ISBA’s template as a basis for their own version for US members. In our review, we believe that the ANA contract template is of best practice standard, but will be hard for advertisers to implement unless they have sufficient negotiation leverage over agencies to get them to accept these terms. That’s the next challenge for marketers, how to put all this stuff into practice.

We certainly welcome the publication of the ANA's Media Transparency guidelines. We discuss that if advertisers adopt these guidelines then they will certainly be in a better position than they were 12 months ago. In that sense, the ANA have achieved their goal and done what they said they were going to do, the guidelines are sensible, reasonable, considered and fair. We highly commend the ANA for the rigorous process they have undertaken.

Finally, we view this as a significant watershed for the global media industry. We hope that, at the conclusion of the ANA media transparency investigations, this will draw a line under this difficult and toxic chapter for the industry and that advertisers and their agencies can build more productive relationships together for the future.

One major point we raise in #MediaSnack is that while the contract is a critical asset, because it more than anything else defines the relationship with the agency and the type and quality of work they do, the contract has to be tailored to each client needs. In our work with some of the world’s leading advertisers in this area we have learned that every contract has to be based on sensible, best practice behaviours as a framework but carefully calibrated to reflected the individual needs of each advertiser.

Overall, we are happy with the conclusion of the project. The ANA's good work in this area will help us all start to redefine media as a race to the top for brands, not a race to the bottom for low cost and low quality.

If you have any responsibility of your company’s media investments, work with a media agency or work at a media agency, you need to be very well versed on this project.

Part 1: An Independent Study of Media Transparency in the US Advertising Industry

Part 2: Media Transparency: Prescriptions, Principles, and Processes for Advertisers

ANA Master Media Planning & Buying Services Agreement Template

Happy reading, let us know what you think in the comments below or email us at ID Comms.

 

 


#MediaSnack Ep. 36: Haribo got their REBATES back

On #MediaSnack 36 we report on a landmark Supreme Court ruling in Germany which has created a new precedent on how media agencies should manage rebates and other incentives related to media buying. This could have implications and impact into the global media buying market and affect advertisers beyond the borders of Germany. This latest ruling concluded a disagreement which has lasted over 6 years between Haribo and German media agency MediaPlus. The case has been through 3 judgements, firstly found in favour of Haribo in 2010 then reversed on appeal a couple of years later. This latest, final ruling has stated that Haribo does indeed have the right to audit and receive rebates and incentives paid to the agency. The turning point of the case rested on whether Haribo’s contract with MediaPlus classified the agency as “agent” and if so then they should be working fully in the interests of the client and pass back all incentives earned. The court ruled that MediaPlus (and in future any agency) working as 'agent' will be obliged to give full transparency over rebates earned.

Also on this episode we review the recent update made by the International Olympic Committee (IOC) to Rule 40 which relaxes the rules places on athletes with regard to mentioning personal sponsor brands. Previously Rule 40 enforced a blackout of any mention to brands who were not official sponsors of the Olympics. We consider the implications, on both the sponsors (who are potentially losing exclusivity) and the brands who have been on the outside and relied upon guerrilla tactics to get seen and heard.

 

  

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Thank you

ID Comms team

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Nadia Shchipitsyna

Nadia is an enthusiastic marketing professional, specialising in integrated media and marketing communications. Her core skill is her expertise in the detailed planning and structuring of projects to ensure delivery and completion on every part, on time and on budget.

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