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Industry Contributor 11 Feb 2021 - 4 min read

Agencies and the ACCC: We're way beyond education and most advertisers don’t care anyway

By David Angell, Business Director - Trinity P3

The ACCC thinks marketers need to inform themselves about the role of agencies in the digital advertising supply chain. But after five years of continuous ‘agency transparency’ debate, do advertisers actually care? 

What you need to know:
  • The ACCC has told advertisers to self-educate in order to self-regulate the market and their agency partners.
  • But the transparency debate has been going on for years.
  • Do marketers need to be told this?
  • Do they actually care?
  • Most of them probably do not. 
  • Transparency is too hard. They want cheap digital media. As long as it looks good to present internally, no dramas.
  • So let's just move on.

I read with interest an article in Mi3 (ACCC adtech inquiry: Brands told to wise up over arbitrage, adtech, but Google noose tightens).

Having also read the ACCC report, my interest in the article was primarily to do with the ‘role of media agencies’ angle.

Correctly, the article summarises the main advice from the ACCC regarding the role of ‘ad agencies’ is a need for advertisers to self-educate in order to self-regulate.

In the words of the ACCC: "The ACCC’s preliminary conclusion is that potential issues relating to ad agency conduct may be mitigated through advertisers informing themselves about the impact of certain practices (e.g. rebates, discounts and incentives, agency-wide fee models, and whether the agency owns any ad tech services) and seeking protections in contracts to ensure their contracting agency acts in their best interests."

Education is so 2015

The fact that the ACCC feels the need, in 2021, to recommend that advertisers ‘inform themselves’ on agency practice frustrates me.

Surely we’re way beyond ‘informing’. Any advertiser who employs an agency and doesn’t have at least a basic grip on this topic must have been living in a cave.

Other than the trade press, there are many well publicised sources. Sources that marketers, procurement people, advertisers do (or at least should) consider. Marc Pritchard, anyone? Bob Hoffman? Augustine Fou? The ANA? The AANA? ISBA? The MFA? The WFA? The IAB? Even, dare I say it, Darren Woolley?

The amount of material is huge, and even if we remove emotion and bias from some contributors, most of it says pretty much the same thing.

Advertisers already know enough to ask the right questions

At TrinityP3, in the last five or six years of consultation with numerous clients (in other words, post 2015 when the first ANA media transparency report was published), we’ve been asked many questions.

Such as ‘Can you explain how the programmatic supply chain actually works?’

Or ‘Years ago I signed an addendum to my agency contract which told me that they’d be using something called a trading desk. What does this mean?

Or ‘The winning agency in our pitch must be transparent. What’s the most transparent model to use?

Or ‘I’m worried about the agency having too much data control, it feels like a black box – what can I do?’

Such questions arise in a pitch, an assessment project, or an alignment or transformation project.

Alternatively, in the absence of questions but having reviewed a process, or a contractual document on behalf of a client, we are obliged to make recommendations that address best practice.

Execution is nine tenths of the law

Despite the intent, I’d estimate in 80 per cent, or more, of cases, the advertiser involved will implement at best some, at worst none, of the answers, options or recommendations provided.

For example in a pitch, when offered a disclosed and more transparent digital trading model, the advertiser is more likely to stick with the opaque black-box offer.

Why is this? Generally it boils down to three things:

  1. The vigilance required to ensure ‘transparent’ operation is too hard.

  2. The advertiser is aware of agencies making hidden mark-ups, but is also aware that the agency service fee is negligible – or isn’t really bothered as long as numbers presented internally look good.

  3. The lure of cheap media at scale (particularly cheap ‘digital’ media, despite overwhelming evidence to demonstrate shortcomings of both the medium and the methods) trumps everything.

Is the care factor missing?

Most advertisers don’t seem to care enough that the agency is clipping the ticket here and there to upset the status quo or invite real change. This doesn’t mean they don’t care at all. Just not enough.

In most cases they simply have too much else to deal with, and for some, as part of the overall picture, it’s just not that big a deal.

I’m not talking about everyone, of course. Some marketers care enough to attempt in-housing; some are vigilant about contracts and holding agencies to account; some, like Marc Pritchard, make it a central plank of professional ambition.

But I am talking about a probable majority in Australia and a certain majority in many of the Asian markets I’ve worked with over the past two years.

More and more, it feels like the industry, and industry commentators, care more about the issue than the advertisers they represent.

So what about the ACCC agency conclusion?

The ACCC is right. The question of an agency’s role in opaque trading practice is not a monopoly issue, far from it. It’s primarily a contractual issue and a trust issue.

To ensure a mutually beneficial arrangement, the due diligence of the advertiser is required, not government intervention. This is completely different from the much bigger challenge of Google’s dominance throughout the ad-tech supply chain.

If advertisers don’t care enough to force change, nothing happens. In a cut-throat, competitive industry, if agencies are hired and targeted primarily against their ability to deliver cheap media at scale, if service fees remain unprofitable, if advertisers sign agreements allowing agencies to exploit other profit avenues, then agencies have no incentive to change.

Within legal boundaries, that’s business, and every corporate advertiser in the world seeks to maximise profit from their own customers in the same way.

Some agencies are unscrupulous. Others have more integrity. All need to be profitable. It’s the same in every industry.

Frankly, I’m tired of the agency transparency debate, and the haranguing subtext that every agency is ‘bad’ – about as tired as I am of the continuous degradation and commoditisation of the services agencies (at least the good ones) can provide.

Stop the flagellation and move on. Much is in place to improve transparency both now and incrementally over time – but only for those advertisers that care enough to make it happen.

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David Angell, Business Director

Trinity P3

Business Director at Trinity P3, David Angell has extensive commercial and media experience gained most recently as the Regional Chief Operating Officer at Havas Group and through an almost twenty-year career in media agencies.

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