The Association of National Advertisers (ANA) has finally revealed its new guidelines to ensure transparency between agencies and clients.
The guidelines are part of a new report, "Media Transparency: Prescriptions, Principles, and Processes for Marketers," that was developed by the ANA in conjunction with Ebiquity, a leading independent marketing analytics specialist, and its subsidiary, FirmDecisions.
It follows a June release of an ANA-commissioned assessment by K2 Intelligence that found non-transparent business practices, including cash rebates to media agencies, were pervasive in a sample of the U.S. media ad-buying ecosystem.
According to a press statement, marketers are now expected to require media agencies to be fully transparent in their proceedings in order to elevate trust and restore confidence in the agency-client relationship.
This was part of a wide-ranging set of recommendations released by the ANA and Ebiquity/FirmDecisions.
One key recommendation was that clients require their agencies to disclose all potential conflicts of interest and allow thorough audits of the agency, its parent company, affiliates, and subsidiaries to ensure full transparency and contract compliance.
ANA also released a recommended contract template and urged marketers to leverage it as the foundation for their master services agreements with agencies.
The template was first created by the Incorporated Society of British Advertisers and was adapted for the US marketplace by ANA general counsel ReedSmith LLP. It includes provisions such as requirements that revenue earned by the media agency and agency-related parties should solely be fees and commissions set out in the contract, unless agreed upon by the advertiser.
All financial and other benefits should be returned to the advertiser unless expressly agreed otherwise by the advertiser, the template stipulates.
The K2 Intelligence study, conducted from October 2015 through May 2016, revealed "evidence of a fundamental disconnect in the advertising industry about the advertiser-agency relationship."
The study indicated that in general, advertisers expressed a belief that their agencies were duty-bound to act in their best interests. Agency executives on the other hand said their relationship was solely defined by the contract signed between both parties.
In addition, K2 Intelligence found evidence of potentially problematic agency conduct concealed by principal transactions; as a principal, an agency purchases media on its own behalf and later resells it to a client after a markup.
It also found considerable media management deficiencies among marketers and emphasises the need for substantially increased accountability and more disciplined processes, such as greater rigor in contract development and governance stewarded by a "chief media officer."
This individual would serve as a centralized internal resource to oversee media strategy, partner with external agencies, and work with third-party suppliers to optimize the media mix and share best practices across teams.
"The purpose of these guidelines is to provide marketers with prescriptions for addressing transparency issues specific to the K2 Intelligence study," Bob Liodice, ANA president and CEO said.
"We outlined actions marketers should consider to diminish or eliminate non-transparent and non-disclosed agency activities and to ensure that their media management processes are optimised," he added.
"Advertisers are now experiencing a unique environment where demands for financial accountability and ROI are increasingly high, while transparency into media spending is difficult to achieve," said Michael Karg, Group CEO, Ebiquity.