Yesterday's news of Dentsu Japan overbilling long time clients Toyota for its performance marketing services sent ripples through the marketing industry. While the car manufacturers did not want to comment initially on the matter, a Toyota spokesperson has since come out with a statement to Marketing, saying:
“At Toyota, we value our relationships with our agencies and other partners. While we are not in a position to provide additional details, we have been notified by Dentsu of irregularities in some digital media business transactions. We would like to refrain from commenting further at this time."
While this is not the first time such an incident has happened in the programmatic space, and the waters in that area still remain murky, it has caused several marketers in the region to sit up and rethink their relationship with their agencies given Toyota's long standing history with Dentsu.
In a conversation with Marketing, Juliana Lim, senior marketing director of KFC said the Dentsu Toyota revelation does in fact make her uncomfortable “to a certain extent.” She said while the brand does track overall performance of digital campaigns in house, a large part of the relationship with its agencies is "based on trust" .
We take our media agency's reports mostly on face value.
“We don’t have a specific performance tracking tool in house because acquiring programmatic tracking tools in house is also an expensive matter. The programmatic and digital space as well is constantly evolving,” she added.
Another senior global marketer who spoke to Marketing under anonymity said the move was indeed worrisome for clients and advertisers. He said that with the recent ANA findings, overcharging and fraud in Australia and now Dentsu overcharging in Japan, “such dodgy practices must be widespread”. He said:
Technology is supposed to make this easier and more transparent but this isn't always the case, particularly when it comes to areas like programmatic.
He added that while he hasn’t actually felt, or found evidence of being overcharged for account management, what he finds challenging are the “dubious deals on outdoor placements in emerging markets, the lack of transparency on rebates in big regional deals and in digital programmatic buying.”
“There is a view there that some clients have cut costs to the bone for their agencies, leading them to seek other revenue but in the case of Toyota they are a company spending billions in a long-term and personal relationship with their agency so there must be more going on,” he added.
Echoing the sentiment was Juliet Yap, marketing director at Carlsberg Malaysia who said this was a key concern for her because most brands and marketers “did not know exactly where the money was spent, and how it was spent.”
Often, with the media buying space being a black box, we are not aware of what we do not know.
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According to Yap last year, as part of a global effort, Carlsberg Malaysia recently carried out a compliance and procedural audit. This has proven to be useful as it helped in pointing out some areas on how the brand could have greater transparency. However, it is also a costly exercise, she added.
KFC’s Lim added that an audit body could be possibly set up to put a system in place which could call for media and digital media buying audits regularly as well as at random.
Meanwhile, Decathlon’s head of marketing and communications, Clarence Chew said self-sufficiency is needed for marketers now as it is the only way to ensure that such issues would not happen.
“This means that marketers need to limit their exposure to being overly-reliant on outsourcing so many core functions. There needs to be some kind of quality control process to prevent this from happening or the industry would just see a natural death,” Chew said.
The marketer speaking under anonymity said ultimately transparency is the solution and more needs to be understood as to how media is bought and where the money is spent.
Auditing is one solution but then marketing may become like the accounting and financial services industries, where regulation is needed or stronger self-regulation sought out.
He also urged for a more evolved relationship between clients and agency partners where agencies would no longer be seen as a “commodity”.
“Agencies shouldn't be cutting and cutting their costs until they feel pushed into a situation where they feel they need to disguise costs. There might be good template for agencies to follow in the form of management consultants where they don't drop their pants on cost. They value their time and expertise and charge accordingly," he said, adding:
Agencies also need to take their reputation much more seriously.
This reputation has been hampered for a while now as agencies are more and more now seen as “flippant with reputation and trust” due to the rise of scam awards. Other reasons also include, not investing enough into hiring the best and brightest minds (always opting for low cost resources and juniors until they burn out) and being inconsistent in their costs and the value they bring.
“Both agencies and marketers need to show what they bring to the table, how much revenue they create or how you're making customers happy and do it in a transparent way and many problems go away.”