Jeff Estok
Jun 3, 2015

Transparency, 'digital erosion' highlight marketer concerns over media

Navigare's Jeff Estok reports on the top marketer concerns raised at the recent 2015 ANA Advertising Financial Management Conference.

Jeff Estok
Jeff Estok

In late May, a record 700 marketing, procurement, and agency representatives descended upon Phoenix, Arizona, for the 15th Annual ANA (Association of National Advertisers) Advertising Financial Management Conference. While the topics were wide-ranging over the course of the three days, two in particular seemed to fuel the record attendance: Media-agency transparency (or lack thereof) and the estimated US$10 billion 'digital erosion'.

Media agency transparency 

What was interesting about the transparency discussions was that despite the international evidence to the contrary, including MediaCom here in Australia, the media-agency attendees and panelists unequivocally rejected the notion that kickbacks, value banks, and other ‘intangibles’ exist in the US.

Irwin Gotlieb, Chairman of GroupM Worldwide. told the audience that complexity and lack of understanding are often confused with opaqueness. "Just because you don’t understand it, don’t assume the other guy is a crook," he advised.

However, Forrester research from March 2014 showed that 82 per cent of marketers surveyed have some level of concern about the level of transparency between them as a client, and their media agency. And of those who answered yes, 42 per cent said that these concerns had increased over the last 12 months. Clearly not a meeting of the minds.

Digital erosion

It has become obvious that advertisers are paying for served impressions rather than viewed impressions when it comes to digital. And this tops the list of advertisers’ concerns in the Forrester study—even higher than media rebates. 

Advertisers have good reason to be concerned, with the ANA estimating that the devaluation of digital media is at least 25 per cent of the roughly $40 billion that is being spent in the US. Forget the technical terms like bots, malware and swagbucks. What you really need to know is their impact on impression delivery: Approximately 36 per cent of web traffic is considered fake, 31 per cent of all display ads are not seen and 50 per cent of online video is never seen by a human being.

Better briefing as an ANA deliverable

One of the ‘ANA White Paper’ insights was that improving client briefs must be a priority. Fifty-eight per cent of clients responded that they provide clear briefs, but only 27 per cent of agency respondents agreed. 

And while this 27 per cent reflects a top-two box score (strongly agree/agree), none of the agencies ‘strongly agree’ that client briefs are clear. This should be viewed quite critically, and may finally provide John Wannamaker with the answer he sought when he famously wondered which half of his advertising spend was being wasted. The ANA views this with the same concern, and has slated a three- to six-month timeframe for addressing the issue of better briefs. Watch this space.

The case against performance-based remuneration

There was a great deal of myth-busting in this session, with a separate Forrester Research concluding that it is time to abandon the practice altogether.

Findings included:

  • Clients with incentive programs are often less profitable for the agency than clients without incentives
  • Incentive compensation represents less than 3 per cent of total agency income
  • Performance-based remuneration does little to drive agency performance
  • The key to driving better agency performance is through partnerships, not contracts.

Surprisingly, many of those engagements with PBR in place don’t have a formal client-agency engagement assessment protocol in place, making the incentives even more arbitrary.

The rise and rise of the in-house agency

According to a 2013 ANA survey, 58 per cent of marketers had an in-house agency of some type.  And that number appears to be growing.

Skeptics might point to the usual arguments against in-sourcing: the inability to hire and retain top creative talent, the lack of tight internal briefing protocols and the political infighting over who has final creative say. But for those companies with high ‘churn and burn’ print, video, and digital requirements, speed and cost efficiencies trump external resourcing. Combine that with the growth of production outsourcing, and the message to agencies is clear: Clients are demanding quicker and cheaper.

The emergence of procurement 3.0?

Eli Lilly presented a compelling case study on its journey from a tactical sourcing department to a business partner, both internally within Lilly, and externally with suppliers. The company conducted qualitative and quantitative research initially across five functional groups to map and segment the views of procurement, to identify the perceptual and logistical barriers to engagement and to develop strategies and actions to eradicate, or at least minimise, these barriers. 

In short, they treat procurement as a brand, and continue to invest in research and feedback on how they can add value to the organisation’s efforts. Including innovations like an internal call centre to help solve stakeholder problems. Hopefully this is the future of procurement?

The conference provided great food for thought. And hopefully action.

Jeff Estok is Managing Partner of Navigare, a Sydney-based global consultancy specialising in client/agency engagement management.

 

Related Articles

Just Published

5 hours ago

Mindshare adds dedicated China leadership

EXCLUSIVE: APAC CEO Amrita Randhawa has relinquished her China responsibilities to two new leaders, Benjamin Condit and Linda Lin.

5 hours ago

Pinterest unveils new tools and insights for marketers

Major takeaways from the platform’s first global advertiser summit.

6 hours ago

Crash Course: How to develop a content strategy

You know content should be a key part of your overall brand strategy, but where do you start? This course explains the key steps you should take to ensure an effective content journey.

6 hours ago

The unlimited potential of live storytelling in ...

Brands like Standard Chartered, Uber Eats and Mastercard achieve impact by marrying human emotions with the unpredictability and excitement of live sports.