New 4A's Chief Must Let Advertisers Follow the Money

Agencies and Marketers Remain Apart on Transparency Issues

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I don't look for much clarity to emerge when -- or if -- the ANA board meets with the 4A's board to discuss media-transparency issues. After the ad-agency trade group rejected the marketer trade group's guidelines created by consulting firm Ebiquity, the ANA invited the 4A's to a discussion at the ANA Masters of Marketing Conference in Orlando, Fla., this year.

It doesn't sound as if the 4A's is very interested in any sit-down.

Nancy Hill, president of the 4A's, said the agency group didn't want to get into its members' contract negotiations. "It is inappropriate for a trade association to comment on contractual language, which is between two contracting parties, not between two trade associations," Ms. Hill stated.

The ANA has no such reluctance. Whereas the 4A's stance has been that clients don't have any business poking into agencies' activities beyond the direct client-agency partnership, it's the ANA position that they most certainly do have such rights. And the marketer group has come up with a long list of ways it says are inappropriate for agencies to make money.

The ANA guidelines state that "all financial and other benefits, other than fees or commissions agreed upon in the contract, that are received by the media agency and its affiliated and related parties, should be returned to the advertiser in the manner set out in the contract unless expressly agreed otherwise."

The transparency document goes on to stipulate that "financial and other benefits should be defined as widely as possible." Agencies must return cash rebates, discounts, free/bonus inventory, early payment discounts, deferred payments, barter income, service agreements with media suppliers, consulting or research agreements with media suppliers "and any other forms of consideration."

Any deals between agencies and media suppliers "can only be entered into if approved by the advertiser and provided that (a) they are disclosed in advance to the advertiser, (b) the AOR certifies that such arrangements are not in any way related to the advertising spend of the advertiser (either alone or in aggregation with the advertising spend of any other advertiser(s)), and (c) the advertiser has the right to audit and confirm the same."

What we have here is a classic standoff. Both sides are so far apart that I don't see how there can be any accommodation. Complicating the matter is that, with the announcement of her departure next year, Ms. Hill is now a lame duck, and I get the feeling that the agency side doesn't want to put its cards on the table until a new president is appointed.

The 4A's is not in a position of strength here, even discounting the fact that its members are the suppliers in the relationship. The 4A's does not have anybody on its board of directors representing agency holding-company management. Board members are heads of individual agencies, both creative and media, most of which are owned by the holding companies. But there is no one who reflects the thinking of the people who run all the interrelated parts of the operations across the world -- and who are in a position to explain the rationale for entering into specific agreements with media and other suppliers apart from the AOR relationship.

The ANA is taking an extremely firm (and some would say harsh) stance here, and it's important (some would say crucial) for the 4A's to justify why its agencies have the right to make money beyond the traditional client-agency model.

It's also evident that the priorities of the new 4A's head have to change to embrace and explain the complex structure of agency holding companies. Ms. Hill told Ad Age that when she became president of the 4A's her "remit" was to modernize the organization "and I think we've done that pretty successfully and moved from being somewhat focused on being a trade association to somewhat of a community organizer and bringing the right people together in the room at the right time to get stuff done. We're much more proactive than we used to be."

The next head of the 4A's needs to be proactive in a different way. He or she needs to move beyond the group's community organizer role to embrace a much more sophisticated approach to how its agencies do business. Agencies will not be greeted with open arms by their clients if they continue to argue that it's none of their clients' business what other deals they make with their media partners.

The ANA has said that, at its core, transparency is about marketers' ability to "follow the money." It's the agencies' job to allow clients on this journey while at the same time showing clients why it's justifiable for agencies to make money outside the traditional way without compromising client trust.