Why Does the ANA Seem to Be Tip-Toeing Around the 4A's on Rebate Issue?

Rance Crain Offers His Take on Why Advertisers Are Reluctant to Shine Too Bright a Line on the Rebate-gate

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ANA President-CEO Bob Liodice
ANA President-CEO Bob Liodice Credit: ANA
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As we reported, the ANA steered clear of discussing such hot topics as digital fraud, ad blocking and agency kickbacks at its annual conference in Orlando earlier this month. The confab instead got what the group's president and CEO, Bob Liodice, promised: a procession of inspirational (if somewhat trite, I might add) success stories focused on what's going right with the industry.

We heard speakers telling us that "you only get one chance to be out in front," urging us to "stand for something" and reminding us that our "primary mission is to drive business growth."

Good advice, to be sure, but when the audience wanted to ask questions about the Volkswagen emissions scandal, that line of inquiry was blocked. In other presentations, real-time questions -- asked via an app and voted on by the audience -- were posted on a giant screen, but during the Audi presentation the screen went dark. One guy I talked to said he thought not showing the questions was a "glitch," but I think a more logical explanation is that ANA didn't want to show there was a lot of interest in the VW controversy. Among the questions in the conference app: "How will you handle the elephant in the room, with a mortally damaged owner in VW?" And: "Do you anticipate a backlash from the VW scandal on the Audi brand?"

And then there's media rebates. From the beginning, the ANA has gone out of its way to distance itself from the unpleasantness of linking agencies to the kickback accusations leveled by former Mediacom CEO Jon Mandel at its Media Leadership Conference in March. "While the ANA cannot specifically identify the breadth and scope of such practices, we regret any impression that agencies in general are engaged in questionable activities and apologize to those who were offended," the ANA carefully stated at the time.

The ANA should have known Mr. Mandel was going to drop that particular bomb. According to a lengthy story in TVWeek.com, the ANA's Media Transparency Task Force had tapped Mr. Mandel to conduct an investigation and prepare the presentation. And ANA staffers reviewed the presentation before Mr. Mandel delivered it.

Yet less than a week later, the group issued its statement of regret after Mr. Mandel's remarks "spurred further discussions with the 4A's," according to our story in Ad Age.

Most recently, the ANA delayed for two weeks the announcement of an investigation into rebates that it initially planned to make public just before its annual Masters of Marketing conference in Orlando. The announcement was pulled back for unknown (at the time) reasons that were finally revealed last Tuesday: It was in deference to the 4A's.

Here's the reasoning. ANA said that well before the conference, it sent to the 4A's the initial draft of its release announcing it was hiring two firms to get to the bottom of media rebates. "That initiated discussions between agencies and several of our members," said Mr. Liodice. "With the amount of conversation going on, we felt it better to hold off on a release, and have that level of dialogue. We're going to make them more aware of what we're finding as we're moving forward. We think that's a good step to ensure everyone has heard each other, and we understand the sensitivities."

Maybe the ANA was being overly protective of the agencies and maybe another reason was because the advertiser group wanted to keep the investigation under the self-regulatory umbrella so the Feds wouldn't conclude there was internal dissension and get involved.

But I'm still puzzled as to why the ANA is being so deferential to the 4A's. After all, the ANA is the client and the 4A's is the agency, and since when does a client go hat in hand to the agency? Perhaps the ANA just wanted to play nice and not have their big conference turn toxic. (That didn't stop some speakers -- like PepsiCo's Brad Jakeman -- from saying the agency model was broken.) Perhaps, as one theory floated during lunch went, the ANA wants to be careful not to mortally damage one of the big holding companies. The ones with the scale to get up to really bad behavior with media rebates are also the ones the biggest marketers are most tied up with.

My take is that advertisers are reluctant to shine too bright a light on the rebate situation because they have helped cause it themselves. Advertisers are already cutting to the bone agency fees, prompting shops to make up the loss elsewhere. And if agencies can bolster their revenue from outside sources, it helps keep the procurement people off marketers' backs.

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