Marketers fear uncovering major ad issues—and more from the ANA Media Conference

A sense of FOFO, or fear of finding out, floated around the Association of National Advertisers Media Conference in Orlando earlier this week, as marketers look to turn a blind eye on some of the more undesirable issues currently plaguing the ad world. That would include finding out about the dark side of agency dealings, when their brands are showing up in media where they shouldn’t, such as made-for-advertising websites and how controlling the frequency with which consumers see their ads may be getting harder than they thought. Check out the latest Ad Age events and award programs Among other key takeaways from the conference, which drew 410 attendees in person and 100 virtually, were the growing prevalence of principal deals in which media agencies own and resell media, some pros and cons of having media agencies buy media at all and differing views on how ready the world is for cookies to go away. WTF is FOFO? Some marketers may not fully understand principal deals involving their agencies, not because the information isn’t available, but because of what an agency consultant called “fear of finding out.” Another marketing executive explained that it’s not always welcome to learn about when a brand’s ads have turned up on click-bait, heavily ad-laden, low-cost-per-impression made-for-advertising (MFA) sites where they're not supposed to—because it’s uncomfortable explaining it to higher-ups. An ad tech executive brought up the “FOFO” term in another context, recounting how a measurement firm had systematically found ad frequency numbers per consumer well above the caps marketers wanted to hit. Agency and marketer executives were afraid of the data, the executive said, to the point that they asked that it be obscured as much as possible in the firm’s dashboard, lest clients or bosses see it. Of course, FOFO doesn’t necessarily engender change or reform. And that leads to the next takeaway. Transparency concerns return Discussion about how well agencies disclose information on media dealings had largely subsided in recent years since the transparency issue exploded at an ANA Media Conference nine years ago. Ultimately, that led to considerable controversy, with the ANA commissioning an investigative report, and at least one Justice Department probe, albeit no indictments. Since the pandemic began, the controversy died down. The ANA and agency trade group 4A’s largely made peace. However, the ANA appears to be taking a harder look at what some marketers and audit firms believe is an increasingly common practice—principal deals, where agencies take possession of media and resell it to clients at a markup, as opposed to acting as agents on behalf of clients with media companies. Keri Bruce, partner with the ANA’s law firm Reed Smith, delved into the subject, how agency contracts need to be clearer on how clients approve the practice and how much principal deals can end up costing marketers. She cited estimates of as much as 30% to 90% markups in the ANA’s 2016 transparency report. Her flash poll during a presentation indicated that many marketers still plan to use more principal deals, in part because agencies require authorization to use them in return for meeting cost benchmarks. Some marketer respondents didn’t know whether or not they were authorizing principal deals. (Maybe it was FOFO.) The 2016 markups are probably a thing of the past, said one person familiar with agency-client dealings, who has seen evidence that markups today fall into the 15% to 20% range. Even so, since that comes on top of what agencies often are paid in their agent roles, it adds up to paying a lot more than several decades ago, when a 15% commission on media spending covered creative and media services alike. Also, executives outside the conference room said they believe there are few, if any, cases where agencies actually buy media on spec and then resell it to clients at a profit. More likely, what’s sold to marketers in principal transactions is so-called “inventory media” agencies get as part of volume discounts (i.e. rebates) from media companies based on the aggregate of what they buy on behalf of all clients, presumably under terms allowed by client contracts, which is then sold to other clients. Look back: ANA Masters of Marketing 2023 takeaways Post-auction discounts David Kohl, CEO of supply side platform TrustX, added a new phrase to the media transparency lexicon. In a Q&A during Bruce’s principal media session, he noted that agencies have been approaching him about getting discounts after bidding on digital media, calling these “post-auction discounts.” Of course, the idea of bidding and auctions suggests a competitive process that leads to the lowest price, or at least a fair market price, for media. That, and the fact that he’s not sure these discounts are getting passed along to clients, is leading him to refuse to provide them, Kohl said. Agency pro and con Amid doubts expressed about agency dealings, maybe it’s no surprise that Procter & Gamble Co. Chief Brand Officer Marc Pritchard talked about how the company has brought 100% of media buying in house in the U.S. and China and is in the process of moving more buying in house in Europe. That’s saved P&G at least 10% on media costs where it’s happened, he said. Even so, the approach is definitely not for everyone. Kimberly-Clark Corp. U.S. Media Director Stacie Medley took the unusual step of describing in some detail her company’s media agency review concluded earlier this year, which resulted in the consolidation of its business with a new agency, Publicis Media. Medley revealed some soft spots for media agency people, big review or not, including moving away from one scheduled Monday meeting so agency people could spend the whole weekend with their families. Medley also acknowledged, “We had been in this cycle of reducing agency costs, cutting, cutting. But when you look at the capabilities we wanted to add—data, measurement, digital technology—it comes at a cost and at a premium. So the business case that we had to build was investing.” The hope, she said, was to build a case where improvements in media performance provided justification for spending on the agency. “It’s not to say that price doesn’t matter,” Medley said. “It plays a factor. But it can’t be the driving force.” K-C started out with three agencies handling planning and buying, headed by Mindshare, and the agency relationships “were not in a healthy spot,” Medley acknowledged, with agencies rating the company as “average” in reviews. “A pitch is really an ask for help,” she said. “And it’s OK to ask for help. You have to be honest and try not to paint a rosy picture.” The marketer of Huggies, Cottonelle and Kotex decided to consolidate all media services, including retail, into one assignment, with extensive dives that included having finalists handle sample campaigns and explain what they did in post-campaign Q&A sessions with marketers. Cookie crumbs The impending loss of cookies in Google’s Chrome, assuming it really happens this time as scheduled by year end, didn’t come up much from the stage. But Shenan Reed, global chief media officer of General Motors, provided some insight about how the automotive giant is almost ready. “Folks, cookies have left the building,” Reed said. “We’re done.” GM has cut its reliance on third-party tracking cookies in digital media in half year over year each of the past three years, she said, getting down to use in 2% of digital media spending now, with the intention of getting to zero by the end of the year. The company has done that through experimentation and improvement, or “test and learn,” she said. Some ad tech executives, however, privately said outside the conference hall that they still believe marketers are experiencing some FOFO on the cookie front—not realizing yet, or wanting to realize, beyond the issue of re-targeting, how much harder it will get to control excess frequency in the cookieless world of multiple alternative identification schemes. Media measurement blog Tracking TV, social and digital updates Click here

Marketers fear uncovering major ad issues—and more from the ANA Media Conference

Featured Stories