On the one-year anniversary of the Association of National Advertisers' landmark study and subsequent recommendations on media transparency, it's time to review the issues in this ongoing debate and see where we stand today. The issues raised in the transparency debate are complex and dominated the advertising industry's discourse in 2016. (Read what Bob Liodice and Doug Wood have to say about transparency issues here.)
It would be easy to think that media transparency is all about media trading incentives, such as rebates, given the furor surrounding the ANA/K2 Intelligence report, published in June 2016. This sparked a firestorm of debate which overshadowed the full extent and true importance of media transparency for advertisers.
The K2 Intelligence report defined transparency as "the full disclosure of relevant information required for informed and intelligent decision-making."This transcends the financial elements and covers all the practices that comprise effective media stewardship. It embraces all media and the full range of media management practices, from media strategy through to measurement and reporting.
This full range was covered comprehensively in "Media Transparency: Prescriptions, Principles, and Processes for Marketers" which included recommendations issued by the ANA one year ago and was authored by Ebiquity and FirmDecisions. It contains seven key strategic platforms that provide advertisers with the roadmap for effective media stewardship.
However, the ultimate objective for advertisers is to improve media effectiveness and achieve improved return-on-investment. Effectiveness and the demonstration of success should be everyone's aim, and the rewards for successful advertising should benefit advertisers, their commercial partners and the whole advertising industry. Media transparency is an important step towards that objective.
What follows are the seven strategic platforms contained in the ANA's guidelines to help achieve improved media effectiveness.
1) Agent versus principal
Where the advertiser agrees to the agency acting as a principal, the advertiser should have disciplined, reliable processes to manage the potential conflict of interest.
Advertisers should actively pursue the most effective media strategy, planning and buying, and this should not be compromised by the advertisers' trading partners' own interests. Advertisers need to be clear on the basis of their relationship with their chosen media agency. A clear focus on media effectiveness requires that any potential conflicts of interest that may affect either planning or execution should be identified at the planning stage.
Advertisers should benefit from "principal trading" that is advantageous -- and as long as they are able to achieve the right level of visibility over the media process.
2) Contract content
Advertisers should ensure that contracts with their media agencies contain robust provisions to deliver full transparency.
The relevant contracts should be set up to ensure that the advertiser can maximize "working" dollars while rewarding their trading partners well, with transparent terms-of-trade throughout. Contracts should reflect the mutual commitment to the advertiser's best interests.
3) Contract audit rights
Advertisers should have robust and far-reaching audit rights which allow them to fully track contract compliance and measure media value delivery.
If one of the main objectives of a good contract is the maximization of "working" dollars, it follows that the ability of the advertiser to ensure that outcome will contribute to media effectiveness.
4) Contract governance
Advertisers should implement strong, disciplined internal processes to deliver contracts which ensure strict accountability, compliance with effective management principles, rigorous process governance and significant senior management oversight.
Advertising budgets represent a significant investment in working capital and should be subject to the same kind of scrutiny as any other large capital outlay, so companies should review the way they structure their investment processes and specifically have governance responsibility allocated to a "chief media officer" or someone with a similar function.
The measurement of marketing and advertising effectiveness should be a systematic and rigorous part of any company's operations. Advertisers should also constantly review their external resource needs and the resultant contracts.
5) Data and technology
Advertisers should take ownership of data and exert control over the media technology used on their behalf.
The programmatic market is comfortably the least transparent to advertisers and there is a persistent issue with the effectiveness of programmatic, partially caused by the high proportion of advertiser budgets consumed by service and data costs. Advertisers should:
Effectiveness in programmatic in particular requires a highly structured approach by advertisers, with a high degree of advertiser control.
6) Advertiser responsibilities
Advertisers are responsible for more active stewardship of their media investments and fair compensation of their agency partners.
Advertisers need to manage their channels more actively to maximize effectiveness. This carries obligations such as the need to put in place compensation arrangements for partners that are fair and which motivate and incentivize the right performance and behaviors. Included in this is the need to pay providers in a timely way in recognition of their own obligations. Good governance can make an identifiable contribution to media success.
7) Code of Conduct
Advertisers and media agencies should establish a culture of trust in their relationships via a specific code of conduct.
A mutual code of conduct is the recommended way to enable good day-to-day operational practices. There are responsibilities that the advertiser owes, but the most important obligation of the practitioner partners is to work in the interests of the advertiser in all aspects.
In summary, advertising needs to constantly prove its worth, so accountability is crucial. Advertisers should create the environment whereby advertising has the best possible opportunity to succeed.
The other stakeholders in the industry -- agencies, ad tech companies, media vendors and measurement providers -- rely on the success of advertising to both justify their role and earn their rewards. An increased focus by advertisers on media transparency to improve effectiveness is therefore good for the whole advertising industry.
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