Time to Blow the Whistle

First in the US my fellow MediaBizBloggeramp160Steve Grubbsamp160posted amp8220We need the ref to blow the whistle and call no more piling on the media agencies over business practices and cost transparency Our industry loves a good public flogging every now and then but enough already Youamp8217d think that marketers were helpless little old ladies being swindled out of their life savings by those evil conniving media agenciesamp8221Then Josh Krichefski COO at MediaCom UK wrote in Campaign amp8220Any agency that recommends one channel over another for commercial gain is naamp239ve Our clients are wellinformed and they scrutinize our plans and what those plans achieveamp8221 I expect Krichefski is happy he has no responsibility for his agencyamp8217s Australian officeamp160whose behaviouramp160he would no doubt describe as amp8220naamp239veamp8221It is easy to get carried away and to accuse media agencies of every sin Such an accusation is clearly factually inaccurate as those same agencies know full well that every sin has already been accounted for by client procurement officers But the agencies seem intent on selfharm if not selfdestruction Consider the following questionsWhy is it acceptable for agencies to demand rebates generated by their clientsamp8217 budgets for themselvesamp160Interestingly a consultant with no particular axe to grind pointed out to me last week that the sales side of the business reports to him that agencies demanding unofficial rebates have never been more blatant in their demandsWhy is it alright to write a plan and then to buy something else on the back of agency dealsWhy is it acceptable to even try to write into clientsamp8217 contracts that the agency will not agree to any form of media auditWhy is it alright for a digital trading desk to buy from a business owned by its holding company and then to refuse to reveal where it has spent its clientsamp8217 moneyGrubbs argues that clients need to be responsible for looking after their own budgets True but if you hire a respectable media agency surely itamp8217s not unreasonable to expect that the agency will provide you with unbiased advice After all thatamp8217s what youamp8217re paying them for isnamp8217t itHereamp8217s what one advertiser recently quoted in The Wall Street Journal had to say about online advertising fraud and unbiased advice amp8220If the entire industry knows fraud exists and plenty of companies claim they have technologies capable of addressing it why does it persist Mr Rupczynskiamp160from Kraft Foodsamp160is among those who say members of the online ad supply chain pay lipservice to the problem but ultimately continue to ignore it because it suits their businesses to do soamp8221Krichefski says his clients are wellinformed and look carefully at every plan This is a cynical defense In effect heamp8217s saying amp8220Weamp8217ll get away with what we can and hope weamp8217re not spotted And if we are accused of wrongdoing weamp8217ll just blame the client for not being wellenough informed to stop usamp8221Thereamp8217s another defense much in evidence at the moment This involves a shake of the head a wry smile and the words amp8220itamp8217s always been like thisamp8221 Even if agency deals have been around for many years they werenamp8217t right then and theyamp8217re not right now The fact that some dodgy practices have been around for years doesnamp8217t make them OK They donamp8217t somehow mellow with age and become acceptable Theyamp8217re not Johnny Rotten for goodness sakeThe truth is that noone talked about such practices way back when so they werenamp8217t ever subjected to critical examination Now they are Thatamp8217s the bloody Internet for youOne of the most damning recent criticisms of the agencies and one that has largely gone unanswered is that they bend plans to fit their own objectives This is dishonest and it betrays trustFurthermore this lack of trust potentially damages the agency holding groups Last week a wellrespected US analystamp160Brian Wieser from Pivotal Researchamp160downgraded his ratings for WPP IPG Omnicom and Publicis Hereamp8217s what he said amp8220Rightly or wrongly there is a growing perception among marketers that agencies have been misleading transferring value associated with media volumes without clientsamp8217 full understanding or support amp8230 As more specific allegations come to light a drumbeat of negativity will build around the sector over the course of this year Given this risk weamp8217d recommend that investors move to the sidelines or exit the sector altogether while it all plays outamp8221Investors duly reacted and many of the stocks dipped Weamp8217ll have to wait and see whether that dip is merely a shortterm hiccupThen the Olympic Gold Medallist amongst bloggers Bob Hoffman the AdContrarianamp160wrote amp8220I know how hard and how diligently most people in the agency business work on behalf of their clients I39ve seen the blood and I39ve felt the suffering The online media industry is rotten to the core and a terrible discredit to our businessamp8221The fact is that the media agenciesamp8217 evolution is finely balanced They could become pure trading businesses admit that theyamp8217ll live by the kickbacks received from suppliers and charge zero fees from their clients In such a world clients would need to use the funds saved from agency fees to put internal or external controls in place to ensure that what is bought at least vaguely matches their business needs In effect clients would plan agencies would simply tradeThe agencies would no longer need planners researchers analysts strategists They would need incredibly fast and responsive financial systems rather like those described by Michael Lewis in his book Flash Boys Think of what they would save in salaries offices the computers and the traders wouldnamp8217t after all need to be in London and general griefOn the other hand they could continue their progress towards a consultancy model which implies objectivity a clientfocus and a return to a relationship built on trustOr they could try to do both and put in place the controls to ensure that the plans drive the buys In far too many cases this is not what happens at the moment although itamp8217s hardly a huge step to takeBelieve it or not many of us think that many people in media agencies do fine work and genuinely add value to their clientsamp8217 businesses Itamp8217s the few the amp8220whatamp8217s in it for meamp8221 merchants who are poisoning the well And they deserve the refamp8217s whistle and the analystamp8217s yellow cardCheck us out on Facebook atamp160MediaBizBloggerscomFollow our Twitter updates at MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and 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Time to Blow the Whistle

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