The advertising agency holding companies continue to find themselves as the pariahs of the industry, implicated as they are by dubious media buying practices, non-transparent digital media processes and practices, and now also by murky advertising production practices.
Last year, the Department of Justice started an investigation into production practices at agencies that implicated all major holding companies. This was apparently driven by suspicions that Uncle Sam’s wallet had been raided unfairly by the agencies. The ANA (Association of National Advertisers, the US version of ISBA in the UK, and leading advertisers trade association) started its own investigation similar to their impactful media transparency investigation published in 2016. As a result of both investigations, Agency Holding Companies are feeling the pinch of clients who have already, or who are in the process renegotiating their media contracts, and production processes.
Digital media is one of the key drivers in the transparency clean up. And one of its most vocal proponents has been Marc Pritchard, CMO of P&G. He also serves as ANA Chairman and so he is wearing two powerful hats that have helped to get the industry moving at long last.
P&G and Pritchard have not just made noise about the need for change, they have actively changed the way P&G invests in digital. In its last earnings call, P&G CFO Jon Moeller said “almost all” of the over $100 million in advertising spend that P&G had cut had occurred in digital. “What it reflected was a choice to cut spending from a digital standpoint where it was ineffective, where either we were serving bots as opposed to human beings or where the placement of ads was not facilitating the equity of our brands. We didn’t see a reduction in the growth rate. What that tells me is that the spending we cut was largely ineffective”, he was quoted in the Wall Street Journal.
And P&G CEO David Taylor added: “We got some data that said either it was in a bad place or it was not effective. And we shut it down and said ‘We’re not going to follow a formula of how much you spend or share of voice. We want every dollar to add value for the consumer or add value for our stakeholders.’ ”
It was quite telling that another ANA investigation into digital placement practices earlier this year was severely hampered by the fact that most of the ANA’s members found that their contracts with their (digital) media agencies contained language expressly blocking access to the very data that would shed light on the digital media placement practices as executed by these agencies. I guess marketers just signed their agency contracts just as easily as the ones we sign daily when we buy apps, get a new phone, order from Alexa, etc.
And now the ANA has completed its investigation into allegations of bid rigging and shady commercial practices in agency advertising and content production. Find the full report here.
Advertising production cost and process management is important at a time when the volume of content that marketers produce across all platforms is ever increasing. The findings indicate that marketers must professionalise the way they manage production contracts and bids – marketers can’t just leave it to the brand manager to review and approve a production cost proposal. The findings are illuminating for marketers and marketing procurement professionals in shedding light on the kinds of practices that are out there. In exposing these, advertisers can now follow the same path as they have done with media: time for a contract clean-up.
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