"Short-sighted", "inflammatory" and "unsubstantiated" - the world’s largest holding companies have some strong words for Association of National Advertisers (ANA) as they try to distance themselves from the damming 58-page report into the long-running issue of agency rebates.
In the report, the trade body said it found evidence of “non-transparent business practices” – including cash rebates – which it claimed are pervasive in the US media buying landscape. It based its conclusions on “detailed source accounts from dozens of confidential, personal interviews as well as documentary evidence.”
The report did not name any individuals or specific companies but has recommended that clients “re-examine all existing media agency contracts and meticulously review all terms and conditions”.
Hitting back at the report, and trying to ease client concern, agencies have unanimously stated that their own companies are not guilty of such practices.
The Drum has reached out to all of the major holding companies. Here are some of the responses so far. This article will be updated as we learn more.
We fully understand that clients need to be certain that their investments are managed in a professional way and according to the contracts they have signed. Mutual trust has been a pillar of our Groupe for decades. Had the ANA been willing to have an open dialogue with our industry we would have been immediately ready to cooperate, as we did last year, and that is reflected in our engagement with the 4A’s. By refusing such a dialogue and choosing a sensational approach, it seems clear that the ANA is not trying to find a solution to the alleged problems, and instead is acting with other goals in mind.
The ANA has failed its members, advertisers, agencies and the entire industry by releasing a report that relies on allegations about situations involving unnamed companies and individuals to make broad, unsubstantiated and unverifiable assertions. Despite repeated urging by Publicis Groupe and others in the industry to include names and sources in its report, the document hides behind suspicions and anonymity rather than encouraging real accountability.
As a result, the report fails to achieve a constructive outcome of encouraging change that can assure advertisers and agencies are well-equipped to work together in a rapidly evolving media environment. The various highlighted practices distort the picture of the marketplace by suggesting that they are pervasive. These allegations are too serious for the ANA to act in such an unhelpful way.
If the report’s authors have evidence of wrongdoing by specific agencies, they should come forward and state their case, so that the appropriate action can be taken.
The unsubstantiated claims are already causing serious damage to the reputation of the industry and endangering the most valuable component of the agency-advertiser relationship: trust.
Trust is a key tenet at Publicis Groupe. We are committed to understanding and respecting our clients’ transparency requirements in all situations, and this is a standard part of our client contract negotiation process. Publicis Groupe has strict internal rules, including a code of conduct that serve as important controls on our practices and public reporting. In addition, we continually examine our processes and procedures to ensure we are following best practices, and our people are expected to meet these high standards.
We are crystal clear: we are committed to full compliance with the terms of the client-agency agreements we sign. We always want to hear from any client that has concerns about the delivery of our services and how we are compensated, so that we can address those directly with them. We also recognize that some alleged practices under question may not be egregious transgressions, but rather outmoded practices that have not kept pace with the fast changes in the media landscape that require more engagement and dialogue between agencies and clients, and better alignment to assure comfort and consensus.
Consistent with our strong advocacy for the industry and our clients’ best interests, we were active participants in discussions last year with the ANA and the 4A’s toward the shared goal of enhancing media transparency. We were on the verge of announcing a broad set of principles when these efforts were unexpectedly abandoned by the ANA.
We remain strong advocates of developing industry guidance now. Our letter sent to the 4A’s on May 30, before the report was released, outlined our concerns about the ANA’s approach, which went unheeded.
Ultimately, the industry has been diminished and maligned by the ANA’s short-sighted and unilateral agenda of casting aspersions on an entire industry, rather than promoting trust and transparency, which should be paramount.
We are continuing to review the ANA’s report, and will comment further as appropriate.
The ANA report and the objectivity of its authors and advisors needs to be examined carefully. The report should not be allowed to tarnish the entire industry, nor every company in it. As we stated from the outset of the ANA’s exploration, GroupM does not seek, nor accept rebates or hidden revenues in any form from media partners in the U.S.; nor do we accept service fees from vendors that are not disclosed to clients.
GroupM is straightforward with clients concerning our proprietary media products and the value they provide; clients always exercise an informed opt-in to participate. As we’ve already indicated, we insist that the ANA share any specifics relating to our group with us so that we can ensure continuing contract compliance. If clients have any questions, they should contact us.
IPG has been a leader in terms of media transparency since 2005, when we proactively confronted the types of non-transparent practices raised in today's ANA report.
We eliminated these practices from our organization, issued public disclosures, and strengthened our governance controls. Since that time, we have continued to modernize our transparency practices for an increasingly digital and complex media landscape. Here at IPG we do not accept rebates in the U.S., nor do we believe rebates should be part of U.S. market practices.
Additionally, IPG does not buy 'inventory media,' where we pre-purchase media on our own account and re-sell it to clients – this decision has been a point of differentiation for our company. As a result, we have a high degree of clarity in our contracts with clients and media owners regarding our respective roles and interests.
Our practices have been reviewed in numerous audits conducted at clients' requests by a variety of firms, including ones that participated in creating the ANA report, and we are very proud of our track record. The broad and anonymous nature of the report's allegations is unfortunate and inflammatory.
The picture the report describes is not consistent with our actual business practices.
We have not yet had a chance to fully review the ANA study, however based on the overview provided in the press release we believe that the key findings – neither quantified nor qualified, and based on a small sampling of unnamed sources – do not accurately portray how Omnicom's agencies work on behalf of our clients; in so doing, it does not serve the best interests of the clients that the ANA purports to represent.
As we have said since the ANA first launched its study last year, we believe that trust and disclosure are the cornerstone of every client relationship. This means that all of our US media agency clients receive all value negotiated on their behalf in the form it is received. Compliance with each individual client contract has always been central to that trust at Omnicom – as is transparency in the structure and execution of each contract.
We also offer proprietary opt-in services that provide certain benefits to clients. These are openly disclosed, discussed and agreed upon by clients who understand the value and choose to participate. These services remain separate and apart from our agency media buying teams.
Omnicom takes seriously its obligations to investigate and appropriately redress any credible allegation of misconduct by its companies or personnel. Our outside legal counsel has asked the ANA, K2 and Ebiquity to provide specifics on any information their investigation has uncovered relating to Omnicom agencies and they have provided none.
We take seriously our responsibility as an industry leader to address any issues that impact the ethics and standards of our industry as a whole – and to that end we continue to both support and be actively involved in the leadership efforts to establish media industry standards.
We encourage our clients who have any questions to contact us directly.
Dentsu Aegis Network
Today’s ANA Report is an insubstantive report with subjective methodologies and anonymous input. The business practices referenced in this report do not exist within our US business.
Our media buying process is robust and transparent for our clients, is subject to rigorous compliance processes and all our clients have the ability to audit us.
Furthermore, we pride ourselves on our focused and extensive efforts on compliance policies, practices and controls.