Conflicts of interest in media service companies – do they need resolving?
Last week Accenture Interactive announced to the industry that they have launched Accenture Interactive Programmatic Services and this has been met with uproar from the industry. Wayne Blodwell, chief executive of The Programmatic Advisory (TPA), offers advice to advertisers on how to rationalize the situation.
Providers MUST be clear to their clients where and how they make money, argues Wayne Blodwell, CEO of TPA
The uproar has been driven by the conflict of interest this new service area is said to represent, specifically the involvement of media planning/strategy and media activation. Traditionally Accenture’s involvement in the media industry has been the auditing of media agencies performance on behalf of their clients, now Accenture Interactive is claiming to offer a complete end-to-end offering to help clients navigate the complexity of digital media.
Through this new offering, Accenture Interactive would see information from competitors in other parts of the Accenture business that could improve their own programmatic offering.
Accenture denies this by saying: "Media audits are conducted by a dedicated practice within Accenture Operations – an entirely separate business from Accenture Interactive – and confidential data/non-disclosure protections, firewalls, and policies are in place to ensure that information is not shared with any other part of our business.”
People talk ...
However, the reality is people talk within businesses and it’s not hard to pick up the phone in one department and get aggregated reports from another. I personally think the uproar is very fair but also very surprising. I find it surprising given how conflicts of interest already exist widely in the industry:
- Media agencies – they act as strategic advisors for how client money should be spent and they make money through the investment of that money*
- Auditors – auditors no longer just conduct price benchmarking, they also have direct-to-client relationships for technology review services and they could get information from their auditing relationships to improve their competing services.*
- Tech companies – some represent the buying and selling of advertising*
*Not all agencies, auditors and tech companies act in this way obviously
What’s best for the end client?
I always like to start with this question when building out a product or capability ahead of any commercial thinking and let’s assume Accenture Interactive have done the same. Accenture Interactive has created a truly end-to-end programmatic offering for advertisers and in a world where clients are desperate to break down technological and operational silos. I’m also not at all surprised they cited in their press release the high demand for this offering from their clients.
However, the thing that any business which has potentially conflicting services/products must do is they must be very clear with the end client on the possible conflict or they need to not offer the conflicting services/products to that client. For example, if you are auditing for one client you could make a stance to say that you will not provide your programmatic execution service (regardless if the service sits in a different area of the business). It’s worth noting that this is very difficult to police.
There are two routes to resolution – continue as is, or break companies up
The reality of our industry is that it isn’t especially well regulated, companies are able to do what they want to generate income by and large. The industry is therefore presented with two options:
- Continue as is where companies are able to create whichever service they wish and generate income in whichever ways they wish (inside the guiderails of client contracts)
- Break every conflicting service/product into its own independent entity
The reality is option two isn’t going to happen due to complex operating/financial structures so we are left with option one for these major service companies (there are of course opportunities for clients to use smaller independents as well where relevant).
Conflict continues to exist but this must be made clearer for clients
If we are heading towards the first option then the providers MUST be clear to their clients where and how they make money. There are some excellent specialists in this space who help clients put the right contractual agreements in place to expose this, but it’s hard to stay ahead of some of the practices that certain companies employ.
I think the uproar will continue for a while largely because Accenture is trying to take share away from other companies in the space and those companies feel threatened, but when all is said and done they will continue as is and so will other companies who offer conflicting services.
In case you were wondering, TPA’s perspective on this is that conflicting services will exist within all major media service providers. Advertisers should ask their consultancies if they have an interest in becoming a technology reseller, plus taking any form of kickbacks/rebates. It’s interesting to watch this battle for position play out as I’m sure it’ll continue to pop up across trade news in the coming months.
Click here to follow Wayne Blodwell on LinkedIn