FirmDecisions in the press: Do you see what I see?

Since the Association of National Advertisers (ANA) published its report into media transparency in the US market in 2016, advertisers have paid ever more attention to where and how their marketing budgets are invested. The impact of the ANA report echoes well beyond the US, covering all key territories, including the emerging powerhouse of MENA.

In the MENA region, many of the GCC markets experienced deflationary pressures in 2019. Consumers are trading down to cheaper brands, cutting margins and profitably for leading advertisers and making marketing efficiency a higher priority. As a consequence, it’s not just global advertisers but also local companies and conglomerates that are driving transparency into all areas of marketing spend. Activity ranges from contract compliance auditing to benchmarking media cost and quality, from assessing media effectiveness to scrutinising planning and buying capabilities.

 

To prevent erosion of transparency in non-media advertising, marketers should:

1. Retain direct management of strategic suppliers.
Consider when it is appropriate for high-value, strategic suppliers – such as print management agencies or activation companies – to be contracted directly by the advertiser. Agencies often charge mark-ups for management and can benefit from rebates.

2. Understand new mediums and costs. Marketing budget allocation is shifting, and the priority must be to understand the elements and costs of these new mediums. Advertisers need to get to grips with the as-yet non-standardised influencer space. With ‘content now king’, they need to become competent with the costs of new budget lines including video content production costs, directors, producers, and talent.

3. Ensure full disclosure of all suppliers and costs being used/charged. The fragmented nature of the countries in MENA is compounded by the increasingly complex media ecosystem. What was once a relatively straightforward clientagency-publisher relationship has now expanded to include agency trading desks, programmatic buys via demand- and supply-side platforms, data management platforms, dynamic creative platforms and ad-verification technologies. Technology has made media trading more complex, more opaque, and less accountable. With digital in the MENA region estimated by Zenith to account for more than 40 per cent of total ad spend in 2020 – and with an estimated two-thirds of display being spent programmatically in 2019 – digital investment has now become one of the key areas of concern for advertisers.

In securing media transparency, advertisers should focus on three areas:

1. Disclosure of costs. Beyond lead agency fees, intermediary companies charge a bewildering array of fixed fees, commissions, CPMs and percentages, so advertisers need to know exactly what each participant in the media chain is charging and how much of each dollar spent actually makes it to publishers.

2. Rebates and benefits. There’s a variety of rebates, free inventor and value pots from which advertisers can benefit, depending on spend commitments with publishers. These can be at both local agency and holding group level. It’s vital that advertisers understand what their entitlements are so they can make informed decisions about how best to invest.

3. Getting what you pay for. Advertisers should ensure diligence in payments and verify that what they pay for is what they get. They need to make sure that agencies pay publishers on time, eliminate the hidden costs of unbilled media and verify that ads ran according to media plans.

Finding transparent solutions
The first step to more transparent advertiser-agency relationships comes in the contractual obligations between the parties. As a critical first step, marketers need to make sure that there is an up-to-date, robust, and fit-for-purpose contract in place, signed by all parties. Those who negotiate contracts between advertiser and agency are usually not the same people as those who use them day-to-day. This is frequently the source of misinterpretation and deviations from the terms agreed and signed, and the route to potential overcharges. That’s why it is vital that everyone understands what the contract allows and expressly forbids.

The key to transparency lies in the three Es: ensure, enshrine, enforce.

Ensure there is complete disclosure of all cost structures in the agency ecosystem, including (for example) when proprietary or inventory media is part of the deal.

Enshrine within your contract the right to audit. Some clients are concerned this could affect agency relationships. But the truth is the agencies they work with are already being audited to maintain a healthy client-agency partnership, so the right to audit is a must. It isn’t onerous and it won’t compromise the relationship. On the contrary, it will strengthen it.

Enforce this right to audit, using a specialist business, expert in marketing and media, to ensure hygiene and maintain the trust in the agency relationship.

The fragmented nature of MENA makes it even more important that advertisers face the ever-more-complex challenge of understanding where their money goes, ensuring they get what they pay for – no matter what their strategic marketing focus. Strong and enduring client-agency relationships are built on trust, transparency and openness.

MENA has a growing, locally literate population, with 60 per cent aged 15-29. Consumers demand locally relevant content, requiring locally produced creative executions and production of assets at the country level. Each link adds layers of complexity to the creative agency supply chain, with the lead agency required to subcontract to affiliates or partners in-market. As a result, advertisers should be concerned with how third-party suppliers are selected and how costs are agreed. They should work to determine whether billings are transparent, whether rebates or discounts are offered by third parties, and whether all jobs are reconciled correctly against the original project plan, with all costs clearly detailed and all jobs correctly closed.

 

This article was featured in Campaign. 

First featured 24/02/2020.