FirmDecisions is the largest contract compliance consultancy in the world. We provide financial transparency in the client-agency relationship to the world’s biggest advertisers.
What is media transparency?
For an Advertiser, Media Transparency is the ability to see what media has been bought on your behalf, where that media was placed, and how much it was bought for. In order for media to be completely transparent the Advertiser should have full sight of the entire supply chain, so as they know exactly how their media $s were spent and with whom.
What should you know about media transparency?
There is a desire among Advertisers to ensure a healthy level of transparency in the media process. But Media transparency covers a broad set of issues from getting visibility into the existence of Agency discounts and benefits in a market, to the correct and appropriate allocation of Annual Volume Bonuses (AVBs) and, at a granular level, understanding how much was paid for each component of a media buy. This is especially an issue in the digital space.
What are some of the risks associated with a lack of media transparency, particularly in digital?
In the digital media space, Media Transparency has become more of a concern in the Advertiser community as a result of the significant increase in media budgets in recent years being allocated to the digital programmatic space. In response to a need for better targeting, improved performance, and more dynamic media placements, Agency groups have created business entities to automate and manage the media buying process using third party platforms to find audience segments, validate the quality of inventory, create ads dynamically, and to trade media. Different Agency Groups offer different levels of transparency in the media buy, from those who assume all the risk by buying media and then resell that inventory to Advertisers (therefore masking the true price of the inventory and any other asset used), to those that offer fully transparent models charging media at net cost. Without the proper agreements and processes in place, this growth in programmatic investment could lead to a considerable decrease in Media Transparency in the digital space.
At what point should you be assessing the level of media transparency that you have?
Advertisers can take a number of actions during the life cycle of their Agency relationship to ensure a healthy level of Media Transparency. Below are the top 5 steps we think Advertisers should adopt:
- At contract development stage, Advertisers should review and address any clauses that may limit their transparency or right to audit.
- Advertisers should ensure that they are able to select their own financial compliance auditor to ensure objectivity and independence in the process.
- Contracts should be designed to allow for the auditing of the Agency and any affiliated company (i.e. the Agency Group itself or a wholly owned entity within the group).
- As the media market develops at a fast pace, Advertisers should seek to be able to amend their Agency contracts on an annual basis to ensure that they are able to capture any new market/process/tech developments in their agreement, and ensure transparency throughout.
- Advertisers should aim to audit their agencies on a regular basis to ensure any changes to in-market processes are addressed.
How can you improve your Media Transparency?
Updating contracts regularly and auditing agencies' financial compliance are two proactive actions that Advertisers can take to ensure better media transparency. Adopting this process will also improve Advertisers’ overall understanding of the media market and the issues and solutions surrounding media transparency, particularly in digital.