Agencies should worry as ISBA gets serious about 'vicious circle of mistrust'
A view from Gideon Spanier

Agencies should worry as ISBA gets serious about 'vicious circle of mistrust'

Media agencies had better watch out because advertisers are getting serious about the ad industry's lack of transparency, judging by the mood at ISBA's conference.

There was a new-found focus and sense of urgency at this annual gathering, organised by the trade body of Britain’s leading advertisers at a sober, new venue, the Hilton London Metropole in Edgware Road (in contrast to previous ISBA conferences at The Oval cricket ground).

And it was certainly a big deal for the UK’s largest advertiser to declare on-stage that "there’s a vicious circle of mistrust that exists" between media agencies and their clients, as Andrew Mortimer, the director of media at Sky, put it during a panel debate on transparency.

Advertisers rarely talk with such candour but Marc Pritchard, the chief brand officer of Procter & Gamble who declared war on the "murky" and "fraudulent" media supply chain in the US in January, appears to have emboldened others, and he was repeatedly name-checked during ISBA’s conference.

Mortimer, who sits on ISBA’s council and controls a near-£300m annual ad budget, said he knew from talking to other UK advertisers that many of them are questioning "every single recommendation" on the media plan. This is because they suspect their agencies may be making buying decisions to maximise profit, instead of focusing on the clients’ best interests.

"It is one of the biggest issues that is facing advertising," Mortimer said, warning of "really serious implications" because "the confidence in advertising among chief executives and chief financial officers is going to start to wane" – particularly in digital, after revelations in The Times in February that programmatic ads have been appearing in front of inappropriate content such as jihadist videos.

That might not be the worst of it. In a punchy but measured opening address, Phil Smith, the new director-general of ISBA, listed a string of problems, including agency contracts, independent standards of online measurement, viewability and brand safety, and the funding of fake news.

And Smith raised the spectre of government or regulatory interference if advertising cannot get its house in order.

He warned: "While I’ve heard some people say, ‘It’s alright, the market will sort it out, this is part of growing up for digital, it’s just a bump in the road,’ I’m also hearing a small but growing number of people talking about the need to regulate, citing the concentration of the media and the agency landscape and also what is seen as a potential threat to the democratic process [because it could undermine media plurality and choice]."

If trust is to be restored through self-regulation and the media marketplace is going to be more "responsible, accountable and transparent", in Smith’s words, then many agency groups would say ISBA could do a better job.

The trade body launched a tough, new media agency framework contract for its members to use in April 2016 – without consulting agencies in advance.

Smith, who only started this year, signalled a more conciliatory tone by saying "our enemies are not each other" and that the contract should be a "living document" that can be updated.

However, he stressed that tighter contracts between advertiser and agency are vital because they are "the foundation for a better alignment of interests" and claimed that ISBA has been making more progress with its contract than "has been reported".

Smith also said 165 of ISBA’s members have requested a copy of the framework contract and more than 20 companies with billings of more than £3.3bn have used all or part of the framework as "a key input" for revising their media agency contracts.

Only a handful of independent agencies have agreed to use the ISBA contract but more are "in the pipeline", according to Smith.

"If I have got one aim for the next 12 months, it is that the ISBA framework will become established as the starting-point for building contracts and other media agency relationships under UK law and will have been used as a key input and reference point by more than half of our members," he said.

The ISBA conference wasn’t all gloom. A presentation by Direct Line and MediaCom talked about an innovative remuneration model where the agency shares in the upside of the client’s success.

But Smith spoke like someone who believes momentum is on the side of advertisers in the debate about trust and transparency, referring in his speech to P&G’s Pritchard and The Times’ revelations as evidence that the "need is pressing" and "change must accelerate".

(Incidentally, Campaign understands ISBA helped The Times on its investigation and began working with the newspaper as far back as last November.)

As Smith looked to the future, he drew a parallel with the US, where ISBA’s counterpart, the Association of National Advertisers, published a hard-hitting report into media agencies last summer. 

"The US experience shows the advertisers and their representative bodies must take the lead," he said.

The big media agency groups have been warned. Refusal to change and non-cooperation are not an option.

As one ISBA member put it privately: "It’s our bloody money."