At last week’s ISBA conference I took part in a panel discussion on transparency.
It was clear from the room and from feedback afterwards that this is becoming one of the central issues in the relationship between advertisers and media agencies.
This isn’t just an agency issue, neither is it an issue solely for advertisers.
It’s a problem that affects, and can only be solved by, partners on both sides of the table.
In the short term, this problem could lead to strained relationships, a reduction in quality of output and demotivation on both sides, but most importantly a continuation of the current vicious circle of cynicism and breakdown of trust.
However, the longer-term impact could be much more harmful to the industry as a whole. We may end up seeing more and more media pitches, where contract transparency becomes the central issue, perhaps more so than media pricing.
The current trend of in-housing and disintermediation will likely accelerate, with advertisers seeking advice directly from media owners who will have their own vested interests.
Critically, it could lead to decreasing confidence in advertising from CEOs and CFOs, potentially even a reduction in media spend generally and digital spend specifically.
To avoid this situation advertisers and media buying agencies need to come together and re-build trust.
Advertisers have a responsibility to create sustainable relationships and acknowledge that their partners need to make fair profits based on the value that the agency is adding to their businesses.
They should convince internal procurement teams that paying fairly is more likely to deliver better results in the long-term.
In return for a fair fee and a reasonable profit, the media agency should disclose all income related to client’s spend and where they or their holding group has a financial interest in the media supply chain.
Without this advertisers will assume money is being made elsewhere and continue to put pressure on fees.
Media agencies need to be allowed by their holding groups or shareholders to take a long-term view and to focus on their client’s objectives, rather than short-term profits.
Advertisers need to trust that the agencies are taking an objective position towards media owners or technology suppliers and not working with them to generate income in non-transparent ways.
It’s time that the industry gets together and starts to have a constructive dialogue, listening to the issues on both sides and avoiding knee-jerk reactions.
We need openness, commitment and mutual respect to break the vicious circle of mistrust.
Andrew Mortimer is director of media at Sky.