Mid-market companies should make sure that agencies are placing media with the company’s best interest in mind.
It’s difficult to ignore the well documented transparency and accountability issues that have plagued the advertising industry. Many of the mid-size and larger agencies are facing client and DOJ scrutiny for inaccurate pricing or post buy media outlet agency kickbacks. Neither of these are beneficial to the client, only the agency. And, that doesn’t even take into consideration companies like Google who openly rebate the agencies based on the amount of client spend they bring them.
What is transparency in advertising? Transparency refers to the costs of purchasing advertising. Specifically, how much of the advertising spend is going directly towards ad purchase versus the fees and charges of the agency. Too often, agencies bury the costs together and won’t show the details on a spot-by-spot basis or how much of the buy is the net media cost versus their fees. As a result, it becomes nearly impossible to measure an accurate return on the media portion of the investment.
What is accountability in advertising? Accountability refers to whether the media plan developed by the agency is in the client’s best interest or the agency’s pocket and whether it was executed and delivered as promised. Two entities control this area, the agency and the media outlets. While ads are purchased to run specifically as ordered by location, day and time or an overall time duration, this isn’t guaranteed because media outlets never close for business even if in a sold- out status, much like airline seats. Multiple factors ranging from bumped spots, program interruptions, and simple human error are often cited as reasons why your advertising spot did not run as contracted.
When this happens, it is the responsibility of the agency to make good on the ad spend by either replacing the missed spot with another spot of truly equal value or refunding that portion of the spend to the client.
These problems persist for several reasons, one I already covered above but there are others. Companies have squeezed legitimate agencies so tight that some can’t breathe. Another reason is profitable but unethical agencies wanting more and finally, the lack of advertising knowledge by the marketing division of the client. As a result, agencies often are given the keys to the castle and are fully in control of the execution and performance measurements.
While most of this discussion has been on the national level by brands such as P & G, the problems are not exclusive to businesses of that size. With smaller budgets it’s even more important that mid- market and regional brands question the placement selections of their agency.
They should demand full pricing disclosure and most importantly, they need to recap the performance of each buy once it’s completed. All brands must understand transparency and accountability issues and demand continued improvements in these areas to ensure the highest standards are upheld. Your media plan is a major cost and contributor to your effort to build loyalty and gain new customers, so it must be executed and examined meticulously.