In its critical agency report, The Association of National Advertisers (ANA) didnt touch on the complexities of the modern media-buying landscape, said Rob Norman, chief digital officer of WPP’s media-buying arm GroupM, in a blog post Tuesday.
Norman’s response comes after the ANA mic-dropped its investigative report into agency transparency, criticizing agencies for taking rebates and a principal on media and for directing spend toward vendors where agencies have equity stakes.
But Norman argued that media buying now requires the application of data and technology in order to be effective – and the ANA’s criticism overlooks this shift.
“I’ve always said it takes four people to transact a Super Bowl spot: the buyer, the seller and the two caddies who carries around the golf clubs,” Norman told AdExchanger. “In the digital world, you require a huge amount of tech and investment that’s just more expensive to do.”
Norman, in his post, was disappointed the ANA didn’t acknowledge this landscape: “Nowhere in the ANA US Transparency Report, nor likely in the upcoming guidelines [slated for release at the end of June], is a positive reference made to either the increasing complexity of the US media market or the investments in technology, data and human expertise made by media services companies and their parent companies in response.”
He fears that, in an effort to uphold transparency, agencies will have to reduce their investments in technology and data as well as their willingness to own media – practices that many in the agency world claim drive performance.
Agencies need to receive a premium on media spend without disclosing all underlying costs in order to create incentive for continued investment. And if agencies are unwilling to invest due to transparency concerns, Norman says it’s the advertisers who will suffer.
“There are no signs of Google, Facebook, Snapchat, fraudsters or anyone else in the ecosystem slowing down,” Norman said. “The advertiser will do themselves a disservice if their agencies are underequipped to deal with the marketplace. It would be simple if the world just stayed the same, but it doesn’t.”
In his post, Norman wrote he hopes the marketer guidelines, authored by marketing analytics company Ebiquity, “take a balanced view of this issue” by encouraging clients to closely examine contracts, take third-party advice from accounting or auditing firms and see value beyond both cost of input and the cost of the last instance of a buy.
“I don’t think they should pay no attention to cost of input, but they should be open-minded about what creates value now and into the future,” he said. “Do I think about it in the sense of the last Ford Focus that rolls off the line, or a generation of new vehicles that meet new standards of emission, safety, quality and importance?”
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While the ANA did acknowledge agencies face pricing pressures in acquiring and mastering new technology, it failed to credit them for combating the issues that technology causes around viewability, fraud, piracy and consumer privacy measures, Norman said. He referenced GroupM’s viewability standard that surpassed the IAB’s guidelines and its investments in GroupM Connect and Xaxis.
Yet, the ANA report noted that agencies sometimes mark up the media they own by up to 90%, and those figures aren’t always revealed to the advertiser client.
“When the AOR within the Agency Holding Company sells the media to an advertiser, the original purchase price – as well as other potentially relevant information – is not disclosed,” the report stated. “These opt-in provisions also limit the advertiser’s right to audit the principal transactions.”
The report also states agency execs pressure their teams into spending with vendor partners with whom they have an equity stake, even if they aren’t the best option for a client.
Norman’s response: Principal-based buying allows clients to receive a “guaranteed pricing for a given objective,” and investing in technology not only gives clients a better deal on inventory, but greater access to and attention from vendors.
“It is our perspective that advertisers and their advisors should take a value-centric point of view around principal media trading models in digital and other media,” he wrote. “These models are developed on the basis of marketplace insights into supply and demand dynamics and not the leverage of client volumes.”
This story has been updated to properly reflect Norman’s post.
