The US Association of National Advertisers on Monday urged its members to “follow the money” and send in independent auditors to ensure that media agencies such as WPP, Publicis and Omnicom act in their clients’ best interests.
The trade body issued 35 pages of guidelines for its members, who include Procter & Gamble and Unilever, in the wake of an investigation it commissioned into media agencies.
Released last month, that investigation, conducted by K2 Intelligence, alleged that US agencies were using “non-transparent” business practices to enrich themselves on the back of their clients’ advertising budgets.
The ANA said advertisers should insist that their agencies allowed “robust and far-reaching” audits of the agency, its parent company, affiliates and subsidiaries. The trade body also sent its members a standard legal contract for use in deal negotiations with media agencies.
It recommended that advertisers “should require media agencies to be fully transparent to elevate trust and restore confidence in the client/agency partnership”.
The trade group’s members spend $250bn a year on marketing communications. The bulk of their media spending is handled by agencies owned by just six holding companies — WPP, Publicis, Omnicom, IPG, Dentsu-Aegis and Havas. All six groups have denied any improper behaviour and have said they operate within the bounds of their client contracts.
In June, the ANA announced that its investigators had uncovered “pervasive” evidence that media agencies had been accepting cash rebates from media companies without informing their clients. These hidden payments compromised the agency’s impartiality, the ANA said.
While rebates are common in the advertising sector in many countries, the US had long been considered a “clean” market in which agencies made money exclusively from fees paid by their clients.
The ANA worked on the guidelines with Ebiquity, the UK-based marketing analytics company. Ebiquity, which is listed on London’s junior stock market, owns Firm Decisions, a consultancy that specialises in media contract compliance.
As well as urging greater scrutiny of agencies, the guidelines recommended that advertisers should improve their own internal governance. It suggested that a company’s chief executive or chief financial officer should have the final sign off on media agency contracts, rather than leaving it to the marketing department.
Michael Karg, chief executive of Ebiquity, described the document as “a turning point for the US advertising industry”.
“These recommendations give advertisers the foundation to reshape the future of the industry.”
The American Association of Advertising Agencies, which represents the agency holding companies, said it would “review this report thoroughly”. It planned to meet with the ANA “to explore common ground and try to address important questions and concerns regarding media buying practices for both agencies and marketers”.