A 2016 study by ANA concluded that “numerous non-transparent business practices, including cash rebates to media agencies, were found to be pervasive in a sample of the U.S. media ad-buying ecosystem.” Obviously, this is not a situation that fosters trust. But a shift does seem to have occured, as media agencies now appear to be addressing concerns and striving towards more transparency. More than two-thirds (69%) of advertisers say they have updated their contracts within the past 3 years to address transparency issues around cost benefits such as rebates, discounts and AVBs that the agency might receive from media sellers, per a recent report [download page] by the ANA.
The issue of media agency transparency has been a concern for marketers well before the 2016 report. Some 5 years ago, ANA and Forrester reported that 46% of marketers were concerned about transparency with agencies and for 42% the concern was growing.
While the findings of this recent survey are based on a relatively small sample size of 86 advertisers, they do show progress in their agency relationships towards greater transparency. However, not all have recently renegotiated their relationships, as about 3 in 10 say they updated their contracts either more than three years ago (10%), not at all (17%) or are unsure (4%).
Nonetheless, three-fifths (60%) of respondents say that revenues from rebates, discounts and AVBs are not considered part of the agency’s compensation and that they receive their fair share return of these from their agency. Almost one-quarter (24%) of respondents say that while the reporting of such revenues is required in their agency contract, they have not addressed if they should be considered part of agency compensation or part of the working media budget.
How are advertisers compensating their media agency? The most used compensation method across both online and digital services is a labor-based fee, with the exception of programmatic services where the largest share of advertisers compensate based on fixed-rate commissions.
The full report can be downloaded here.
About the Data: Report findings are based on a survey of 86 advertisers conducted online in April 2019.
