Did lack of trust changed the course of the advertising journey?
Over the past several years, a number of research studies have addressed transparency issues within the media industry. The results are documentation of the erosion of trust between advertisers and agencies.
How did the media industry move far away from transparency? How did this lead to situations that created concerns all around? What is next?
How it all began
The advertising industry was growing multiple folds between 2012 and 2014. The agency holding groups were also gaining business momentum, the result of the booming market. With time, the dependency of the client on the agency grew. And with this arrived a sense of concern -- concern about non-transparent business practices in production and this changed the course of the advertising journey.
It is said, “A lack of transparency results in distrust and a deep sense of insecurity” Relationships between global brands and their agencies were on a path of destruction.
What was next?
In the interest of providing additional context for the findings, several studies invested time and effort to this rising situation.
Two ANA committees: the Production Management Committee and the Advertising Financial Management Committee specifically voiced concerns.
In 2016, the ANA Production Transparency Task Force was launched with a specific two-part mission:
- To assess whether there are non-transparent advertising agency practices in the U.S. production industry.
- To assess advertiser production management processes and develop recommendations for improvement.
Twelve subject matter experts from various industries and organizations provided consistent perspectives and the following conclusions were drawn in the K2 Intelligence report which was supplemented by an ANA member survey:
As a by-product of its 2016 report, “An Independent Study of Media Transparency in the U.S. Advertising Industry,” K2 Intelligence identified production transparency concerns with multiple agencies.
- Transparency issues exist in the advertising production ecosystem.
- Transparency concerns exist at multiple agencies and holding companies.
Want to know more about transparency issues in the industry? Download our “Transparency in the media industry” infographic and get a grip on the situation
In what part of the world were these concerns found?
Issues related to production transparency extended beyond the United States. This is a current topic in Australia, Europe, and South Africa.
Outside of the U.S., the World Federation of Advertisers (WFA) has also attempted to measure perceptions of transparency. The WFA published a survey of members in Europe, Asia Pacific, and Latin America, regions where rebates are generally regarded as an accepted practice. The survey indicated that many advertisers suspect that their agencies do not pass on rebates in full to their clients.
This didn’t end here.
Another research by London Research and TRUTH in 2017 highlighted the crisis in confidence in the advertising industry. Key findings from this research include:
- A lack of visibility on 3rd parties leading to transparency.
- Low levels of trust in agencies.
- Inconsistent measurement of values and standards is undermining the industry
The advertising industry is now more convinced than ever of the importance that transparency plays in the advertiser and agency relationship. Despite these findings, the current level of trust is perceived as significantly lower than in the past two years ago, demonstrating a lack of progress.
Can we move in the right direction?
ID Comms an independent, expert consultants leading in the areas of strategy, operations and auditing, conducted the latest wave of Media Transparency research between June - July 2018. The 232 respondents comprised of Marketing, Media, and Procurement professionals with a range of global, regional, and local market responsibilities from across the globe.
Findings from this research:
Since 2016, the industry’s agreement that close and trusted relationships between advertisers and their media agencies have in delivering a stronger marketing performance has intensified.
In 2018, more respondents believe that the level of trust between the advertisers and their media agency is low, accounting for 40% of the respondents in 2018, compared to 29% in 2016.
Over 80% of advertisers and 75% of agency respondents rate transparency as having high or very high influence over trust issues of advertiser-agency relationships.
As the roots of this situation grew, the U.S. Department of Justice reinforced industry concerns with its announcement of a probe to assess alleged “bid rigging” in late 2016.
That probe now covers the practices of five major agency holding companies and currently, the case continues to be under review.
Will this end here?
Maybe, or maybe not.
At HH Global, we believe that trust is the foundation of every relationship and the only way to build trust, is by being transparent. Our relations with our clients bear complete transparency from day one!
We take pride in what we do and as one of our core values, “Act with integrity and trust”, we put forward trust before anything else.