K2

Hidden Fees.

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Hidden FeesSo the ANA just dropped the other shoe.  But it looks like it’s falling right on the toes of the marketers themselves.

Last month in this space I posted “End of Days,” about the scathing 58-page report the ANA commissioned and released on the bad behavior and lack of transparency across ad agencies.  Now comes the second phase of the report, with a title that had to be written by a committee:  “Media Transparency: Prescriptions, Principles, and Processes for Advertisers.”  Since the name of the report sounds like such a snooze, let me sum it all up quickly:

#caveatemptor – let the buyer beware.

This week’s Drift is proudly underwritten by AppNexus. The AppNexus Publisher Suite helps maximize monetization for Publishers today with tomorrow’s technology through integrated, intelligent, and open ad serving and programmatic selling solutions.

The inescapable conclusion here is that it’s up to the marketers themselves to police what they’re paying for and what they’re getting.  As AdExchanger put it so succinctly, “While advertisers believe their agencies are obliged to act in their best interests, agencies largely see their duties within the scope of a contract.” In other words, you can forget all that “partner” bullshit: the agency is running a business and does not infer a fiduciary responsibility to the customer.

The inclusion and emphasis on “fiduciary” is mine, and it’s an intentional bridge to the currently-broken relationship between consumers and financial advisers.  In case you missed it, national treasure John Oliver served up a breathtaking analysis of the hidden fees that are loaded into the typical investor relationship on HBO’s “Last Week Tonight.”  Most consumers wrongly infer that their financial analyst (or financial adviser or financial consultant or wealth manager or…there are a bunch of these) has a fiduciary duty to act in the investors best interests.  But when you read the fine print, only a very select and legally explicit subset of these advisers do.  It’s up to the consumer to ask hard questions, never assume anything, and ultimately take responsibility for what they are buying.

And so it is with marketers.  Who is going to help those marketers buy, inspect and verify the true and valuable audiences in which they’re investing their shareholders money…now that’s another story.  Will it be the same agencies and buying groups they savaged just four weeks ago?  Or is there an opportunity for publishers, technology and service companies to step into the void?  The answer may characterize what the buying of media looks like for at least the next decade.

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End of Days.

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End of DaysThe leading advertiser organization in the world – the ANA — just issued a 58-page report accusing its ad agency “partners” of everything from shady buying practices to kickbacks to conflict of interest.  The ad agencies’ own trade group – the 4As – has naturally cried foul, arguing that they should have been fully involved in the investigation all along (not unlike having the defense team sit on a grand jury).  But the whole food fight about whether the report was fair or accurate or should have named names just distracts us from the big truth at its core:  The entire premise of the media agency has timed out.

It’s being argued by agency defenders that the ANA’s motive is money and control;  that advertisers are trying to squeeze even more blood from the empty stone of agency margins, and that advertiser procurement practices and policies have been destructive to the advertiser/agency ‘partnership.’  That may well be true, but think about this:  would the ANA have even considered such a drastic and destructive step if advertisers hadn’t already pretty much given up on the media agency?  The media agency problem isn’t the K2 report.  The problem is relevance and time.  The problem is rust.

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The simple truth is that the media agency is a transactional intermediary in an age where transactions have already been digitized and power and control have shifted from the intermediary to the transacting parties.  Travel booking once exclusively belonged to the travel agent; now it’s almost exclusively a direct transaction between the traveler and the carrier or hotel.  There are a hundred more examples of intermediaries being marginalized.  And the media agency position today has the unmistakable feel of a late stage disintegration.

Marketers, publishers, media companies and technologists are all innovating; often for the better, sometimes for the worse, but always with remarkable speed.  The media agency is increasingly seen as a high-priced toll collector who’s adding time and cost but not value to the trip.  A good friend of mine who’s been on the inside of the agency/client relationship argues that the media agency will now and forever more be in a state of perpetual review… yet another sign that the jig is up.

Group M’s Rob Norman writes persuasively about how his company is in a state of massive reinvention; that its investments and partnerships make it a fundamentally different kind of company and change the value equation.  Rob may well be right:  the ultimate spawn of WPP/GroupM/Xaxis may well be successful.  It just won’t be a media agency.  All that’s left for that model are more reviews, continued assault on margins and less relevance.

And rust.

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