Are media agencies pooling media purchases to get rebates on the time and space they're buying and not passing those savings on to their clients? With another investigation set to start, that question won't go away anytime soon.
The Association of National Advertisers is launching a search for a consultant to examine claims that media agencies are getting "kickbacks" from media sellers in the United States by buying media for multiple clients at the same time.
The practice is not unusual in overseas markets but not the norm in the U.S. and now marketers—egged on by former media agency leaders like Jon Mandel—want to get to the bottom of it.
The new investigation comes in the wake of the ANA and 4A's starting a joint task force to study how agency-marketer contracts are set and develop a code of conduct.
"The issue that we have is we don't know where truth lies," Bob Liodice, president and CEO of the ANA, told Adweek.
The goal is to get an objective look at the situation, Liodice explained. "Let's hire a third party to take an unbiased look at the way the industry is operating," he said, "to be able to synthesize all the various perspectives that are in the marketplace and to do whatever research" is necessary "to provide a clean understanding of what is taking place, so that we can effectuate the right discipline and the right behaviors that will start to clean this mess up."
The ANA's board of directors initiated the search after hearing from Mandel and others that media agencies are benefiting from volume discounts in the U.S. and may be hiding that benefit through overseas units. Mandel raised this issue at an ANA conference in March, and it has simmered in the minds of marketers ever since.
"There's a level of disbelief," Liodice said. "We had several knowing people present to the board" who "validated what Jon Mandel has been talking about."
Liodice declined to further describe the "knowing people," who he said insisted on confidentiality before addressing the board.
When asked about the reactions of board members, Liodice said that some are "bewildered, some are confused, some are angry, some are disbelieving."
Broadly, marketers sense that there's a problem here, but its extent is unknown. Figuring that out is the core assignment the ANA will distribute among consultants.
The association is still drafting a request for proposals, but it could be ready as soon as next week. Based on submissions and possibly a round of presentations, the ANA will hire a consultant, but that's at least a month away. For now, however, board members are satisfied that the process is underway.
"Recognizing that there is a substantial amount of information that is in the marketplace, you have to come to the realization that you can't bury your head in the sand and hope that it goes away," Liodice said.
"We are not out to throw anybody under the bus," he said. "That is not the intent. But it is to get a clear articulation of facts, to say, 'C'mon, how can anybody dispute these facts?'"
UPDATE: On June 17, the ANA issued its "Media Transparency" RFP, asking consultants to signal their interest in the assignment by July 10 and to reply by July 24. You can find the document here.