EACA Media Audit Report: How agencies, clients and auditors must rebuild transparency and trust | M&M Global

EACA Media Audit Report: How agencies, clients and auditors must rebuild transparency and trust

In today’s increasingly labyrinthine media landscape there is a greater need for agencies, advertisers and media auditors, to build more trusting relationships.

There is such a plethora of companies building businesses in the digital ecosystem — from intermediaries, ad tech firms and ad fraud companies to targeting specialists and data firms looking at audience measurement — the need for clarity has become more pressing than ever. So concludes a report by the EACA (European Association of Communications Agencies).

“There’s an intrinsic opacity to media trading generally that’s historical,” says one senior marketer at a global FMCG giant. “Big advertisers like us were just getting to grips with the old world of transparency, with rebates, AVBs (agency volume bonuses), etc. There was a reasonable level of understanding two or three years ago, and more confidence.

“Then digital trading came along, with its promises of greater efficiency, improved targeting and better cost management. I think a lot of advertisers went in blindly, volumes in overall spend were at first modest, then began to grow, before coming under greater scrutiny from financial people within advertiser groups.

“There are questions about the efficacy of the environment and that creates an atmosphere of uncertainty and febrility.”

The EACA last month published its Media Audit Report, the result of six months of telephone and face-to-face interviews with agencies, advertisers, auditors and media benchmarkers. The report was conceived by the EACA’s Media Agencies Council (MAC), which convenes every two months to discuss a range of important industry topics, challenges and opportunities. Over the past 12 months, the agencies noted growing concerns about the influence of the media auditing ecosystem upon client perceptions of agency transparency – in turn, negatively affecting trust, explains Jon Chase, Chairman, MAC.

The key agency concerns with the media auditing marketplace relate to data confidentiality guarantees, professional standards and potential conflicts of interest (an example being traditional management consultancies and accounting firms building major, global digital agency networks).

“The media along with some auditors and advertisers have suggested that agencies are not being sufficiently transparent, but agencies believe such criticism has become somewhat unbalanced and less than constructive,” continues Chase.

A pervasive sense of paranoia and suspicion has been fuelled by reports such as that of the US’s Association of National Advertising, which earlier this year claimed that media owners had been receiving as little as 58 cents for a $1 of programmatic spend, thanks to the numbers of smaller players at the periphery of digital advertising.

All parties need to accept a degree of responsibility for the gap between perception and reality, says Chase. Advertisers have only recently become acutely aware that significant proportions of digital media investment are required to fund a range of related ad:tech, data and audience targeting services. Agencies could and, perhaps, should provide more detailed training and education to their clients, but advertisers must take more responsibility too – ensuring they fully understand the market dynamics behind the digital advertising ecosystem. Auditors also need to pro-actively add further perspective.”

Other factors have contributed to the air of malaise, from the debate around ad fraud to media owner misbehaviour, such as Facebook misreporting engagement figures.

“The people that you thought you could trust and were relying on are also lying to you,” says one unnamed marketer.

Another ingredient thrown into this murky soup has been agency trading desks, which have had an impact on advertisers’ perceptions of agencies’ business interests. The World Federation of Advertisers (WFA) published research in January which found that agency trading desks were the main approach for nearly 40% of the world’s biggest brands, but that advertisers are demanding greater transparency and control, with 90% reviewing and rewriting contracts and agency relationships.

What are agencies doing to be more transparent?

Some agencies are taking a more proactive approach. In May, Havas sought to foster greater transparency and trust with its clients by launching its Client Trading Solution, a technology platform that gives brands the option to have “full visibility on costs”, allowing them to monitor programmatic media buying.

“The client-agency relationship must be based on mutual trust,” says Marc Schader, Havas Group’s group chief executive of global growth.

“Trust is at the centre of all good partnerships and there is no doubt that better understanding and greater transparency are the building blocks for any solid relationship.”

Havas’s move is progressive, and was welcomed by the likes of Google. Meanwhile, one of the most resonant messages of the EACA report is that the broader agency world is likewise “keen to build bridges,” Chase says. “Agencies are determined to rebalance the equation and deal with the underlying reasons for perceived transparency concerns and associated impact on trust,” he adds.

A call to action

The 23-page Media Audit Report (available in its entirety on the EACA website) highlights concerns around confidentiality of data, standards, conflict of interest and non-contractual demands for agencies to provide data.

Quite simply, advertisers want reassurance that agencies are making the most effective media investment decisions of their behalf.

“No one has cracked digital at a macro level,” says the FMCG marketing boss. “There’s a huge amount of fragmentation and diversity of environment, from social, to display and search, attribution to track it, to contribution, it’s really clear that we’re not sure what we’re looking for — ROI or efficiency gains.”

His comments echo a more general plea by advertisers for more insightful information. The EACA interviewed an array of advertisers, who raised three key points:  Agencies need to better educate them to understand the media ecosystem; the choice of media auditor or benchmarker should be their decision; and auditors can and should demand that agencies supply them with an extensive range of data, while appreciating that this is a burden on agency resource.

“Agencies recognise that trust needs to be earned and is, inevitably, closely linked to transparency,” says Dominic Lyle, the EACA’s director general.

Media auditing

“The process of media auditing has an influential role to play in this dynamic. As a result, we believe it’s crucial that all parties agree and ensure that the media auditing ecosystems remains fully fit for purpose.”

Media auditing has changed dramatically in recent years, reframing itself around digital change. Today it is a market populated by an array of companies, from large accountancy firms and management consultancies to smaller media auditors, benchmarkers and independent consulting teams; some encroaching on what was once media agency territory.

The EACA found that advertisers want more dialogue to improve some media auditing practices, a sentiment shared by media agencies, who think that some auditors are fuelling unease, and that advertisers are trusting their auditors more than their agencies.

“The diverse range of companies referred to as media auditors can be misleading. Within the EACA Report we explicitly refer to contract compliance or media benchmarking companies. The reality is that some of the larger auditing businesses also offer a range of other services (e.g. pitch management, media training, strategic consultancy, ad:tech consultancy etc) which, inevitably, increases the potential for conflict of interest,” argues Chase.

But according to the EACA report, the views expressed by advertisers and agencies were shared by most media auditors, who are eager to engage in collaborative working groups to identify common ground, upon which guidelines and codes of conduct can be built.

Tom Denford, chief strategy officer at strategic media consultancy ID Comms, describes the EACA’s report as “the most significant effort by the agency community to date to find constructive dialogue with auditors and consultants”.

“We welcome the report by EACA giving voice to agency concerns over the expanding media auditing, advisory and consulting community,” he says.

“It makes perfect sense that any company advising advertisers about media, benchmarking pricing or auditing agency performance must offer total transparency and must be 100% free of any conflict of interest.

“For example, auditors and consultants that charge fees to media agencies for services should never be put in charge of managing pitches in which those media agencies are also taking part.”

While much blame has been placed on the agencies (and other digital intermediaries) for digital media transparency concerns, according to Chase, advertisers and auditors also need to accept their own responsibility and take actions to help improve the market dynamics. This may include ensuring that contractual terms are crystal clear for all parties. It is also likely to require significant education and training to improve the degree of understanding and skills within their own organisations.”

Short of a panacea

While there is no magic pill, the EACA’s report has plotted a route that could lead agencies and advertisers out of the mire and back on track, ultimately arriving at a new code of conduct.

MAC is due to convene on 13 July, when “we will be reviewing the initial response to the publication of the report and discussing specific next steps with all the agency groups,” says Chase.

Conversations involving agencies, clients, auditors, benchmarkers and other consultancies will continue throughout 2017. Next year, Chase notes that the EACA are aiming to develop best practice guidelines (as previously created for other industry topics with positive effect by industry bodies such as the EACA, WFA and IAB).

“Such International Guidelines would be a helpful reference tool for any business seeking to appoint, interact with or act as an auditor,” he says. “It will not, however, provide a formal or legal mandate. The next step would require the creation of a mutually agreed Code of Conduct. This would essentially provide a self-regulatory mandate across the 3 stake-holder groups. It would, however, stop short of becoming legal regulation, ”Chase notes.

For our unnamed FMCG marketer, the EACA’s proposed measures are “the only step in the right direction”.

“To try to bring some standardisation to the market is a great initiative,” he says. “We are already seeing it — quite a few contract templates are knocking about that advertisers are grateful for.

“Agencies need to let go of opacity and they should be able to afford to do so if the remuneration models are fair and transparent.

“I think on the one side clients are saying they get the message about remuneration, we need to have fair remuneration. Frankly, media savings aren’t going to come from remuneration, they’re going to come from better use of media budget.”

Havas’s Schader concurs. “In our experience, clients don’t necessarily want to take on the role of a digital or media planner,” he says. “Without exception, what they do want is a total understanding of the value chain,” says. “Once each side has this, there’s no limit on our power to deliver.”

Agencies collectively agreed to three key requirements to improve the three-way relationship between advertiser, agency and media auditor:

  1. Bulletproof confidentiality guarantees: more rigorous processes and procedures to protect the sensitive and valuable data provided by agencies to media auditors, and that it should only be shared with the client paying for the audit.
  2. Consistent and evidenced professional standards: more robust internal measures and controls must be upheld, with evidence provided by all media auditing businesses. For example, accreditations, qualifications and independent verifications.
  3. Zero conflicts of interest: standards and criteria need to be woven into decision-making when independent media auditors, benchmarkers or advisers are appointed.

The EACA’s report identifies three steps to overcome the challenges raised by agencies.

  1. To create two separate working groups, encompassing agencies, auditors and advertisers: one for contract compliance auditing and the other for media benchmarking. Each group would contribute to best practice guidelines.
  2. To create best practice guidelines reached by the three stakeholder groups.
  3. To produce a more binding, mutually agreed code of conduct giving clear rules on professional standards and obligations for all parties.

Ben Bold


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