More than two-thirds of advertisers have updated their media agency contracts within the past three years – and one-third in the past year alone – in response to concerns about transparency and alleged rebates in the media buying ecosystem, according to a new ANA report.
Conversely, 31% of the respondents have either not updated their media agency contracts (17%), have not updated it in the past three years (10%), or don’t know whether they have updated it (4%).
The survey took place earlier this year with 86 respondents from smaller and larger advertisers and a number of follow-up phone interviews.
The ANA said the findings showed that the trade body’s 2016 study, with K2 Intelligence, into media transparency has had a “significant” influence on media agency contracting and cost governance – but added that there is room for further improvement.
“We fielded the survey to examine current media agency compensation practices and related issues of media service costs and transparency,” said ANA CEO Bob Liodice. “The results clearly indicate that media transparency remains a key industry concern and that our members are actively seeking solutions to address it.”
Six-in-ten respondents reported that rebates, discounts, and their variations are not considered part of a media agency’s compensation and that they receive their fair share return of any rebates.
Media agency compensation practices differ from other agency compensation practices in only one notable regard, according to the study: media commissions (as opposed to hourly fees) are more likely to be employed for media buying services, and particularly for programmatic media services.
More than 70% of the respondents use a fee method of compensation for “traditional” offline media planning and buying services, and nearly 60% use fees for digital media services.
Nearly half of the respondents said they include performance incentives as part of their media agency compensation, and marketers with larger budgets are more likely to employ them.
Eight-in-ten have an annual performance evaluation to understand media agency performance, with media savings or a business performance metric the most widely used assessment factors.
And, the source of potential rancour, 40% of respondents want their media agency to act as an agent in a neutral and objective manner on their behalf and are philosophically opposed to their agency buying and re-selling media to them, although another 27% are prepared to consider agency-purchased inventory on a case-by-case basis.
Sourced from ANA