Marketers at some of the world’s largest companies have taken greater control over digital media activity in the past year, with 70% amending their contracts with media agencies, a World Federation of Accountants study of 35 multinationals has found.
The study found a quarter of global brands inserted contractual clauses that require agency partners to return incentives and/or media rebates secured using client money in the past year. This is in addition to 53% of companies that already have a rebate clause and 47% that can recover incentives.
Efforts to tighten agency contracts and deter non-transparent practices has been a focus for advertising bodies across the world.
In the US, it is illegal for agencies to pocket kickbacks, rebates and incentives) derived from client money. Therefore, the multinationals in this study with US operations have a legal incentive to make sure supplier contracts are watertight.
In Australia, such practices are legal if clients are aware and agree to them. The AANA has developed a contract template and guidance notes that provides guidance to marketers on agency contracts.
Interestingly, 58% of companies sought to include terms that define agency status as 'agent' or 'principle' by law, eliminating any ambiguity about an agency partner's role.
The survey found multinationals cracking down on ad networks that offer poor quality inventory and cannot meet industry standards on ad fraud and viewability as the use of third-party verification partners becomes the norm.
Building digital capability
Nearly two-thirds (65%) are investing in building internal capability, such as programmatic hires, empowering brands to take a more proactive role in managing media. This includes 41% of brands reviewing programmatic trading practices and nearly a quarter (24%) bringing the function in-house with a further 41% planning to.
Although in-housing programmatic trading has been happening for several years, last year’s explosive ANA reports and this year's AANA Media Challenge event raised questions about its effectiveness, lack of transparency and whether non-disclosed agency margins were too excessive.
“Last year’s ANA report was a catalyst for a new wave of action by brands not just in the US but around the world, addressing many of the media issues that our members have highlighted including brand safety and ad fraud,” WFA head of marketing services Robert Dreblow said.
“These actions, coupled with an increasing number of WFA members sharing that they have witnessed improved transparency, are positive signs that we can create an improved media landscape for brands, agency partners and media owners.”
The study, which mostly polled global-level marketers with a combined media budget of $30 billion, found media transparency as the top priority followed by brand safety.
The two areas of transparency that concern marketers most are the 'murky' digital media buying ecosystem and non-transparent business practices.
In March, Ebiquity's Nick Manning told an AANA event that 60% of every $1 of spent on programmatic trading is paid to a supply chain of ad tech partners and another 20% is lost to wastage and inefficiency.
Non-transparent business practices refer to incentives, rebates or other kickbacks that media buyers receive in deals with media owners that may be hidden from clients.
Digital media more broadly has come under closer scrutiny in the past year due to a series of measurement issues at Facebook, brand safety concerns at YouTube and concerns around ad fraud and viewability.
On brand safety: 74% have suspended investment in ad networks where they felt there was an unnecessary risk to their brands and a further 14% plan to do so. 89% currently limit or plan to limit investment in ad networks that do not allow use of third-party verification
On viewability: 63% are now only investing in viewable impressions which meet industry standards and 37% have devised their own viewability criteria.
On ad fraud: 55% are now limiting run of exchange buys; 43% are shifting away from using CPM as their key metric in favour of business outcomes; and 40% are developing in-house resource to help tackle ad fraud.
Full results
On media transparency
- 29% have added specific media/financial audit right clauses to contracts and 9% plan to do so. (53% of respondents were already doing this.)
- 26% have added contractual clauses for return of media income and a further 15% plan to do so. (53% of respondents were already doing this.)
- 26% have added contractual clauses for the return of incentives and a further 21% plan to do so. (47% of respondents were already doing this.)
- 35% have improved media knowledge via internal training and education and 21% plan to do this. (38% of respondents were already doing this.)
- 32% have added data ownership clauses to contracts and 24% plan to do this. (38% of respondents were already doing this.)
- 26% have conducted forensic/financial/contract compliance audits of their agencies and a further 21% plan to do this. (35% of respondents were already doing this.)
- 24% have taken greater contractual control of programmatic via a hybrid model and a further 41% plan to do so. (21% of respondents were already doing this.)
- 41% have conducted a programmatic review and a further 35% plan to do this. (15% of respondents were already doing this.)
On viewability
- 57% percent have started implementing viewer tracking via a third-party vendor and a further 9% plan to. (31% of respondents were already doing this.)
- 40% now only invest in inventory which meets the minimum industry standards laid out by MRC/JICWEBs and a further 26% plan to. (23% of respondents were already doing this.)
- 20% have devised their own viewability criteria and a further 40% plan to. (17% of respondents were already doing this.)
On brand safety
- 49% have adopted site whitelists or blacklists where advertising should or should not appear and a further 6% have plans to do so. (46% of respondents were already doing this.)
- 54% have worked with third-party verification companies to monitor the environment in which their ads appear and a further 20% also plan to do this. (20% were already doing this.) 37% have limited investment in networks that do not allow the use of third-party verification and 34% plan to do so. (17% were already doing this.)
- 54% have suspended investment in ad networks where they feel there is unnecessary risk and 14% plan to do so. (20% were already doing this.)
On ad fraud
- 54% are now working with third-party verification/counter ad fraud partners and 11% plan to do so. (34% of respondents were already doing this.)
- 29% have stopped or reduced run of exchange buys i.e. not buying blind and 20% plan to do so. (26% of respondents were already doing this.)
- 26% have put in place contractual stipulations assigning liability for misallocation of spend on fraudulent inventory and 51% plan to do so. (14% were already doing this).
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