Non-transparent production practices exist at multiple ad agencies and agency holding companies, according to a new study by the ANA (Association of National Advertisers).
The study leveraged the work of the ANA Production Transparency Task Force, which includes 30 ANA member executives, and perspective from 12 organizations deemed to be subject matter experts. Eleven of the 12 subject matter experts supported the conclusion that transparency concerns exist at multiple ad agencies and holding companies. Additional conclusions of the study include:
• The use of agency in-house production resources is not always transparent to the advertiser.
• Production business processes marked by agency control of the bidding system — where the agency also competes for the business — is sometimes dysfunctional and conflicted because the buyer can also be the seller of the services.
• Non-transparent agency-controlled bidding can lead to costly, inefficient, and suboptimal advertiser business decisions, and a disrupted competitive landscape for production and editing services.
• The state commercial production incentive system is often not transparent to advertisers, and therefore advertisers may not be receiving the financial benefits they are due.
“The report demonstrates that transparency continues to be a fundamental issue throughout our ecosystem,” said Bob Liodice, ANA CEO. “Marketers are strongly encouraged to revisit their business protocol and their agency contracts. Additionally, marketers must step up their supervision and understanding of the production ecosystem to ensure that their investments are managed superbly.”
The report, “Production Transparency in the U.S. Advertising Industry,” suggested that client stewardship and oversight of production is weak at many companies. According to an ANA survey supporting the study, fewer than half the respondents require their agency to disclose if they are bidding a production job to an in-house or affiliated production company. In addition, over 60 percent of respondents either do not require or don’t know if their agency contract requires production rebates and other incentives to be passed back to their company.
The study is not a conclusion that the behavioral concerns identified are engaged in by every company in the ecosystem, but clearly indicates that some agencies are less transparent than they should be.
To download report CLICK HERE.