APAC advertisers can no longer ignore the issues of media agency transparency
The time for media agencies in Asia ignoring the warning signs from the ANA report in the US are over with the revelation that Dentsu has been overcharging clients for digital media, writes Darren Woolley.
With reports of over-charging of digital media by Dentsu in Japan with one of there most significant and longest standing clients, Toyota Motor Corporation of Japan, advertisers across the region need to reflect on their own media agency arrangements rather than to continue to ignore the issue thinking it is an isolated issue or one for the US alone.
If this can occur in a market where trust and honour are such core concepts to business practice, between two such long standing business partners, then how can any right thinking person no believe it is happening elsewhere across the region.
The relationship between the agency and their client has traditionally been one of a trusted advisor or partner, and yet increasingly the facts are that the relationship is a commercial one too where the agency has a responsibility to drive profits, seemingly at the expense of their clients best interests.
And the answer being, of course, to pay someone like Trinity P3 to advise you on your agency contract terms, and do cost benchmarking, and help with reviews etc etc..
To the person with benchmark angst
Spending 1% of your budget to get 100% more output is pretty iron clad.
In most industries NOT doing your due diligence would be incompetent to the point of malpractice, with most firms getting specialists in to do a job that only needs to happen once every few years.
God help you if you every work in a regulated field, where integrity isn’t a brand value, but the difference between success and jail time.
I would have thought that to prove ‘overcharging’, an initial ‘price’ would have had to have been established i.e. the price from the media buyer charged to the advertiser, given the buyer is acting as principle (in which case it’s not an agent. Agents have a different problem here). The necessary transaction between the buyer and the medium is another matter of course and infinitely more complex.
If a marketer is happy with the price he pays the buyer but continues to obsess about the margin the buyer negotiates for itself with the medium in order to satisfy, for example, the head-office required level of profit, it could be that the matter of “value” has been overlooked. If the buyers are left with no option but to look for profit elsewhere, after having been drilled to the bone by the marketer, what does the marketer expect? Governance of budgets by marketers (and buyers) is a no-brainer, but if you lead the market, are happy with the quality and efficacy of the supplier’s output, and have a great relationship, where’s the issue? If the marketer is happy with the “price” at the outset, why now decide your supplier is making more money than you judge they should? Odd. Go back to the value equation. Bentley drivers do. I know it’s more complicated than this, but try to keep it simple.