Inquiry into ‘opaque’ media agency pricing recommended in ACCC Digital Platforms Report
The Australian Competition and Consumer Commission (ACCC) has taken issue with the “opacity” of media agency pricing in its Digital Platforms Report, recommending an inquiry into the “black box” process of buying and selling ad space.
The regulatory body zoomed in on holding groups and large agencies that negotiate discounts with publishers and may be incentivised “to act in ways that benefit their own interests, to the detriment of advertisers”. The inquiry would directly look into the share of ad spend media agencies retain, including “any potential excessive margins”.
The report cited Google’s submission to the preliminary report, in which the search engine noted that agencies pool their purchases on behalf of all clients to get discounts, only to resell that inventory to clients without disclosing the original purchase price. These discounts or rebates influence agencies as to where they direct client spend, which could be inconsistent with the client’s interests, the ACCC proposes in its 623-page report.
Ouch.
Great, so can we see the individual costs of each component of an iPhone please?
This seems to conflate two issues. 1) the margins within the digital media buying process 2) agencies not acting in the best interests of clients.
2) is bad.
1) is a result of Agencies knowing more than clients about the true cost of goods sold and is easily remedied by any advertiser taking the time to strike their own deals.
“This, the regulator said, reinforces the need for a separate inquiry into media agencies.”
I’m totally over this.
The ACC looked into Facebook and Google market dominance and anti-competitive issues that affect jobs, innovation and even democracy.
During this industry consultation phase, the AANA members went off topic & cried foul over ad-tech and media agencies again. Give me a break.
– Ad-Tech is not simple. Either skill up or give it a miss. Stop complaining you don’t understand.
– Media agencies are directly contracted. So if you want more trust & transparency then change your contract.
The AANA needs to wake up. They just added their own unnecessary confusions into an important regulatory matter.
About time. The issue with your iPhone component line, is that Apple will definitely know how much each component costs from each supplier. Whereas, the same cannot be said about media buying.
The components of an iPhone have individual purpose and contribute to the overall value of the manufactured product.
Adding 100%/200%/500% to unit costs – on top of management and media buying fees – is just plain misleading, damages the reputation of all agencies and accelerates in-housing.
It’s like Volkswagen emissions in reverse. Performance is a lot better than it seems!
Cue smug PR campaign from big holding group announcing they’re the first to ‘go straight’…
Transparency is long overdue, I just hope its retrospective.
Of course, the same can be said about media buying.
Demand a transparent pricing obligation in your agency agreement. Move your business if the holding company doesn’t comply. They’ll soon adjust. There’s only one customer.
But if that customer wants turnkey wholesale rates with 0% agency commission AND full supply chain transparency… well that’s a something for nothing problem.
Either way, hardly a matter for regulation. Let the market decide
What about the ever increasing rebates paid by Broadcasters and other media to the agencies and their holding companies ?
Surly the ACCC is going to stumble upon those at some point?
Dont forget the independent agencies.
[Edited under Mumbrella’s comment moderation policy]
[Edited under Mumbrella’s comment moderation policy]
@[Name edited under Mumbrella’s comment moderation policy]
We need a real audit from a client with consequences, like a government client. Like they had in the USA a few years back in a creative agency where people went to jail.
We need the culprits called out and held accountable and sent to jail like any other white collar criminals. Its definitely going to happen at some stage. Its just a question of when really. The paper trails must be massive around this stuff.
Its crazy too think you have all these execs walking around lording it up when so many are just white collar criminals.
… start shredding guys.
I agree regarding the broadcasters paying kick backs to the media agencies. I don’t see why they don’t just stop.
What could the agencies do, stamp their feet, report them to the ACCC for ceasing to pay bribes – it’s laughable.
But it is corruption and fraud, what else can you call it.
For example let’s say client [Edited under Mumbrella’s comment moderation policy] briefs in a winter campaign $500,000 budget to the agency. The agency then approaches Network [Edited]. They tell them that they will give them all the money if Network 6 Acme pay them $270,000 paid discretely over a few months as a kick back. The Network says great. They don’t care, why should they. They get all the budget, the agency agrees to pay higher rates than it could really buy for, ignore whether any other media is more suitable for [Edited] and pockets the $270,000.
Everyone’s a winner.
Except [Edited] who pay double to be on the wrong channel.
The ACCC getting all over digital is one thing, and an important thing, but where have they been when it comes to this very obvious, very well known, very common, very dodgy fraudulent activity that has been all over the industry for decades.
We are a very dirty industry. It’s time to drain the swamp. Let’s make media great again.
@[Name edited under Mumbrella’s comment moderation policy] . I get it but ..
I think it’s well know just the numbers are smaller so it doesn’t warrant raising to many alarms.
Most aren’t audited and as accreditation no longer exists small Indis are writing their own invoices.
The temptation to add another zero when cashflow gets low could be compelling for someone whose spent decades doing it for somebody else in New York or Hong Kong.
I agree with Josh Frydenberg it is “groundbreaking” and “world-first”, that something is being investigated. Its not ground breaking investigative findings but again it is ground breaking that at last something is happening and the big players havent managed to crush things again. My mind goes back to a group set up by the MFA a few years ago positioned and designed to set rules for transparency and honesty. These were the senior people in charge of programmatic and media businesses. So, we put the fox in charge of the chickens – amusing.
John says “with the government set to provide its response to the report by the end of the year?”
Britney do you know in what capacity the government is examining this or who is the point of contact there should we wish to share information with the government regarding non transparent activity?
I’d like to know more, please elaborate?
Hi Bob,
The government isn’t responding to the report until after a consultation period, so we we won’t know which of the recommendations they’ll agree to and follow through with until the end of the year. With regards to the inquiry into media agencies, the ACCC wants it to be carried out by a specialist digital platforms brand. The creation of this is another recommendation, so until we know whether it will be set up, and it is set up, your best bet is contacting the ACCC directly: https://www.accc.gov.au/contact-us/contact-the-accc
Hope that helps,
Brittney – Mumbrella
Like all the athletes caught doping, metaphorically speaking if an agency bosses have been revealed to have been taking money from their clients when they shouldn’t have, as the report above suggests, and therefore bringing our industry into disrepute when then have also been publically recognized for their contribution to the media industry – then man up, give your medal back.
Admit what you have done and see what happens from there.
The crazy thing is that the majority of those involved in stealing clients money through dodgy digital or back handers have taught themselves to believe that it is not stealing. But of course it is. And people who steal are called thieves.
#giveyourmedalback
It makes sense. But is old news. Yawn