US marketer trade body the Association of National Advertisers (ANA) announced on Tuesday it had hired two research firms to investigate the media rebates and transparency issues plaguing the sector.
The ANA says the idea of the project is to help with “demystifying the landscape.” It wants to uncover and get industry perspective on “non-transparent behavior” such as agencies receiving rebates from media companies and not disclosing them to their clients and media arbitrage, with a view to developing practical solutions and behaviors that can eventually serve as industry standards.
One of the research companies ANA has brought on board is investigative consultancy K2 – a firm that AdAge notes includes the FBI’s former cyber division chief technology officer Milan Pitel and Austin Berglas, who was the assistant special agent in charge of the FBI’s cyber branch in New York. It was founded by Jules and Jeremy Kroll, “a father-son detective duo.”
Asked whether the appointment of K2 reflected the seriousness and potentially criminal nature of the transparency issues at hand, ANA president and CEO Bob Liodice told Business Insider: “K2 was chosen for its fact finding capabilities. The purpose of this study is to ascertain the set of facts that will allow the industry to create better, more transparent business processes. K2 was the best choice – among many – to do the relevant fact finding. That’s the only reason we chose them.”
The ANA also appointed marketing analytics specialists Ebiquity.
The trade body told Business Insider there is no specific timeframe for the release of the research, but that the first phase of the fact-finding mission will likely take “several months.”
The controversy surrounding rebates, kickbacks, and agency transparency is not new. But the issue was thrust into the spotlight at the ANA’s 2015 Media Leadership Conference in March this year when former Mediacom CEO Jon Mandel said media agency kickbacks and non-disclosure of those rebates to clients was so widespread in the US it forced him to leave the business.
Most people thought the practice was something that still only happened overseas, and that it didn’t really affect the US any more. And the major advertising agency holding companies have all since denied there is a problem.
Nevertheless, a survey commissioned by the ANA conducted by Forester last year showed there are growing concerns amongst marketers across a wide array of business practices within the media buying industry, as the chart below shows.
- ANA/Forester Research
For the past few months, the ANA has also partnered with The American Association of Advertising Agencies (The 4A’s) to create a joint task force designed to work on industry standards for agency-client contracts.