The Politics of Transparency
This article first appeared in MediaVillage on February 21, 2017
By David L. Smith & Tim McHale
Given the recent President’s Day holiday, we considered that if one was to equate the difference between the 4A’s and the ANA – the two associations which govern the ad/media agency and brand marketer communities respectively – to the differences between the Confederacy and Union states, the case for, or against, transparency should become abundantly clear.
The 4A’s body politic believes that there is nothing wrong with making money. Agency public holding companies are not slaves to their clients. They are only really beholden to their shareholders. Capitalism is what built this country and their creative initiative is what drives innovation. They have families to feed, just as all the other sectors in the communication enterprise supply chain.
To their way of thinking, as long as the marketer’s communication goals are achieved, marketers should understand that their agency fees, be it a percent commission, or revenue based on time and materials, will simply not do and/or are not enough in the long run to keep the agency afloat; given the chaotic and often disruptive impact that technology is having on delivering a daily, stable, reliable service that agencies are supposed to deliver to their clients.
It’s not unlike the political difference between the reported unemployment rate vs. the actual unemployment rate. Which is the real metric? Caveat emptor.
Of course, the ANA sees it differently. Their position is that agencies answer to marketers first, not the agency shareholders. Fees from marketers keep the lights on at the agency, not Wall Street. With capitalism, comes the free market system of competition. If an agency is lucky enough to win a marketer’s business, the compensation should be transparent, between the marketer and the agency at the time the contract is signed.
The marketer is first and foremost in the business of selling their products and services. That’s how they make money.
They hire agencies a) as they are domain experts in advertising b) so that the marketer can concentrate on things they are best at and c) so that the agency can focus primarily on the brand communication. As detailed in the new film, “The Founder”, McDonald’s, for example, focuses on delivering QSC&V (Ray Kroc’s famous acronym summarizing quality, service, convenience and value) to billions of consumers, daily.
Their agency doesn’t “flip” the burgers. Their job rather is to help them “sell” the burgers, hopefully with great imagery and daily reminders, in the QSR war.
Mediasmith Morsel – Netflix Hits a New Milestone
Netflix has hit a major new milestone. As recently published Statista Infographics Bulletin, the Leichtman Research Group reported that the streaming service is now more popular than the digital video recorder (DVR) amoung U.S. adults. Six years ago, Netflix was present in 28 percent of American households and that has now increased to 54 percent. That momentum has taken it past the DVR which is present in 53 percent of American households.
When a marketer must focus on how their agencies are behaving, it takes their eye off the war they are waging for consumer awareness and brand loyalty. It sucks up time and resources away from their core QSC&V mission focus. It’s not that different from, say Abraham Lincoln’s predicament during the American Civil War, when he quipped about how he didn’t know which was worse, the war against the Confederacy in front of him vs. the war between his generals, behind him.
The difference between the 4A’s versus the ANA is the same philosophical difference between the thinking that “War is too important to be left to the politicians” versus “War is too important to be left to the generals.” In essence, the 4A’s believes the generals know best, while the ANA thinks that the politicians do.
Who is right?
According to MediaPost’s well-respected editor in chief, Joe Mandese, who spends his time impartially reporting as the watchdog between agency and marketer strategies, tactics, outcomes, at their annual All Star Awards event, he highlighted Mediasmith’s resignation from the 4As and stand on transparency, illuminating Mediasmith’s three decades long effort “as a fiercely independent media services agency focused on leveraging new and emerging technologies, [when] online advertising didn’t even exist.”
Mandese emphasized that “while bigger agencies take much of the credit for helping to shape it, Mediasmith’s neutral, client-centric approach has kept it honest and effective, ensuring that it works for the proper stakeholder: Not the agency, or the media, or the litany of ad technology middlemen that emerged over the next several decades, but the advertisers funding the entire food chain.”
Paraphrasing one of the great American Presidents in his Gettysburg Address, “Now we are engaged in a great civil war, testing whether marketers or agencies can long endure, on this great multiscreen communications battle-field….it is altogether fitting and proper that we should do this.”
The politics of transparency therefore is all about what side you are on.
History shows us that the chains of slavery were only won after the Lincoln’s Union formed the team that focused on the real war in front of them, versus behind them, which ultimately helped them to accomplish their objectives. Today’s CEO’s and CMO’s must also do no less.
In 2017, though the stakes are nowhere near as dire, marketers must confront success and failure in the battle-field of their sector every day. The agency team that ultimately wins the day with them will be the one that focuses on the marketer’s KPI’s first to create “a more perfect union” between themselves and their marketer clients, and choose against being a slave to the double-dealing which happens behind the lines, and beneath the daylight of transparency.
The trust must be rebuilt between marketer and agency. And between the ANA and the 4A’s. Transparency is the key to trust. Only when this trust is rebuilt can the related engines of advertising and marketing work together smoothly. At which point we can all get back to business.