Five Years Later, Agency Rebates are Still News: A Conversation with Doug Wood

Bill Duggan So Doug what have we learned since Jon Mandel first told a shocked audience about undisclosed rebates and incentives in 2015Doug Wood We39ve learned the need to change perspective on auditing and make it more forensic It39s too easy for fraudsters to hide in the weeds particularly in programmatic Brands need to quotfollow the moneyquot and insist on supply chain accountability and transparency unless they approve otherwise While it is a business decision to approve nontransparent transactions amp8212 sometimes called quotprincipal buysquot or quotinventory mediaquot amp8212 a brand should do so with open eyes knowing the agency is making an additional profit in those transactionsDuggan What strategy should brands adopt in negotiating an agreement or reviewing an auditWood The process from negotiating to auditing should be holistic It begins when a brand engages in a review or RFP a brand must include the contract with the RFP The ANA Media Buying Agreement Template is a good place to startThe brand must set up a strict timetable for the agency to respond and insist that any response explain objections and where appropriate offer alternatives quotTo be discussed laterquot or redlines without explanations should not be acceptedThe second stage is compliance Negotiating even the best contract is a waste of time if it is relegated to a desk drawer Conduct annual independent audits keeping in mind that a brand can learn much from information that is withheld by an agency Finally if a brand has concerns it can hire a company like K2 Kroll or others to investigateDuggan Reed Smith has considerable experience negotiating media buying agreements on behalf of brands Can you share with us what the biggest challenges are in those negotiationsWood Every negotiation is different because every brand has different media plan priorities spending levels and internal expertise While some large brands can do much of the negotiations inhouse most brands do not Auditing and compliance are at the forefront as a brand39s desire for complete transparency from the AOR and its holding company and affiliates Working through those provisions is perhaps the biggest challenge in negotiations and the areas most resisted by the agenciesDisclosure of conflicts of interest is another area of concern Defining a conflict of interest is one thing but getting agreement on the process for disclosing when the agency amp8212 or its affiliates amp8212 has a conflict is not always easyDuggan Has the industry made progress in restoring trust between brands and agenciesWood Yes but it has been too slow That39s why the ANA started the Trust Consortium in 2019 amp8212 to bring participants in the supply chain together to address issues on which we can agree Undoubtedly there will be some areas where agreement is unlikely yet each conversation about those differences brings more clarity to the issues I encourage anyone who wants to be a part of the solution to contact the ANA and see how you might participate in the consortiumDuggan What is the latest with the FBI investigationsWood We are aware of two active investigations by the FBI One out of the Eastern District of New York located in Brooklyn is focusing on bot fraud The grand jury in that investigation has issued subpoenas to at least one major agency that in turn has asked clients for information regarding bots The second investigation is out of the Southern District of New York in Manhattan From the subpoenas we39ve seen or read about this investigation is focusing on the type of schemes reported by K2 Intelligence in 2016It would be sheer speculation to opine on where or when these two investigations will end no one knows Generally such investigations are either dropped for lack of sufficient evidence or the DOJ issues criminal indictments against companies or individuals For now we can only continue to monitor and waitDuggan On behalf of Uber your firm recently filed suit against Phunware Among other things the suit alleges that Phunware and its executives knowingly falsified reports to Uber on click attribution inflating their compensation The complaint goes on to describe such activities as racketeering What39s happening in that suit and does it represent an escalation of tensions in digital buying and accountabilityWood The Phunware case is active and I cannot comment on it Nor should anyone make conclusions about liability Phunware is entitled to provide its defenseWhat is clear however is that the programmatic media landscape needs increased vigilance by brands and agencies on what is used to measure ROI and compensation Moreover that vigilance requires that brands either have inhouse technology expertise or retain consultants amp8212 inside or outside their agencies amp8212 who have the expertise before a brand assumes any metric is accurateDon39t stop now Stay in the know on marketing excellence and the future of the industry with more from ANA InSitesClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

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Five Years Later, Agency Rebates are Still News: A Conversation with Doug Wood

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Bill Duggan

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Five Years Later, Agency Rebates are Still News: A Conversation with Doug Wood

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