IN THE NEWS: USE THE VALUE INDEX TO SHOW ROICLIENT/AGENCY RELATIONSHIPS NEED MORE TRANSPARENCY AND ACCOUNTABILITY
The marketing industry is buzzing from Samsung Electronics Co.’s recent marketing operation layoffs and speculated connection to the abrupt departure of its CMO, Marc Mathieu. Information shared in The Wall Street Journal indicate the company conducted an internal investigation of the dealings between marketing staff and its agency partners that purportedly led to the shakeup. With agency partners playing such a critical role in a brand’s marketing campaigns, it’s time to leave the Mad Men–era glad-handing behind and emphasize more transparency in agency relationships.
Trust issues between marketing divisions and agency partners have skyrocketed in recent years. Non-transparent media-buying practices, agency kickbacks, and questionable compensation methods have been the subject of many recent DOJ and FBI investigations.
Although the specifics of Samsung’s internal investigations are not yet fully known, is the debacle really a surprise? Perhaps not. But when one of the world’s largest advertisers decides to make an example and hold the organization — even at the highest levels — accountable, everyone pays attention.
While not all make headlines, audits of agencies and agency practices are not uncommon. To the contrary. Those have accelerated in recent years as transparency and trust have declined.
The Association of National Advertisers’ (ANA) recently released “Trust Report” shows that trust between clients and agencies declined by 28% from two to three years ago. This decline led to the formation of the ANA’s “Trust Consortium,” announced in March to address the raging issue.
So, what can we do to get ahead of audits?
Most recently, the industry’s focus has been on auditing external agency partners. Advertisers must expand their audit strategy to include both internal and external practices and be ready to take on any impromptu internal audits. They must keep top-notch records of their agency dealings, communications, and key decisions. It’s not only critical to successfully pass an audit, but it’s also essential to avoid having these audits slow down the organization or get in the way of timely marketing activities.
This level of record keeping is crucial to ensuring compliance during an audit. It can also be helpful to have an independent consultant or objective third party assist with sensitive matters such as agency compensation, contract negotiations, and agency performance evaluations — especially if those are tied to incentive and bonus payments. Marketing teams should consider using an automated system and process that ensure a more accurate tracking of these activities, with the right level of paper trail.
Existing operating principles, non-competes and conflict of interest statements are often relegated to the same place as software terms of service — the “read later” pile. This leads to troubling trends and lack of transparency. Most companies have well-defined operating principles and policies that marketing staff must adhere to. But knowing how to apply them to various daily activities can be confusing at times. Providing regular compliance training and creating playbooks and other resources on how to be a good partner can be incredibly helpful.
In the age of trust, Samsung’s audit is a sound reminder of the importance of adopting transparent agency activities, both internally and with external partners.
The only effective form of leadership is leading by example, no matter how difficult it can be. The industry must hold itself accountable — not only the agency world, but brands and their internal agencies, as well. And when they do, we must applaud the bold moves that are intended to keep the bar high.
This is a wake-up call for many advertisers that have not yet implemented sound and accountable agency operations and practices. It is time to seek more transparency and accountability for the relationship between agencies and the brands they represent.
By: Bruno Gralpois, Co-Founder and Principal | April 8, 2019