The State of Digital Advertising Transparency and the CMO

The call for advertising transparency continues to grow louder. But has anything changed? Who is championing new practices?

A Recap of The Key Issues At Hand

In October 2016, the ANA Masters Circle was unveiled as a group designed to empower CMOs and work toward advertising transparency. Since then, brands have become more openly critical of the ways in which agencies have been handling media buying.

A 2016 ANA advertising transparency study found that media-buying agencies have been known to not share rebates, leave fees unexplained, and purposely keep data sharing vague. Now, companies are complaining in unison because they they don’t know where their money is going and if their spend is having any impact – and with good reason. Experts say that in 2017 around 15 billion dollars were wasted on ad fraud. If things continue on the same trajectory as of June, it’s estimated that 19 billion will be wasted again this year.

With huge numbers like this at stake, there is no time to waste. The war against ad fraud – having been declared by the ANA in 2016 – is well underway. And while the Masters Circle has been a great catalyst in calling attention to this expensive issue since then, what else has our industry done on this front? Here are the three most tangible changes that have come about in the past few months.

Specific People Are Being Put In Charge Of Advertising Transparency

Some companies have selected executives to be explicitly in charge of transparency in advertising. This helps by placing that not-so-sexy responsibility onto someone specific, when otherwise it could easily be delegated into oblivion. It has now become a top priority to find the best-possible talent for the task.

In late 2017, AT&T appointed Kirk McDonald – former President of Digital Advertising at Time Inc. – as their CMO on a platform centered around advertising transparency. Though his “transformational leadership ability” alone may have been enough to land him the opportunity, his experience in advertising is what probably caused AT&T (an ANA company) to choose him.

Basically, he knows just how shady media buying can get, and that is now an asset. His hire is exactly what the current marketing atmosphere calls for.

Though some people could argue that appointing ‘transparency watchdogs’ in marketing teams is just a symbolic move, the pressure those overseers are putting on agencies is having very concrete effects, in some cases causing agencies to take action for fear of losing business.

Agencies Are Cleaning Up Their Act

One agency feeling this pressure and behaving proactively is New York City-based Assembly. This year, the agency began paying for its clients to use Ad:Box, an AdFin product that puts real-time media tracking capabilities into their hands. This provides Assembly’s clients with numbers meant to reassure them that agency doesn’t overcharge to make extra profit.

While the Assembly case is an example of a big agency’s approach to this issue, smaller agencies are also finding ways to swoop in as the most transparent options. A 2018 survey by McKinsey has already seen more account wins for leaner, independent agencies armed with pitches anchored in integrity and transparency.

In December of last year, London’s The7stars agency used this strategy to great success. Brand Director at Capital One, Katy Lomax, hired the less-than 200 person house due to their “transparent approach to media buying.” And although some agencies may raise their prices for increased transparency, 87% of marketers say they would rather invest up front than be jipped on the back end.

Media agencies of all sizes are making moves to accommodate their new demands because more watchdogs like AT&T’s Kirk McDonald and Capital One’s Katy Lomax are getting put in charge.

CMOs Are Further Organizing To Take Action

As mentioned, the ANA presented the Masters Circle in late 2016. By now, the group includes “1,000 of the topmost marketing executives at the forefront of fostering industry growth” – but CMOs are not done mobilizing against ad fraud.

The latest development on this front happened in Cannes this past month, when P&G’s Chief Brand Officer Marc Pritchard announced the creation of the CMO Growth Council, a “diverse group of marketing executives from a cross section of the industry” brought together to discuss the biggest growth barriers and opportunities for marketers today. Pritchard will serve as chairman.

Though the Growth Council is not specifically centered around the advertising transparency issue, there is no doubt Pritchard will place it high on the influential group’s agenda. As CBO of the biggest ad spender in the world, he has cut production costs by around $400 million annually since 2015 and has reduced P&G’s agency roster by 60%.

Led the face of the war on ad fraud, the creation of the CMO Growth Council is expected be one of the biggest blows to it since 2016. It also paves the way for other groups like this to be formed around the world.

So What’s Next?

There is a long way to go before the problem of advertising transparency is solved. Nobody has it figured out, so people are trying many different things – only three of them are mentioned above – in hopes of making progress. Just a few weeks ago, IBM revealed its partnership with Mediaocean, forged in hopes of harnessing Blockchain technology to process programmatic media transactions. Bill Wise, Mediaocean’s CEO, explains that “Blockchain could help us come together under a single source of truth [that will] push us into a new era of advertising transformation.”

Though original, the idea of using Blockchain is similar to all of the other approaches in that it has yet to solve all of our media buying problems. Could it be that, in order to win the war, it is necessary to attack ad fraud on more than one front? It seems we are already doing that, but it may not be fast enough to help all 96% percent of marketers who say they will maintain or increase what they spend on advertising within the next year.

In 2018, digital spending is necessary. But smart marketers will stay ahead of the curve and take advantage of the solutions to ad fraud that seem most promising: appointing people in charge of transparency, working with forward-thinking agencies, and staying abreast of industry standards as championed by today’s champions.

Visit Agency Spotter’s Brand Pages to see how we are helping shed light on brand-agency relationships and helping them move toward more transparency.

Additional Sources

The Moment of Truth for Digital Advertising, AdWeek – 2018
Truth in Advertising, McKinsey – 2018
The CMO Call for Transparency, CMO Council – 2018
Blockchain for Advertising, AdAge – 2018
The CMO Growth Council, AdWeek – 2018

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