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Full-Frontal Financials Needed

Transparency in the world of media buying and planning has been a big issue internationally over the past few years but Catriona Campbell writes that creative agencies have – so far – emerged relatively unscathed, but questions still remain about mark-ups and kick-backs.

Three years ago, the American Association of Advertisers announced a federal investigation (yes, a federal investigation) into the level of kickbacks and rebates in the media buying industry. Their damning conclusion that media agencies “recommend or implement media that is off-strategy or off-target if it works for their financial gain” ricocheted globally.

In the UK Deborah Morrison of the ISBA (the trade body for UK marketers) announced “I don’t believe that media agencies have got the best interests of their clients at heart anymore.” Three years later, and McKinsey has reported that in the fall out, in excess of 500 media accounts have been reviewed, countless contracts have been rewritten, and audits of media agencies have skyrocketed.

Throughout, creative agencies have pretty much escaped the glare, from the auditor or otherwise. But should we have?

Across my 15+ years in the industry, in the UK and Ireland, I’ve heard of some of the same practices going on. The culture of mark-ups, rebates and kickbacks. I’ve heard about kickbacks from a production job, a mark-up on a print job, a rebate from a supplier. Some money here, a little more there, potentially a lot more from somewhere else. Of industry friends being brought into their MD’s office to be reminded that TV (and its inherent production budget) was the most lucrative channel for the agency, and one they should get behind (the implication that they should push TV even if they didn’t think it was the right approach).

These arrangements cover the overspend, the uncharged hours, the time we can’t get back. It covers the agency. They are a little greasy, but not necessarily illegal, unless explicitly covered in the client/agency contract. Pub chat justification is that it’s tougher to survive in creative agencies than ever before, whilst our media colleagues are printing money, so if we colour outside the lines a little, and take a bit of cream off the top, it doesn’t really matter. But in my mind, it does matter. It matters a lot. Because is this practice in some way hampering our capability to give the best, most objective advice?

Clients are navigating the new era of communications with greater challenges than ever before, chief of which is how to be relevant and useful to people who are bombarded with thousands of messages across a multitude of channels every day? The strategic advice clients get from their strategic partners therefore is critical. It’s not good enough to have a great idea or to innovate. It must extend to smart and objective thinking about how to reach people in a meaningful and effective way. And even the suggestion that our strategic advice is compromised, well, that just isn’t good enough. Our advice should be unbiased and untethered to a particular media channel, to a particular production technique or supplier.

The advice that we give our clients fundamentally must be all about what is best for their business, not our business.

Advertising has always had a bit of a shady past – best framed by Jacques Seguela’s book “Don’t tell My Mother I’m in Advertising, She thinks I Play Piano in a Whorehouse”. And personally, I’m a straight-talker, I like to be on the same page as people, and the murky invisible world of mark-ups just makes me uncomfortable.

When I first talked to Colin, founder and Creative Director of The Public House, about joining him as a business partner, one of the first conversations we had was around our commercial approach. We both had a belief that building genuine enduring strategic partnerships with clients requires unilateral trust and transparency. And trust can’t be based on a lie, or an invisible truth. What it came down to is that we both believe a business shouldn’t be based on what you can siphon off, but where you can add value. So, at The Public House, we talk with pride, Erin Brockovich style, about our full-frontal financials. No mark-ups, no kickbacks, no rebates, just full transparency.

There is an element of ‘yeah right’ amongst our peers, amongst some suppliers who see mark-ups as a standard, amongst freelancers, even amongst our new recruits who come to us accustomed to different business practices. But it is a black and white fact about our business. An audit for us is about hitting file and print.

We work with a network of excellent suppliers and partners to bring ideas to life in whatever medium is most effective once we really understand the people we want to reach and engage. We don’t come with a set agenda or a set of production overheads that need to be justified – and that gives us the flexibility to resource up depending on the specific business problem we’re trying to solve. We look at each challenge with an open mind – with no presumptions or preconceptions. And that is what enables us to build truly bespoke solutions to our clients’ challenges. Our work looks consistently inconsistent – it could be a TV ad, equally it could be an app, a stunt, a piece of point of sale. It’s about what’s right for that challenge. We’re set up to solve problems, not sell advertising. And we’re proud of that.

Catrióna Campbell is Managing Partner at The Public House.