7 Ways the ANA Contract is Disrupting Media Agencies

The new ANA contract is either a worst nightmare or a dream come true for media agencies. Some have already lost business, others have tagged it as an existential threat, and the rest have embraced it as the perfect opportunity to snatch clients away from competitors.

Which is it for you – an opportunity or a threat?

Get ahead of this contract with this article – Gain a better understanding of the ANA Contract and the new risks it exposes for your agency. Find recommendations on how to mitigate the risks and how to create a competitive advantage.

Please note that I am not a lawyer, and this is not intended to be legal advice. Consult your own lawyer for their advice to develop your own strategy. That said, I hope you find this breakdown helpful.

The ANA Contract is the New Model Agreement Between Advertisers and Agencies

The Association of National Advertisers (“ANA”) has called for more transparency, accountability, and control of advertising investments in response to unethical behavior in the advertising industry and a breakdown in the partnership between advertisers and their agencies.

As one of their latest actions supporting this initiative, the ANA has developed a media agency Master Media Planning & Buying Services Agreement, which is now being widely used by advertisers as the basis for negotiating their own agency agreements.

The ANA Contract Can Make or Break Your Agency

The ANA contract is shaking up the advertising industry. It’s living up to its promise as a “game changer” that will create “winners and losers.” If you haven’t already seen some form of the contract in your negotiations, you soon will.  It’s important to get your agency up to speed and prepare for the day when this contract lands on your desk.

If you run a media agency, it’s critical for you to determine whether or not your media operation is in compliance with these new terms. If not, you run the risk of either losing clients in review or being at a big disadvantage when pitching new clients. Or maybe both.

Winners are already emerging under these new conditions. For example, agencies like Assembly have been gaining ground with transparency as a key selling point. In fact, Assembly just won AdAge 2018 Media Agency of the Year. Meanwhile, recent quarterly financial reports have revealed that big agencies have started to lose significant revenue because of renegotiated contracts.

The ANA Contract is Tedious, but it Boils Down to 7 Key Compliance Areas

As a service to its members, the ANA published Master Media Planning & Buying Services Agreement. It’s a template that serves as a model for a strong contract between an advertiser and its media agency.  This contract aims to protect the advertiser from conflicts of interest, non-transparent practices, and lack of accountability. It also strives to embody the ANA’s own prescriptions, principles, and processes for media transparency.

At 51 pages of dense legal language, the ANA Contract takes a long time to understand and is difficult to digest. However, I’ve labored through it armed with a yellow highlighter and a black pen.  My copy has handwritten notes up and down the margins. What I’ve discovered are seven key compliance areas that introduce new obligations and, therefore, risk.

Here’s a rundown of the seven ways the ANA Contract could disrupt your media agency:

#1 Obligations as an Agent – Section 6

What it says:

Early in the contract, there are dozens of powerful statements regarding the agency’s responsibility to act in the best interest of the advertiser.  Here are the three most prevailing clauses:

  • At all times, Agency will act as a fiduciary and in the best interest of the Advertiser.
  • A senior level Agency Associate shall certify that the plan is free of undisclosed conflicts of interest.
  • The Agency will purchase media placement in accordance with the Media Plans or other Authorizations provided by the Advertiser.

What it means:

Media agencies can’t have undisclosed conflicts of interest. Period.

If you have conflicts of interest, you need to disclose them.  You should also consider eliminating any conflicts of interest to ensure your client has the maximum trust in your recommendations.

Media plans must be free of conflicts of interest (e.g. ownership stakes in publishers, under-the-table incentives, etc.). Someone with oversight and authority needs to certify that there are no conflicts or that conflicts have been disclosed to the advertiser.

Additionally, you are obligated to buy exactly what was approved at the price represented to the advertiser (no bait and switch, bulk buys, or rebates to increase the agency’s margin).  You need to keep a clear and auditable record of every media placement’s lifecycle from initial plan to final payment.

#2 Placement Compliance – Section 6

What it says:

Agency will use available industry systems, technology, and proprietary tools which provide proof of appearance of media placements and ensure placement compliance with the insertion order.

What it means:

Excel spreadsheets will fail every audit under the ANA contract.

If you like having big advertisers as clients (who doesn’t?), you cannot run your media operations on spreadsheets any more.  If you haven’t already, it’s time to get up and running on a purpose-built media investment management system that encompasses media plans, media placements, KPIs, and performance tracking.

#3 Approval Audit Trail – Section 13

What it says:

Every single:

  • Media Plan
  • Media Placement
  • Estimated Third Party Cost

Must be approved by the Advertiser via either:

  • an ink signature on Agency documentation
  • an email from an Authorized Advertiser Approver
  • a signed Purchase Order

What it means:

Agencies must get advertiser approvals on every expenditure and keep a careful audit trail of approvals.

You need a way to create and track media authorizations with fine detail.  Gone are the days of blanket plans based on an estimated CPM and quantity of impressions.  You must be able to produce an audit trail showing all the details of every media authorization including plan details, placement details, and cost details.

#4 Reporting Obligations – Sections 14 & 15

What it says:

During the term of the contract, the Agency is required to keep the Advertiser fully informed as the progress and status of all services.  The Advertiser will also be provided with online access to Agency systems and be able to download/export media data. 

What it means:

Media agencies must now provide advertisers with access to real-time performance data through an online interface.

Again, it’s clear that Excel spreadsheets will fail every media audit (or at least make them unnecessarily painful). A single report at the end of a campaign will not comply with your contract obligations.  You must now provide a real-time interface that reports on pacing ad delivery, as well as the achievement of business related KPIs such as click-through rates, conversions, actions, and revenue.

#5 Third Party Cost Transparency Obligation – Section 16

What it says:

All Third-Party Costs will be approved in advance including the cost of Media Placements.  All third-party costs will be charged at Net Cost paid by the Agency without any markup and will give full credit to Advertiser for all rebates or incentives obtained by the Agency or Holding Company. 

What it means:

Media agencies must now itemize, track, and report all third-party costs to the advertiser.

Every cost must be itemized, planned, approved, and – most importantly – be accurate and transparent.  One of the issues that precipitated the media revolution was bundling third party costs with net media, and therefore obfuscating the true net media cost. The ANA contract strictly prohibits this behavior, requiring third party costs to be completely transparent and passed through without markup.

#6 Data Retention Obligations – Section 18

What it says:

During the term of six (6) years after its termination, Agency will maintain clear, accurate, complete, and up-to-date records in respect of the performance of its obligations.

What it means:

Media agencies must now implement a rigorous data retention system that enables organized retrieval of advertiser data. These systems must enforce access control, version control, and audit trails. Advertiser data must be secure and protected against hacks and disasters.

All media plans, media placements, KPIs, or performance data, costs, financials, and any other advertiser data metric is subject to audit up to SIX YEARS after the end of the contract.  Do you still have your media plan spreadsheet from six years ago?  Can you certify that someone didn’t change it? Are you confident that you’ll be able to find the plans you are working on right now in six years?  Are you sure that the Excel AutoSave wasn’t on when you used that old media plan as a template for your upcoming campaign?

#7 Data Ownership – Section 24

What it says:

All data is owned by the Advertisers (not the Agency).  Advertiser shall have the right to access, store, download, export, track, transfer, or use Advertiser data.  Agency (or the Holding Company), will not use Advertiser data for any purpose other than the provision of services.

What it means:

Media agencies must formally acknowledge that advertisers own advertiser data, and must provide them with the ability to easily access and export it.

While this obligation can be met sub-optimally with a series of disparate systems, a centralized platform is the ideal solution.

The ANA contract exposes media agencies to many new risks. It’s important to eliminate them as quickly as possible without disrupting your business.

Compliance with the ANA Contract is Not as Hard as You Might Expect

Want to thrive under the new ANA Contract?

Bionic for Agencies is an enterprise-class, media investment management system built for modern, transparent agencies.

Bionic is a powerful solution that can ensure that you are in compliance with the ANA contract.

Want to learn more? For product information, pricing, demo, and trial access, go to https://www.bionic-ads.com/agencies/.

By | 2018-04-06T15:21:44+00:00 April 6th, 2018|