At Maxis, we are still huge believers in the value a great agency partner adds to our business. - Lau

Mixed reactions to P&G’s proposed rulings

At Maxis, we are still huge believers in the value a great agency partner adds to our business. – Lau

There needs to be a common viewability standard in the industry

THE call by the world’s biggest advertiser – US-based Procter & Gamble Co (P&G) – for greater transparency rules in digital advertising has drawn mixed reactions from industry players.

P&G chief brand officer Marc Pritchard in a transcript released by the company, which was published in Advertising Age on Jan 29, said there was a need for a thorough review of all media-agency contracts plus requirements that everyone use industry-standard viewability metrics, fraud protection and third-party verification.

The new rules which P&G is pushing for and scheduled to be out this year include requiring funds to be used for media payments only, i.e., payments or fees should be matched with the services rendered. All rebates, at the same time, should be disclosed and returned as well as transactions being subjected to audit.

Another is the endorsement by P&G of the controversial US-based Media Rating Council (MRC) viewability standards for digital media. It defines a viewable impression as requiring a minimum of 50% of pixels in view for one consecutive second for display and two consecutive seconds for video.

Commenting on the proposed rules, IPG Mediabrands Malaysia CEO Bala Pomaleh tells StarBizWeek that viewability, fraud protection and verification are critical areas for clients to ensure their investments are not wasted.

In Malaysia, however, he says there are no enforced standards at play. The MRC classifies 50% viewability as acceptable, and various research does indicate that there is awareness value for ads that are not 100% viewable, he adds.

“It is important, therefore, to note that the pool of available inventory which is 100% viewable is small in the country and will, as such, cost a much higher premium. Thus, running a campaign with fully viewable inventory at this point may be neither realistic nor cost-effective,” Bala says.

Clearly defining the scope of work and service level agreements can prevent misalignments. – Bala

Industry veteran and Lowe & Partners Malaysia former chairman Khairudin Rahim says the viewability standard for digital media, which among others, allows the opportunity for clients to see an ad, does not in itself ensure its effectiveness. Properly practised creativity that is relevant and engaging does, he adds.

“After all, creativity which is the originality of thought, unexpected ideas, the fresh expression of a timeless proposition, insightful and inspiring story-telling, and surprising executional treatments plays a big part in marketing effectiveness. This is what matters most,” he stresses.

Maxis Broadband Sdn Bhd head of marketing services, who is also a council member of the Malaysian Advertisers Association (MAA), Sulin Lau, however, feels it is important to understand the underlying trends that triggered Pritchard’s controversial statement, not just for agencies but for all advertisers too.

Basically, she says marketing as an industry has changed so dramatically in the last three years that the legacy performance metrics, procurement contracts and remuneration models have become hopelessly inadequate.

“At Maxis, we are still huge believers in the value a great agency partner adds to our business. Our reaction to all these emerging challenges is to take a more active, less backseat role in shaping the kind of agency relationships we invest in,” Lau explains.

On its views on the rulings, AirAsia Bhd head of commercial Spencer Lee says the company takes all its investments seriously, as it audits the company’s agencies and partners and believes in full transparency to get the best out of its marketing investment.

“Our KPIs are clearly defined to expand our brand footprint, especially in the digital space. The key is to ensure that we have full understanding of all digital platform dynamics and metrics, which is why AirAsia has its own internal digital and marketing folks to question and challenge our agencies,” he adds.

P&G Malaysia could not be reached for comment as at press time.

Our KPIs are clearly defined to expand our brand footprint, especially in the digital space. – Lee

Touching on fee transparency, Bala notes that IPG Mediabrands is Sarbanes-Oxley-compliant. This, he says, means that the agency only earns revenues as allowed in its client contracts. This is further vetted by strict internal and external audit processes. Clients can also request for audit clauses to be included in their contracts, allowing them to audit related documents if necessary, he explains.

On the ruling that payments or fees should be matched to the services rendered, Bala says matching fees to service is a critical area of alignment between a client and an agency. Procurement processes can be significantly improved in making a partner selection, and right now it is still largely cost-based, he adds.

“This is risky, as the lowest cost may not come with the right quality or level of service and will affect business in the long run. Clients need to know what they want and engage the right partners with commensurate fees. Clearly defining the scope of work and service level agreements can prevent misalignments.

“The adage ‘if it is too good to be true, it probably is’ should be taken seriously here, and procurement teams should be experienced enough to know when an agency makes an unrealistic fee or commission proposal. Terms like six months fee-free service are completely unbelievable, unless these agencies don’t have staff costs.

“Companies should learn how to set the right KPIs for their procurement teams – the lowest price or fee may not deliver the best marketing results. Similarly, clients should also set the right KPIs for their agencies – a low fee is acceptable if there is a strong upside for performance and results.

“An ecosystem that continuously under-rewards the supply chain can’t sustain in the long run, and at the end of the day, creating joint value in partners is what will deliver overall best results,” Bala says.

On the matching of fees to the services rendered, Khairudin says the agencies’ management goals, among others, should be looked into.

“An agency needs to pay a return on owner’s capital, pay taxes, and grow to keep pace with inflation. It needs to attract talented people and provide a stimulating environment in which to work, as well as to retain and reward those people. All of these are management goals that can be attained only by recovering costs and earning a fair margin,” he adds.

Bala, however, agrees for a common viewability standard in the industry. For this to happen, he says clients need to play a more active role. Towards this end, he also stresses that organisations like MAA, the Media Specialists Association and the Malaysian Digital Association should collaborate and set standards for implementation.

*Source from The Star – 4th February 2017

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