Dive Brief:

• In response to the fallout over its controversial report on industry transparency, ANA Chairman Tony Pace has released an open letter defending the report and its results according to Ad Age.
• Last week, the Association of National Advertisers (ANA) released the report, which included research that showed media rebates to agencies was pervasive.
• In response, major ad agencies, including WPP and Omnicom Group, pressed the ANA to hold off releasing the report and condemned the report after its release.

Dive Insight:

Brand and agency relationships have been somewhat fraught recently with a record number of agency relationships going under review last year – more than the previous three years combined in terms of dollars at stake.

The ANA’s transparency report will do nothing to help repair the overall mood of the advertising industry. Finding out that agencies are pocketing rebates on media buys that don’t get passed on in the form of savings for clients isn’t a good look for an agency system in need of positive PR.

An eight-month probe by the ANA found that ad agencies receiving rebates from media companies was widespread in the industry. The rebates rewarded agencies for buying a certain amount of advertising space or time, and the report is sure to stoke more friction between marketers and their agency partners. While a number of agencies condemned the findings, one anonymous marketer who attended the ANA briefing on the probe told the Wall Street Journal: "There was some belief that this was just one bad apple, but it seems to be pervasive."

Although agency cash rebates was the big news from the report, other findings included uncovering non-transparent business practices that senior executives at ad agencies were aware of across media such as digital, print, out-of-home and TV.

From Pace’s letter:

Undisclosed and deteriorating media buying practices have been discussed by the ANA Board for the past five years. During the last fifteen months, our focus on media transparency increased substantially. When we failed to reach consensus on the extent of the issue with the agency community, the ANA Board commissioned the independent assessment conducted by K2 Intelligence.

K2 Intelligence was an inspired choice. They are thoroughly professional, comprehensive fact-finders with strong investigative expertise. In the estimation of the ANA Board, K2's report is an excellent piece of business fact-finding that is beyond reproach. I urge all interested parties to read the 58-page report carefully, perhaps more than once, to fully absorb the extent of the findings and the implications for our industry.