ACA’s New Marcom Services Agreement Addresses Media Transparency Issues

January 12th, 2015 | David Young, Principal, David Young Law

David YoungAmong top of mind issues for marketers in 2015 will be transparency for media buys. A major focus of these transparency issues is the burgeoning digital media advertising space—a significant new channel for marketing communications. The importance of this new channel is reflected in the phenomenal growth of programmatic buying/trading of digital media ad views. However the transparency issues extend beyond online media. Another key transparency issue focusses on agency holding group discounts.

The ACA’s 2014 edition of its Marketing Communications Services Agreement contains contract clauses that address these media transparency issues.

The growth of the digital media MarCom space and the programmatic advertising functionalities that it has spawned have created new challenges for marketers and their agencies. Concerns with how current ad buying models treat transparency of costs, ownership of data and accountability for content delivery have lead marketers to look for alternatives.

The contract clauses contained within the MarCom Services Agreement publication can be used by marketers to address these issues both in their traditional agency/media buying relationships as well as in provider relationships specific to digital marketing.

The ACA has been diligent in identifying concerns with current programmatic trading models and the role of agency trading desks. These concerns have focused on transparency of fees and the arbitrage mark-ups charged by the supply chain parties (agency trading desks, demand side platforms, supply side platforms). An example of arbitrage in such a programmatic model could see an insertion order executed in the publisher’s media at $2 CPM but costing the advertiser $5 CPM. Most of the difference in these cost amounts would reflect arbitrage.

The MarCom Services Agreement addresses this issue by stipulating that the marketer pays only publisher’s cost (a defined term) plus any transaction fees or mark-ups disclosed to and accepted by the marketer, and for verification mechanisms to ensure that these stipulations are complied with.

A related transparency issue concerns the ownership of performance data and user information generated by the ad impression. Under typical digital media agreements, ownership of information resulting from the advertising, including performance data and user-generated content, are retained by the publisher (or the digital marketing agency). Alternatively, their future use for repurposing is restricted. For example, such agreements may only assign such rights to the marketer if clear disclosure is made at the time the ad is served, or viewed—something that is highly unlikely to occur in typical online or mobile ad delivery contexts.

The ACA’s recommended contract clauses provide that performance data and user information rights are assigned to the marketer and, where these rights are not owned by the marketer’s agency, require the latter to use best efforts to obtain such rights. If the agency is not able to obtain and assign such rights to the marketer, it must disclose this fact to its client who can then decide whether to proceed using the agency’s channel or to seek an alternative option.

A further transparency issue addressed by the MarCom Services Agreement is that of benefits paid to agency holding companies on media buys, including digital media. The concern is one of full disclosure (or lack thereof) of the real “net” cost of media paid by a media agency’s client. The issue is that rebates, volume bonuses, special fees and other premiums received by agency holding companies on total ad volume placed with a media vendor are not accounted for in billings of insertions specific to the marketer. These income sources for agency holding companies typically are not part of the standard media contract relationship that the marketer has with its agency. Furthermore, the agency likely has no direct knowledge of these benefits. The result is that the agency does not reflect them in the net cost of media billed to its client.

The MarCom Services Agreement provides a protocol for full disclosure of such benefits as well as a verification procedure to ensure compliance.

A final transparency issue addressed by the ACA publication is accountability for the content delivery and viewability of digital media advertising. The MarCom Services Agreement contains a detailed protocol for media audits that can be used to stipulate criteria and reporting of ad delivery effectiveness.

These are some of the key transparency issues addressed in the ACA’s 2014 edition.

Marketers will know that in a typical agency relationship they are presented with the agency’s standard media buying/service provider contract terms and conditions. The ACA’s MarCom Services Agreement publication is designed to provide critical advice as well as contract wording that can be inserted in place of the agency’s terms and conditions to address the marketer’s objectives for transparency. The publication is the only resource of its kind for advertisers to develop and negotiate agency relationship agreements.

David Young
David Young is Principal at David Young Law, a regulatory law counsel practice focusing on privacy and marketing issues. Formerly a partner with McMillan LLP, David has been advising clients on marketing and related matters since the 1980’s. David is co-author of the ACA’s Marketing Communications Services Agreement – Commentary and Model Agreement (4th ed.).