US media agencies will be making a big mistake if they "dismiss out of hand" the ANA's transparency report, said Bob Liodice, CEO of the Association of National Advertisers, likening their dispute to the Cold War.
In an interview with Campaign, Liodice said that he had expected agency groups to respond angrily to its hard-hitting report but urged them to "digest" it "for a while."
The ANA report, which was carried out by corporate investigators K2 Intelligence, found "non-transparent" business practices were "pervasive" across the "spectrum" of US media agencies, but it did not name names.
That prompted the American Association of Advertising Agencies to brand the report "anonymous, inconclusive and one-sided."
"If the agencies are simply going to dismiss this out of hand, then they are dismissing what has been endorsed by the ANA board of directors," Liodice said. "And I don’t think that’s what they want to do in reality."
"You’re basically saying, ‘No, we don’t believe you, ANA board, and we don’t believe the people that represent 700 companies and thousands and thousands of brands and billions [of dollars] in investments that we put through those organizations,'" he said.
The ANA board includes representatives from PepsiCo, Unilever, Procter & Gamble, IBM, Visa, Diageo, McDonald's and many other leading brands.
Liodice urged agencies to come up with a more considered response.
"Everybody needs to digest the report, and we need to let it sit with us for a while, and then we intelligently have to begin talking," he said.
"If you think about during the Cold War, the United States and the Russians, arch-enemies, figured out how to discuss nuclear disarmament and things of that nature," he added. "These are situations of far less criticality but very important to our industry."
"We have an eco-system that is shrouded in a level of mistrust, and it’s going to take some time for us to agree on how we are going to fix the situation and come to a far better place."
Many agencies and most of the holding companies have been fiercely critical of the ANA’s findings, and have denied taking rebates without telling clients.
Publicis Groupe said the report was "unsubstantiated" and "unverifiable." Interpublic described it as "unfortunate" and "inflammatory." Omnicom said it "does not serve the best interests of the clients that the ANA purports to represent." WPP said it was "one-sided" and "in no way independent."
"I don’t agree with their reactions but I understand them," said Liodice. He suggested agency groups were in denial about taking rebates which, he said, had taken off only in the past seven or eight years in the US.
"There’s nothing wrong about rebates in itself," he said. "[But] when we hear from major holding companies that there are no rebates, we kind of say, ‘Where does that come from? We all know that it’s happening, so how do you say that?’ It’s really a head-scratcher on that front."
"It’s incumbent on [agencies] to recognize that there are non-transparent activities that are taking place and be upfront about it with marketers," he added. "To simply not just talk about them is not good enough."
Asked if he was surprised by the contents of the detailed 58-page report, Liodice said: "I learned a hell of a lot. There was so much in the report that that it made my head spin — that I was just not aware of. So surprise is a relative thing.
"It substantially increased my knowledge about how business is conducted in my industry. I suspect a very large number of marketers will have the same reaction [on reading the report]."
He insisted there was still "an incredible role for the agency community" and advertisers do not want agencies to "go away." He added marketers have a "great responsibility" to "do better" themselves and review their agency contracts.
Liodice insisted the ANA was right not to name names and could not speculate if clients might pursue legal action against agencies.
"Our job was simply to fact-find," he said. "We cannot make judgments about the legality or the illegality of the situation. That’s the reason K2 and the ANA don’t want even to speculate what may be legal or not legal."
This article first appeared on campaignlive.co.uk.