Latin America has an unfortunate reputation for non-transparent practices, especially in business — and yes, in advertising.
But what people don’t know is that Latin America is seriously attempting to tackle advertising's transparency issue, which continues to vex the industry in North America.
On September 1, the Mexican Chamber of Senators and Deputies enacted a new law that eliminates and prosecutes non-transparent media practices between advertisers, media owners and agencies. This is groundbreaking legislation that should create ripple effects throughout the industry, in Latin America and the U.S.
In 2016, when the ANA, K2 and Ebiquity released a study alleging unfair media buying and planning practices in the U.S., agencies were defensive. After some soul searching — and significant pushback from clients as well as the U.S. justice department, which is still investigating the issue — stateside agencies re-evaluated their practices and began introducing reforms to repair the damage.
Among the many regulations imposed by Mexico’s legislation are reforms that U.S. media agencies have been adopting voluntarily. They include prohibiting agencies from buying media to re-sell to advertisers with high markups and guarantees that advertisers receive discounts in full.
As programmatic spending surpasses $81 billion this year, according to eMarketer, close attention is still being paid to transparency, or lack thereof. The ANA recently announced a new study “aimed at improving process transparency and productivity” in programmatic. According to the organization, nontransparent practices cost advertisers billions of dollars and make roughly 15% of their investments unattributable.
Mexico is regulating the complex processes of programmatic. According to the new law, an agency must disclose the identity of the advertiser as soon as media is placed programmatically. In addition to reporting campaign results to their clients within 30 days, agencies must disclose all vendors used during the campaign as well as platform and technology fees.
These are key forward-thinking controls that will help clarify a very complicated web of relationships and deals. But why stop there? We can bring trust to the marketing ecosystem by creating standards evaluating data quality and privacy compliance to mitigate risk for marketers.
Let’s consider agencies were required to disclose the following:
Sharing the identity of all data providers and ensuring they’re privacy compliant
Reviewing all consent mechanisms and data collection practices
Sharing data governance, protection and methodology
Establishing the quality of the data used
Offering direct access to campaign results and performance
Full transparency about the team working on the account
Mexico is the second country to legislate media transparency after France passed the “Sapin” law of 1993 and more rules in 2017 regulating digital media. The law imposes penalties of up to 4% of total annual revenue for non-compliance — no small change for agencies, advertisers and media owners.
Although a handful of media agencies were cleared of wrongdoing by the Justice Department following the ANA report, investigations are still open.
Transparency is a two-way street. Agencies can be more transparent if advertisers do the same. Honest collaborations between clients and agencies will lead to mutual success between all parties.
Santiago Mas is managing director, LATAM at Labelium.