UPDATE – Media Trading Practices Under FBI Scrutiny

According to an Ad Age article posted today, the FBI has turned to the Association of National Advertisers (ANA) and its members for cooperation with an ongoing “criminal investigation into media buying practices” of service providers.

There are a number of global media buying agencies caught up in the probe, but no word on larger local players being part of the investigation.

The FBI investigation was likely the result of the ANA’s own investigation amid complaints from members about transparency and contract compliance issues on the part of media buyers and the media suppliers.

The ANA probe resulted in the issuance of a K2 report in 2016 which supported member claims of some agencies withholding cash rebates from clients as well as other transparency issues, and a new, highly detailed, media contract template as well as best practices. While media buying practices and contract terms can vary by country, problems identified in the K2 report were not limited to international markets.

ANA members are encouraged to contact the organization’s lead counsel, Reed Smith, which serves as interface between the ANA and FBI, if they believe their media agency relationships warrant further scrutiny.

There is no indication at this time as to when the FBI investigation will be completed.

 

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams including building in-house media planning and programmatic as well as in-house creative and production operations. For more information, please visit our website.

Share

65% of Marketers Moving Some or All of Programmatic Buying In-house

According to a study just released by the Interactive Advertising Bureau (IAB), 65 percent of surveyed marketers making programmatic buys have either moved some or all of those functions in-house or are planning to doing so.

Key reasons cited include greater cost efficiencies and transparency, improved targeting and control of ads, shortened optimization time frames, and better focus on business objectives.

Not An Overnight Process

Taking programmatic in-house requires more than just appropriate staffing and isn’t accomplished overnight. In fact, it could take a year or more, and that’s after you develop your scope and implementation plan. And since you’ll need to hire the right talent, integrate multiple data sources, and build the right tech stack, you’ll need to prepare a detailed human and hard capital budget too.

Fortunately the IAB report provides a checklist to facilitate the process – plus there are external consultants to spearhead this initiative or advise along the way.

 

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams including building in-house media planning and programmatic as well as in-house creative and production operations. For more information, please visit our website.

Share

Freelance Worker Restrictions – Coming to a State Near You?

In an April ruling, the California Supreme Court significantly raised the bar that companies must meet to classify workers as independent – aka freelance – and not as employees.

What’s driving this? Money of course.

Money in the form of lost revenue to state and federal coffers, and in benefits “denied” to freelancers.

Freelancers have long been the backbone of the advertising industry as agencies worry about margins while trying to meet the demands of clients and new business opportunities that ebb and flow on a weekly basis. Between 2005 and 2015, the number of workers classified as freelancers rose more than 50 percent, accelerated by the 2008 recession and changes in worker attitudes about their work-life choices.

There certainly has been abuse, which gave rise to the term permalancer as agencies denied employment opportunities when there was clearly a sustainable need. We even know a few permalancers that rotated between a couple of NYC agencies every 4-6 months just so the agencies could avoid having to classify them as employees.

In these instances, however, those permalancers were paid through payroll as temporary help and all taxes were collected as though they were real employees. What they were denied was vacation and sick time benefits as well as access to agency 401k programs.

But what of all those gig economy predictions, whereby temporary positions for short term assignments are offered by companies to independent workers, would become the new normal? A study by Intuit predicts that by 2020, independent contractors will comprise 40 percent of the workforce.

Between clients squeezing agencies on pricing and increasing government scrutiny of worker classifications, agencies and clients may need to rethink their remuneration as well as staffing practices.

Some agencies have already turned to using staffing companies that take care of payroll matters while supplying temporary creative, production and even account management help. The challenge though is getting top talent to work through these temp agencies that can skim anywhere from 10 to 33 percent of the worker’s wage – and that’s before covering the payroll taxes.

Another solution is to directly hire top freelance talent as temporary employees for clearly defined short terms assignments, paid through payroll, and then released when the assignment is over.

While the right solution may not be a lasting one, it’s clear that agencies as well as marketers with inhouse studios need to work with their human resources and legal teams to find a solution that heads off potential legal battles while attracting top talent that just don’t want or need a full time permanent job.

After all, your state could be next.

 

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams in the areas of agency relationship management, agency search, process audits, contract and SOW development and audits, and a number of other marketing resource and marketing operations related areas. For more information, please visit our website.

Share