remember the hierarchy of responsibilities and that their company is at the bottom of that hierarchy, because it is in the company’s best long‐term interest to be last. Good companies know that what goes around, comes around; that good karma returns home; that ethical behavior is good business; that employees are happier working for ethical companies; and that consumers keep coming back to products and companies they believe are ethical, do the right thing, and are sustainable.
Great media companies understand that, if they take care of their audience that usage, readership, and ratings will go up, which means advertising revenue will go up. Also, if advertisers trust salespeople and their companies, most advertisers will pay higher prices for better service from these trusted partners. If salespeople do the wrong thing, it results in lost customers, expensive employee turnover, high lawyers’ fees, large court costs, and, perhaps, even time in jail.
Unfortunately, many companies set up rewards for salespeople that unwittingly reinforce doing the wrong thing. These include compensation systems that reward getting an order regardless of what’s best for the customer, contests that reward selling special promotions or events regardless of advertisers’ needs, and bonuses for making sales budgets regardless of what is reasonable.15 Beware of chief finance officers (CFOs) and top management that recommend accounting practices that “preserve a company’s assets”; they often have the wrong assets in mind. A company’s and a salesperson’s most precious asset is an excellent reputation, which is preserved by always doing the right thing all of the time.
The Five Cs of ethical responsibility
The Five Cs of ethical responsibility are:
1 Consumers
2 Conscience
3 Customers
4 Community
5 Company
An Ethics Check16
Is it legal?When salespeople conduct an ethics check, the first question to ask is: “Is what I am considering doing legal?” The term “legal” should be interpreted broadly to include any civil or criminal laws, any state or Federal regulations, any industry codes of ethics, or any company policy. If salespeople do not know or have any doubts about the legality of what they are doing, they should ask their boss and the company’s legal department.
Is it fair? Is it rational, as opposed to emotional, and balanced, so that there are no big winners and big losers? Is it fair to all: to both sides, to the consumer, to the salesperson, to the advertiser, to the various communities, and to the company? If the company had an open‐book policy, would all of its customers think everyone got a fair shake? Are all customers getting fair rates, placements, rotations, and makegoods? To test for fairness, ask yourself the question, “Suppose everybody did this?”
What does my conscience say? Salespeople should ask themselves, “How would I feel if what I am doing appeared in the Wall Street Journal or The New York Times? How would it make me feel about myself? According to my personal moral standards, is what I am doing OK?”
A company’s and a salesperson’s most valuable assets are their reputations and their relationships with their customers. Reputations and relationships are built by consistently doing ethics checks on the way you do business, by taking a long‐term view, and by not doing anything that would put you or your company in jeopardy, even a hundred years from today.
Transparency
Transparency is closely related to ethics because both concepts depend on being honest and having integrity. Transparency is being completely open about how you do business, in other words, being openly honest.
The concept of transparency in the media made headlines in the summer of 2016 with the release of the Association of National Advertisers’ (ANA) Media Transparency Initiative: K2 Report.17
From October 20, 2015, through May 31, 2016, K2 Intelligence, on behalf of the ANA, conducted an independent study of media transparency issues in the U.S. advertising industry. K2 was selected to lead the fact‐finding portion of the study after a request for proposal process initiated by the ANA on June 17, 2015.
Over the course of the study, K2 conducted 143 interviews with 150 individual sources, representing a cross‐section of the U.S. media buying ecosystem. K2 kept the identities of all participating sources – and all the individuals and corporate entities named in their accounts – confidential from the ANA throughout the study.
Results of the study were delivered by K2 in a comprehensive report. Among the key findings:
Numerous non‐transparent business practices, including cash rebates to media agencies, were found to be pervasive in the U.S. media ad buying ecosystem.
There were systemic elements to some of the non‐transparent behavior. Specifically, senior executives across the agency ecosystem were aware of, and mandated, some non‐transparent business practices.
There was evidence of non‐transparent practices across a wide range of media, including digital, print, out‐of‐home, and television.18
The ANA had commissioned the study because of a number of back‐and‐forth allegations in 2015 between major advertisers and large agency holding companies that the agencies’ ad buying, especially with growing use of programmatic trading, had not been transparent, which had inflated the profit margins of the agencies at the expense of major advertisers who should have received credit for discounts and rebates that instead went to the agencies.
When the report was released, the Association of American Advertising Agencies (4A’s) posted this response:
The ANA today released a K2 report on media buying practices. Although the 4A’s has worked collaboratively with the ANA via a joint task force, this report is anonymous, one‐sided and paints the entire industry with the same negative brush. This statement further elaborates the 4A’s position on this issue.
A healthy and constructive debate about media buying can only happen with a bipartisan, engaged, industry‐wide approach – and that is precisely the opposite of what the ANA has pursued. The immense shortcomings of the K2 report released today – anonymous, inconclusive, and one‐sided – undercut the integrity of its findings.
We call upon the ANA in the strongest terms to make available to specific agencies on a confidential basis all of the materials related to them. Without an opportunity for agencies to assess and address the veracity of information provided to K2, sweeping allegations will continue to drive attention‐grabbing headlines; this does nothing to foster a productive conversation or to move our industry forward.
Faced with a report that views media buying from the perspective of only one of the three parties to such transactions, agencies are hard‐pressed to defend themselves, which could cause substantial economic damage to all media agencies.
The advertising ecosystem is increasingly complex, and we are firmly committed to ensuring appropriate
