Originally published in Ad Age, December 7, 2018
Marla Kaplowitz opens up to Ad Age about the DOJ production probe’s impact on the industry and where the agency world goes from here.
Now that the Department of Justice cleared five holding companies of unfairly directing production business to their in-house departments, Marla Kaplowitz is fired up.
“We are going to start being a lot more proactive,” says the 4A’s CEO.
Last month, holding companies MDC Partners, Omnicom, Publicis Groupe, WPP and IPG revealed they had been cleared without action being taken. It was a rather abrupt — and quiet — end to what Kaplowitz says has been a “dark cloud” hanging over the industry.
As the head of the advertising agency’s trade association, Kaplowitz had largely kept mum about the production investigation and another DOJ investigation into media-buying practices in the industry, which was first reported in September.
But not anymore.
Kaplowitz spoke to Ad Age about the probe’s impact on the industry, where agencies go from here and more. This interview has been edited for brevity and clarity.
What was your reaction to the holding companies saying they’d been cleared in the production probe?
Unfortunately, this has been dragged out over two years. It did feel like the news landed [when the investigation was announced], there was this thud — and it went quiet. An investigation doesn’t mean guilt. It doesn’t mean that it will lead to any charges. Here’s an incident where it didn’t lead to charges across the board. And an industry was vilified quite often. It distracts from the bigger issues.
What bigger issues?
People are forgetting what agencies are doing well: Agencies are in the business of working with marketers and clients to support their business issues, to identify creative solutions and help them grow their businesses. Production is one aspect of that. But to take this and drag it out, and then not really acknowledge, ‘Oh, I guess we were wrong, there were no issues,’ that’s disappointing.
What has impact of this investigation been over the course of the last two years?
Lots more audits, lots more reviews going on. Imagine the scrutiny that’s been put in place in the area of contracts and making sure everyone has the right processes and procedures. What it did was make everyone pause and make sure they’re adhering to a process that is fair and is equitable and they’re aligned with their clients.
Is there anything positive about that increased scrutiny?
What I do think is positive, what that conversation has sparked, is what does trust look like? What is transparency and the way that you define that? It’s up to every client and agency to define that relationship on their own.
Agencies are opening up about their business practices, but no one listens to them because they’re individual companies. They can’t do it on their own. That is why we are going to start being a lot more proactive and really get out there. It’s not always going to be the positive things to talk about. We need to engage in that dialogue in the right way.
What’s been happening, it’s been a one-sided conversation in a courtroom where people are accused of something and they’re not quite clear about what that is because it’s very vague. The unsubstantiated claims have got to stop.
Are you referring to the Association of National Advertisers, which has published reports including one in 2016 on transparency, which the 4A’s at the time called anonymous and one-sided?
I’m not going to point my finger at any one person because I think there are multiple constituents out there pointing fingers. I think everyone is looking for growth, and there’s sort of the land grab of, ‘Let me take over this business, and expand in this area.’ So whether you talk about system integrators or consultants who are those whisperers … there are people out there that are creating mistrust whether it’s real or not, just by creating doubt. They’re all pointing fingers back at the agencies. It’s a convenient old negative narrative. So pick who you would like, but you can find many people out there who are doing it both publicly and privately.
We often hear agencies say they feel they’re being squeezed in part because of this mistrust.
There’s all this negativity. Who is really raising that in the marketplace? It’s the people who are going to benefit from that doubt. Agencies have to stand up and be clear and say, “No.” They should not be pushed to have 120, 180-day payment terms. They have people to pay. They have technologies to invest in. There is work that needs to be done there. It is a big issue — to make sure that agencies are valued for the work they deliver and the people they deliver. And as work shifts from retainers to project work, clients can’t expect agencies to be category-exclusive in that environment.
So what can agencies do?
It can’t just be the 4A’s out there championing and advocating. Agencies also have to reinforce to their clients the value that they bring, the business building contributions that they make. Agencies also need to be very vocal. I see some of them are taking more of a stand and pushing more and standing up.
I want agencies to not only reflect on the strengh of the history of what they have and what they’ve done but also the future that they’re enabling. I don’t think enough agencies are given credit for the work they’re doing to evolve, to lead clients in the area of data and technology and what’s happening next.
I need help from our agency members to also help push the conversation forward. Because this isn’t just about agencies or marketing, this is about the whole industry, and business in general.
Where does the industry go from here?
I think people need to celebrate the positive. There are issues. Let’s tackle them together as opposed to ‘he said, she said.’ And how do we get back to focusing on growth? That is what everyone in this business wants.