Woolley Marketing: How much transparency is too much transparency?

Conventional wisdom suggests that transparency and trust are inextricably linked in the relationships between advertisers and their agencies. However, what if, in this complex world, there is the possibility of too much transparency? Under the right circumstances, being comfortable with and managing less transparency could benefit both the advertiser and the agency.

In this context, transparency refers to the agency's openness and honesty in advertising. This encompasses providing information about agency fees and billings, media buying positions, performance data, processes and strategies, as well as potential conflicts of interest, both real and perceived.

Traditionally, this was the hallmark of the agency relationship, with the agency acting as the agent for the advertising principal. This relationship came with distinct fiduciary duties for the agent and financial and legal responsibilities for the principal, including indemnification, honesty and good faith to allow the agent to perform their duties in good faith.

This legally defined relationship explains why advertising, media, or digital agencies are referred to as agencies. However, today, very few, if any, advertiser and agency relationships truly qualify as principal-agent relationships; instead, they are most commonly categorised and defined as contractor, vendor, or supplier, but not agent.

These relationships typically do not give advertisers the same level of control over the agency. However, the agency also does not owe the same high level of fiduciary duty to its client and must take on a greater level of liability. Does this mean they do not need to provide the same level of transparency?

Yes, transparency signals honesty, integrity, and a commitment to the advertiser's best interests. It creates a foundation of trust, crucial for a healthy, productive, and long-lasting relationship between an advertiser and their agency. However, both parties must operate with openness and clarity to build a partnership that drives successful outcomes for the advertiser.

It is also possible to have too much transparency. It is not necessarily too much volume, but rather it is provided in a way that creates a negative outcome. For example, bombarding the client with raw, unfiltered data without context or clear analysis can overwhelm the client instead of empowering them, particularly regarding media data.

Demanding transparency about every minute detail of the agency's internal processes and resources, especially during the procurement process, can lead the client to micromanage the team, stifling creativity, slowing down execution, and undermining the agency's expertise and autonomy.

With the current transition and implementation of AI, there is a danger of focusing on processes instead of results, distracting the client from the agency's actual outcomes. Likewise, AI makes providing constant agency updates about every small development easier, which can become a communication burden for both sides.

While a lack of transparency is almost always detrimental, poorly managed or excessive transparency can create challenges. The ideal approach is one of reasonable or strategic transparency, being open and honest in a manner that builds trust, provides valuable insights, and facilitates effective collaboration without overwhelming the client or hindering the agency's operations.

Instead of accepting less transparency, advertisers should strive for reasonable and strategic transparency. This means, first, focusing on understanding the metrics that directly impact business goals. Second, obtaining transparency in fees and billing to understand precisely how the agency generates revenue and the impact this may have on performance. Third, understanding the reasoning behind the agency's recommendations. Finally, cultivating a culture of open, two-way dialogue and being willing to ask and answer questions.

While it can be convenient to demand complete transparency from your agency, you must be careful about what you wish for. Maintaining a level of transparency is vital to build trust and enhance operational performance; however, the danger for both parties is that an obsessive focus on transparency alone can be counterproductive. As transparency is ideally a two-way street, a good rule of thumb is to ask yourself what level of transparency you are comfortable providing before you demand it from your agencies or, more correctly nowadays, your vendors and suppliers.

Woolley Marketing is a monthly column for Campaign Asia-Pacific, penned by Darren Woolley, the founder and global CEO of Trinity P3. The illustration accompanying this piece is by Dennis Flad, a Zurich-based marketing and advertising veteran.