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Paul Sage

Account Director

 

There is a relatively new discipline at some large media agencies or within their holding companies:  Accountability.  Functional teams with names like “Accountability,” “Value Management,” and others have arisen at some large agencies within the past few years.  One function these teams often serve is that of facilitating third-party media audits from the agency side, so we have witnessed the inception and growth of this specialization firsthand.

Media Audit Implications

With respect to oversight of agency accountability — and specifically compliance to media audits, the addition of this discipline within agencies provides all parties (the agency, its client, and reputable media audit firms) with several key benefits:

1.  Experience. Agencies have rarely had designated professionals on staff who have extensive experience with the media audit process and its role in the paid media ecosystem.  Other than perhaps some personnel in the finance department, many agency personnel are only exposed to media audits when one of their clients conducts an audit, and even then only when that individual has a specific task in completing the audit. Not only do these agency accountability professionals work with media audits across many agency clients on a regular basis, in some cases they even have professional experience working for media audit firms.  This increases the likelihood that the agency understands the media auditor’s approach and will thus be equipped to engage in the process – to the benefit of all parties.

2. Time.  Previously, it was no one’s day job at an agency to comply with a media audit.  As we tell anyone who will listen, complying with an audit is simply not that difficult for an agency that has been doing its job.  Still, someone does need to pull the information, send it, and confirm that it is correct.  The person pulling the information is likely the same as before (it is the person who understands where it is, how it is organized, etc.).  However, the person coordinating the audit compliance is now someone whose day job is in part to comply with media audits.  Previously, it might have been an overworked planner or management supervisor who viewed the audit as an unwelcome extra responsibility.

3. Accountability.  This is what it all boils down to.  The addition of these professionals represents a recognition by agencies that they must not just talk media agency accountability, but walk it, and merchandise it back to their clients.  Not simply argue, deflect, diffuse.  Agencies are paying more attention to media auditor credentials, compensation, methodology – which is great.  Let’s all be transparent.  A media audit is the equivalent of an open-book test.  Whether you know ahead of time that you will be audited or not, you should have a client agreement, buying guidelines, authorization to buy, order letters, etc.  These are the “book” in the open-book test.

Beyond the Media Audit

A cursory review of LinkedIn profiles and descriptions on job listings confirms that people in these roles are of course fulfilling a variety of responsibilities beyond leading agency media audit compliance.  This only makes sense.  On the heels of the ANA’s transparency studies and recommendations in 2016, advertisers have grown more aware and vocal about the transparency of business practices and accountability by media agencies.  Agencies have countered with a new level of assurance to advertisers.  Indeed, many agencies had already begun to make performance guarantees (hard savings, etc.) a centerpiece of their new business pitches in recent years.

 

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Many advertiser-agency contracts now stipulate guarantees of cost savings or other media delivery KPIs.  Arriving at these agreements requires detailed knowledge of available industry data, specific client media requirements, and a detailed understanding of media research methodologies and marketplace dynamics (such as audience trends and anticipated media inflation rates).  In the past, agencies approached performance guarantees on a more piecemeal basis.  Indeed, a year or two into a relationship with a client, those on its media team might not even be aware of the agency’s commitments to that client.  Really.  We’ve seen it.

The agency Accountability team exists to define and self-report on the agency’s performance against these agreements, and to provide centralized focus and continuity to assure that expectations are understood by all parties.  In this way, it’s a new way of thinking and working. Agencies don’t just buy media – they invest their clients’ media budgets – and the Accountability team is there to measure and validate performance, savings, etc.  They help to set the expectations, establish the measurement methodology, and report performance to clients and third party media auditors.

Some specific examples:

Cost Savings

“We guarantee a savings of X percent” needs to be clearly defined and documented. What is the guarantee?  What will performance be measured against?  Where will the data come from?  What will constitute measurable vs. excluded components of the buys?  Who will validate performance?  When and how often will savings be measured?  Example approaches:

  • An advertiser might reduce budgets based on an agency guarantee of X% savings vs. real current costs, and then measure the agency’s performance to assure that it realizes the guaranteed savings.
  • Alternately, an advertiser might secure a guarantee of X% savings versus marketplace pricing or inflation (via available third-party industry resources) to demonstrate financial responsibility over media budgets to internal stakeholders.

Media Performance Criteria

“We can buy better” also needs to be clearly defined and documented.  There are again many different criteria that can be measured here.

  • Proving a better ability to estimate and forecast media audiences (and actually deliver them in-flight)
  • Timely reconciliation and recovery of restitution for under-delivered or non-compliant media
  • Improving the “quality” of media buys in terms of mix of media properties or programming, audience sizes and quality, times of day, etc.
  • Elimination of waste (e.g., Digital buying)

The introduction of Accountability as a specific discipline at agencies has the potential to provide advertisers with a level of insight, transparency and reporting which may have been previously lacking.  To be truly accountable and transparent, a third-party audit firm should be engaged to help establish methodologies and measurement resources and to conduct the savings analysis or independently validate the Accountability team’s savings reports. Just as students don’t grade their own tests in school, advertisers need the objectivity of an independent auditor to verify an agency’s results.  But again, the ideal situation is that this is an open-book test, where parameters, calculations and metrics have been clearly defined and documented.

 

If you liked this post, you might also enjoy “NAB Show 2017:  Five Takeaways for Advertisers

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