Cost Benchmarking, Pools and Marketplace Transparency as Compared to International Markets

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This outlines key differences between the media marketplace in the United States and that of Europe and other international markets, particularly as it impacts media auditing. While there are numerous variations in business and other practices around the world, we believe this provides a solid review of fundamental issues impacting media accountability and, more specifically, the media audit business.

International markets are characterized by open markets in which there is:

  • A high degree of transparency.  Whether by custom or legal mandate, once ads run virtually everything about them is a matter of public record, from the data regarding occurrence of the ad itself to costs to the advertiser.
  • International Audit firms develop and maintain proprietary pools reflective of the media costs paid by their clients and/or agencies involved in client pitches.  These can be sizable, but they are mutually exclusive.  Auditors generally do not disclose detailed information regarding the composition of their pools, so we might rightly question whether they are truly representative of the overall marketplace.  Nevertheless, pooling is common practice, enabling auditors to benchmark client costs to those of the pool.
  • Positioning is an important influencer of media costs.  Specific positions in television and print can be purchased.  Highly desired pods/positions are priced at a premium for television; for print, the equivalent involves front vs. middle and back or run of book.
  • Client pay for what they get.  Costs are tied to actual audience delivery, including ratings for television commercials measured at the sub-minute level.
  • “Joint Industry Committees” or “JICs” often set standards for audience research and select a specific supplier as the official resource for audience measurement in their respective countries.

In stark contrast, the United States is a much more closed market, partly driven by antitrust and privacy regulations as well as other factors.

  • Markets are not transparent.  There is no requirement for disclosure of advertising activity.  Most of the information regarding advertising occurrences is held in close confidence by media sellers.  This has spawned a substantial competitive research industry, with Nielsen, TNS-Media Intelligence, VMS, Competitrak and others monitoring broadcast and cable programming, reading publications (magazines, newspaper and FSIs) and providing similar services for other media (internet, radio, out of home, etc.).
  • Pooling is not the norm.   Most advertisers and agencies specifically prohibit the use of their data in auditor pools via non-disclosure agreements.  Those auditors claiming to maintain pools are relatively small, the largest reflecting just a handful of clients.  SQAD has emerged as an industry research resource, providing several services to the agency and advertiser communities as well as media auditors:

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