Think changing your media buying agency will be just a minor and short-term bump in the road to better advertising effectiveness? Marketers face a number of challenges as they wind down one agency partnership and start up a new relationship, and the time to assess and protect areas of risk is before those wheels are set in motion. Even with a clean and well-defined break there is an impact on media stewardship that may take up to a year to run its course, and will affect if and when full values are realized for your media investment. With the best interests of advertisers at heart, MMi recommends the following protocols and shares some case studies to illustrate what may be at risk, how to best limit losses and ensure continuity of best practices and media weight recoveries.
Assign Responsibility for Every Step of the Process For Every Quarter
The media buying process is merely beginning when the agency comes to deal terms with vendors for an advertiser’s approved budget. Stewardship is crucial to maintaining the planned consumer communication levels. When there is an agency transition, be sure to clearly designate responsibility for each of these steps to the outgoing or the incoming agency for every buy. Then, hold each partner accountable to those obligations via contract language and terms, through an executed cancelation, or exit, contract with the outgoing partner, and a specific transition scope of work for the new group; each may include compensation as appropriate to protect investments as responsibilities change hands. Advertiser scrutiny in this area and precise communication not only protect advertiser interests, but help command proper stewardship attention.
Negotiate with stations/networks.
Secure advertiser approval of recommended buy schedules.
Place orders with stations/networks.
Execute proper contractual documents addressing all key deal points (not just ratings and costs, but agreed ratings streams, delivery thresholds, posting methodologies, invoicing procedures, etc.). See “MMi’s Anatomy of an Order Letter” for more information.
Ensure station contract acceptance (confirm schedules as originally negotiated, or with appropriate makegoods for inventory no longer available).
Enter detailed buy schedules in agency electronic buying system.
Agency with responsibility to process invoices will need every commercial input in their system for accurate matching to ensure only spots run as ordered are paid.
Discuss whether cancelations/deletions are required by outgoing agency and new orders issued by new agency.
In conjunction with paid schedules, secure no-charge spots for prior quarter under delivery or other non-compliance (on separate estimates for transparency). Based on MMi experience, this ratings, or TRP, balance owed will exist for all advertisers.
As schedules air, handle/negotiate makegoods and bonus spots due to station error, client changes, or in-flight audience delivery tracking.
Process station/network invoices.
Fully reconcile invoices to buy schedules to ensure payment only of spots run as ordered.
Indicate buyer acceptance of makegoods and bonus spots for delivery protection via entry into “buy” side for full reconciliation.
Provide quarterly post-performance report to advertiser including assessment of ratings points balances owed.
Submit data as needed to third-parties including auditors, econometric modeling companies, etc.
Some advertisers may choose to hold agency fees until all obligations from an agency are fulfilled. Expert oversight and best practice contracts and scopes of work ensure no investment falls through the cracks.
Ensure Clear Transfer of Records and Recovery Responsibility
The MMi norm for audience under delivery is 5% value lost (based on 16 years of experience and billions of dollars audited). After every effort is made to minimize this loss in the first place (via strong estimating and stewardship processes), the key is to ensure any shortfalls are made whole in a timely and transparent manner. Transition of records and continuity of recovery responsibility is crucial to realizing the full value for every media dollar spent in the quarters leading up to and following a buying agency transition.
Keep in mind the new agency will not have detailed records of previous buys in their system against which to negotiate, schedule, and post recovered ratings points. Be clear about your expectation – again, via contractual language -- that they recover as much as possible of your rolling rating point balance with stations; that is, inheritance of your business includes inheritance of your under delivery balances due. Best practices may include a third-party audit of the buys made by the outgoing agency to provide not only the neutral assessment of media weight owed, but also a baseline of performance which can be used to set goals for and empirically evaluate improvements by the new partner. In addition, an audit will verify whether or not all obligations were met by the outgoing agency, including completion of vendor payments to match advertiser final billing.
With advertiser approval, detailed audit reports from a third-party assessment can be shared across agency partners and can provide continuity of reporting through a transition period. MMi’s Circle Audit® “Under Delivery Four Quarter Market Recap” is a good example of how owed TRPs and recovered TRPs should be tracked and recorded.
Case Studies Show Millions at Risk
Advertiser #1: Spot TV ($70 million annually)After many quarters of good delivery trends, average performance fell by as much as -18%. In addition, millions of dollars in vendor under delivery values owed were accrued during the last few quarters of outgoing agency stewardship with less than 1% recovered by the end of Quarter G. In this case there was a very precise transition plan, yet natural staffing changes may have played a role as old agency phased out and new agency ramped up.
Advertiser #2: National TV ($200 million annually)Despite a transition audit identifying better-than-norms performance by the outgoing agency, the advertiser wanted to ensure two key items: recovery of the millions of dollars of rolling vendor under delivery values owed, and accountability for multi-quarter upfront deals in progress which crossed agency stewardship responsibility.
Agency transitions occur for a variety of reasons; however, improved performance, greater effectiveness and increased efficiency are frequently driving factors and expected outcomes. All too often, marketers end up making (often substantial) short-term sacrifices as one relationship ends and another begins, in pursuit of the expected long-term gains from an agency change. These losses can be neutralized with diligent planning, clearly documented responsibilities, and third-party expert oversight. The time to assure a seamless transition is before it begins -- not during or after. Given the size of many companies' media investments, the time and effort required to secure complete accountability leading in to an agency transition is more than offset by the value which is preserved.