Why Should Advertisers Consider an Independent Media Audit?

Because up to twenty-percent of your media investment may be at risk!

Ironically, while advertising media represents a significant portion of an advertiser’s SG & A (Selling, General, and Administrative) expense, there are often insufficient controls in place to insure that an advertiser’s media schedule will actually run as purchased.

The first question to be asked within an organization regarding advertising media is “Are we satisfied with the level of transparency and oversight that exists today to provide the accountability that we seek for our media investment?”

Sadly, the answer is most typically “No.” Why? Chances are that the only feedback being provided to an advertiser regarding their media performance is provided by the agency that actually placed the buy. Neither this reliance on agency self reporting or the lag time for documenting media performance (90 to 120 days following the close of the quarter in which the media ran) are acceptable in today’s regulatory environment . Compounding this situation is the fact that Corporate Media staffs (if your organization even has a Corporate Media staff) are often understaffed and under resourced, presenting challenges for them to delve into the minutiae that is necessary to optimize their firm’s media investment and to verify that what was planned ran and that what was billed is reflective of what ran. In light of Sarbanes Oxley, companies must ask themselves two basic questions.

• Can we safely assert that we have proper internal controls in place to insure the accuracy of our financial reporting as it relates to media?
• Have we documented our internal processes for control and risk mitigation in this area? Further, have we validated those processes via an independent media auditor? If the answer to either of these questions is no, you may want to read on…

What could possibly go wrong with my media investment once the media plan is approved?

• An initial media buy is a pledge by a media property to attempt to honor an advertisers time and space placement requests - it is not a guarantee.
• Ads can be bumped, moved, run incorrectly, audience delivery can fall short of goal, agency buying platforms allow for Nielsen ratings to be overridden by the agency, ABC audit circulation data can be overstated by the publication, billing to an advertiser (often estimated) can be incorrect, credits, rebates and discounts may not be applied back to an advertisers account and remittance to the media property may or may not match the bill to advertiser and may or may not be reconciled to the appropriate fiscal period.
• The media’s role is to deliver ad impressions, people within an advertiser’s target audience that are actually exposed to the advertiser’s message. Unfortunately, estimating delivery isn’t an exact science. Impressions are estimated by the media planning team well in advance of the actual performance and may or may not be monitored or updated once the media buy has been approved. While the tools are there for an agency to assess audience delivery trends and ad placements, they are not always applied… particularly if an advertiser is not independently auditing media performance.

How can you mitigate these risks, satisfy your internal control and reporting goals? Commit to an independent media audit process. Media auditors are specialists with the experience, tools and resources to probe all aspects of the media investment cycle necessary to insure that an advertiser receives full value for their media investment. An independent media auditor can provide a level of expertise and transparency into this highly complex area that can be likened to the difference in advice in perspective between a neurosurgeon and a general practitioner. There is a truism in advertising: “What is inspected is respected.” Media agencies and media properties know which advertisers are monitoring their buys and billing and will to take precautions to make sure that those advertisers’ media buys are being properly stewarded. Unfortunately, providing these precautionary measures is a non-revenue generating activity that requires time, money and people, all finite resources for agencies and media properties.

So while you may trust your agency partner and or your media sales representative, great. However, trust is not a control. If you are not monitoring your media performance your organization could be at risk. Media analysts have indicated that twenty plus percent of an advertiser’s media investment may be at risk due to audience delivery shortfalls, buying guideline discrepancies and billing inaccuracies. One bit of good news is that independent media auditing can actually generate significant media savings in the form of under delivery restitution, discrepancy resolution and improved media benchmarking. The only real question to be asked: “SOX-404 aside, is this a risk your organization is willing to take?”