Articles

FirmDecisions opens new office in Mumbai

Growing demand for financial compliance sparks joint venture with Spatial Access

As the global media industry has progressively digitized over the past 20 years, so the dynamics and structure of the media trading ecosystem have changed dramatically. These changes have brought with them both new trading entities and new trading practices. New trading entities include agency trading desks, demand-side platforms, supply-side platforms, and ad exchanges, all powering the automated world of programmatic media buying. And new trading practices include annual volume bonuses, early payment discounts, and agencies acting as both agent and principal when buying media inventory in bulk from publishers and platforms.

With many more links in the transactional chain, it has become more difficult for advertisers to assess and understand the return on their media investments. As well as becoming more complex, the ecosystem has also become more opaque. In some instances, advertisers have voluntarily waived access and audit rights to financial and media transaction data in the contracts signed with their media agency partners, often to secure access to seemingly cost-effective inventory media.

For many advertisers, the increasingly-complex, ever-more digitized media trading ecosystem has strained key relationships with their media agencies. This has come to a head in the U.S., the world’s largest advertising market, in the last 12 months after the publication of the ANA’s media transparency study. We have seen increased demand from advertisers for better understanding and more vigilant administration of contracts with agencies since the study was published. And this is not just in North America and Europe, but right around the world.

Growth in global ad spend is expected to slow in 2017. MAGNA, part of IPG Mediabrands, predicts that total spend will reach $505 billion, which is only an increase of 3.7% from 2016, compared to 5.9% growth from the year before[1]. Much of this slowdown in growth is down to the impact of the changing political landscape in the US and UK. With growth rates in those key markets of only 1.6% and 1.5% respectively for this year, it’s India (+11.5%), China (7.3%), Spain (7.3%) and Russia (9.6%) that will drive media industry growth[2].

India especially is seeing a huge investment in advertising from many global and local advertisers. Now the seventh largest advertising market, MAGNA estimates that offline media spend in India will grow at a compounded annual growth rate (CAGR) of 9.7%, while digital will grow at 25.5% over the next five years[3]. Corroborating this view, GroupM’s advertising expenditure futures report forecasted India’s advertising investment to grow by 10% in 2017, with 30% growth in digital[4]

This means that India is now becoming a major growth market for advertising spend – particularly in digital – and therefore there is ample opportunity for transparency issues to arise, if contracts are left unchecked. But the ANA report has struck a chord with advertisers in India, too. In fact, in the last six months alone, FirmDecisions has been invited to present at two major industry events – the first in Mumbai and the second in Gurgaon – specifically about media transparency.

This increased level of interest suggests that there is significant desire in the Indian market to address issues of transparency in existing media agency contracts. We know that Indian advertisers want to learn what peers in other markets have done to put their contracts right since the ANA study was published. This is why we’re encouraging advertisers in India to review and update their contracts now, using the precautionary principle that ‘prevention is better than cure’. And this is one of the reasons why we’re planning to increase our presence in India.

For many years, FirmDecisions has supported clients in India – to date indirectly. However, the growth in our local business in the last six months has accelerated the need for us to have experienced people on the ground, full time, to deliver financial compliance services. As a result, we are announcing today that FirmDecisions and Spatial Access Pvt Ltd have formed a joint venture based in Mumbai to deliver media financial compliance auditing to local and global advertisers in the Indian market. Spatial Access is India’s largest media auditing practice.

For more information, please contact us here. 

 

[1] MAGNA Global Advertising Forecast, Winter update, 5th December 2016

[2] MAGNA Global Advertising Forecast, Winter update, 5th December 2016

[3] MAGNA Global Advertising Forecast, Winter update, 5th December 2016

[4] This Year Next Year; Worldwide Media and Marketing Forecasts, GroupM, December 2016