Fortune favours the prepared mind
The French scientist Louis Pasteur observed that “in the field of observation, fortune favours the prepared mind”. As in chemistry, so in media contract compliance. It really is the case that nothing matches experience and preparation when it comes to an audit. Change and complexity is accelerating in the ever-more digital, data-rich world of marketing communications. Power is increasingly concentrated in the hands of the big holding company groups, vertically integrated to offer ever more services. In the face of increasingly complex dynamics, it’s only robust, insightful, and curious auditors who can help advertiser clients to secure proper oversight of and value from their marketing partner agencies.
Increased scope, increased complexity
Complexities in contract compliance audits have grown exponentially in the past decade, in lock-step with the increased complexity of the marketing ecosystem. This has been driven by audits increasing in scope to focus not just on agency volume bonuses and unbilled media, which were historically the drivers of transparency issues.
With the significant growth of digital – which now represents around 60% of media billings globally – a new parallel universe emerged. This universe is full of more complex communications solutions and increased billings, as individual ads – insertions and bookings – are much smaller than was the case in the heyday of TV broadcast. More transactions and more links in the transactional chain mean more opportunities for value erosion.
Today’s largest global media owners are Google and Facebook. It is true that global digital platforms help advertisers in terms of consistency, and their pricing, operations, and engagement with agencies are universal – at least outside of China. Other issues that advertisers need to bear in mind and work on with their audit partners include the following, all of which are increasingly widespread, but none of which are as transparent or compliant to agency contract terms as would be ideal:
- Third-party players in the ecosystem
- New trading methods such as programmatic and addressable media
- Innovative media buying methods that are value-based pricing, such as inventory media and barter
Specialist knowledge of the increasingly-labyrinthine nature of digital marketing can only be gained through decades of communication and agency experience, coupled with hundreds of audits. This is what enables expert auditors to assess all items of expenditure in the proper context and so spot outliers that demand attention and resolution. Media contract compliance auditing was established 20 years ago and has grown in scope as marketing communication has evolved since then. In reality, it is only those companies that specialise that can undertake future-facing audits in this area.
Success through engagement, intelligent sampling, and technology
Beyond decades of experience and evolving in parallel track with the global advertising industry, there are three other critical aspects that set apart successful auditors: engagement, intelligent sampling, and technology.
- Engagement: full engagement from advertisers and their agency partners are the cornerstone to a good audit. From our perspective at FirmDecisions, the contract compliance audit is a fantastic tool for both partners to engage with fully, as it highlights and rewards the good work, as well as allowing new processes to be put in place to make the future cooperation even stronger. If an audit is particularly painful, it also provides good insight for both parties to improve their relationship and raise it to another level.
- Intelligent sampling: is crucial to ensure that all time, effort, and focus are allocated only to those items that potentially need attention. This approach can help to reduce workload in the audit and so ensure that advertisers and their agency partners can focus on their day jobs, while at the same time also allowing time to be allocated to those issues that can be improved by review.
- Technology: automated solutions, such as invoice matching, can also help to minimise and automate the mundane but necessary work. This allows experienced audit consultants to focus on innovative media practices and solutions that demand more detailed, human scrutiny.
Given the increasing complexity of modern digital media and marketing, for advertisers with significant spend levels it is vital that they put in place a programme of regular – ideally annual – contract compliance auditing. Without this practice, it’s just not possible to operate efficiently. To do this optimally, it truly is a case of “fortune favours the prepared mind”. Contract compliance audits should be delivered by senior, experienced, specialist auditors. Through a combination of decades of experience in media and communication, they can help advertisers to understand the big picture and the details of the operation. What’s more, they can link this all back to the foundation of best practice – the contract with their agency partners.
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