The importance of auditing contracts as well as performance

The turbulent times of the last 18 months have muddied the pool when it comes to who is responsible (and paid for) what. So what is the best way forward?

Ad-spend is predicted to outstrip GDP – by 18% for this year and 7.7% in 2022 – with brands investing heavily in marketing their D2C offerings to stand out. But transparency in all areas is vital if it’s going to be money well spent, argues Stephen Broderick, Managing Partner, Media Marketing Compliance…

The media landscape has become an increasingly complex world for advertisers. Even compared to five or six years ago, there are now many different organisations involved in the planning and buying supply chain. They all have their own commercial interests and they are not always aligned with the interests of the advertiser or the terms of the contract.

When people hear the term media audit, they often think about an analysis of how marketing is performing – what the reach and impact of a campaign has been, for example. 

But an equally important yet overlooked side of the process is ensuring that the contract in place is being delivered within the negotiated commercial terms of the contract and is relevant to today’s media trading environment.

This means that advertisers need to be sure that they have received quality independent advice that delivers transparency and identifies whether or not all of those promises made when they first signed on the dotted line have been delivered. 

It’s an issue that is more important than ever now the pandemic is beginning to recede, and there are several areas both sides should be evaluating.

The key areas for evaluation

Let’s take budgets, for example. In some sectors, clients cut budgets quickly and dramatically, which led to some media vendors offering huge discounts to agency groups as incentives to encourage clients back into the market. But we are seeing evidence that these discounts and savings have not been passed back to clients as the contract states they should be.

Likewise, as the worth of inventory changed at a rapid pace, was the increased sale of agency-owned inventory correctly approved by clients? And has it continued to be approved by them, given we are still experiencing peaks and troughs across the world when it comes to footfall levels, regional lockdowns, and sectors such as retail, hospitality and travel re-opening at different times?

While it has been over a year since the first lockdown, many contracts will be longer term deals. This means that agencies may still be scrambling to hit annual spend commitments with certain media vendors while at the same time trying to deliver price commitments guaranteed for clients.

As they do so, have they amended plans accordingly and fairly?

Don’t forget the housekeeping

Finally, there are several housekeeping issues that businesses need to look at. These are conditions that are not necessarily linked to campaign spend but still impact the final amount of money that gets to the end of the funnel.

As teams have been furloughed and agencies try to service with fewer staff, fee servicing issues will linger. These need to be investigated to create clarity between the advertiser and its agencies as to who has been working for them, for how much and for how long.

Gaps here may lead to your business being overcharged, or worse, paying for staff that are not even present on your project.

Championing transparency across the board

While media is generally the larger part of a client’s marketing spend and quite rightly the focus, billions are spent on other marketing categories and clients have lots to gain by considering non-media agency partners for audit. After all, the culture of financial management at non-media agencies is very much the same as it is at media agencies where, sadly, transparency is something clients must fight for, rather than rightfully being provided.

We are seeing increasing opaqueness within the non-media supply chain, and advertisers are auditing their creative, production and BTL [below the line] agencies like never before.

This is an important issue and the industry needs to actively champion transparency  in order to ensure agencies are properly remunerated for the work they do too. 

Agency interests and efforts must be reflected fairly. This is not about targeting agencies or putting unnecessary strain on working relationships with them. Rather, it is about bringing a neutral third party to proceedings to ensure business is done correctly. 

Avoid nasty surprises

In fact, regular auditing maintains and strengthens the relationship with agencies as it prevents lack of trust or any surprises that might lead to the partnership being terminated. 

For those interested, very little work has to be done by businesses to begin the auditing process. Aside from choosing your audit partner, supplying them with the agency contract and advising the agency of the audit, you do not need to do anything further until the audit is completed and the results are being presented.  

Doing so can bring much needed clarity to a complicated process, ensure marketing spend is used effectively, and foster a healthy, long-standing relationship between both parties.

Stephen Broderick

Managing Partner

Media Marketing Compliance