Advertising Financial Monitoring

30 Dec

????????????????????????????????????????What is it?  Should a marketer consider it?  Should it be done out-sourced or done in-house?  Three great questions as it relates to a growing aspect of marketing accountability.  

Let’s start with a brief overview of the advertising financial monitoring function and its role.  Marketers have historically made significant investments in advertising ranging anywhere from 1.5% to 5.0% of gross sales, depending on their category, market position and growth posture.  Many organizations have struggled to establish a causal relationship between this investment and in-market performance results; overall, by product, by marketing mix element and or by agency partner.  The goal of advertising financial monitoring is to provide timely, relevant feedback on the stewardship of advertising investment across geographies, brands, agencies and disciplines. 

An effective advertising financial monitoring program provides a streamlined framework for timely capture and analysis of data to yield insight into handling of the organization’s marketing budget and performance of agency partners.  Corporate strategy and accountability protocols serve as the basis for developing the processes to be employed.  And the advertiser’s individual contracts with agency partners establish the performance metrics to be tracked and reported on.  

How many marketing services agencies does your company employ?  It is not atypical for an advertiser to utilize dozens of agencies to formulate and execute the advertising and marketing plan; Full-Service Agency-of-Record, Creative Services Shops, Media Agencies, Diversity Shops, Digital Agencies, Public Relations Firms, Social Media Shops, Regional Marketing Firms, Shopper Marketing Specialists, Event Marketing Agencies, Direct Response Shops, Sale Promotion Agencies, etc…   

In our contract compliance, fee reconciliation / billing, and agency performance review experience, one of the biggest shortcomings is a lack of clarity around “Who Owns” the agency relationship.  A weakness often resulting in overlapping agency responsibilities, limited agency oversight or control, lack of performance monitoring and limited transparency into an agency(s) stewardship of client resources.   

What is your annual marketing spend?  $75 million?  $650 million?  What would efficiency gain in the range of 1.5% to 9.0% mean to your organization?   This is a typical return-on-investment for improved and focused accountability.  Beyond financial yields, benefits are derived from a streamlined data gathering process and a constant flow of process improvements.  Most importantly, advertising financial monitoring will positively shape agency behavior for resource investment and in-market performance.  In the words of Michael Josephson: 

“What you allow, you encourage.” 

Outsource or Build?  It’s the same old discussion – most organizations don’t have the requisite technology or resources to architect, implement and manage such programs in-house.  As well, there is the significant benefit of having access to niche counsel which compliments in-house marketing, procurement, and finance team knowledge. 

As a result, each stakeholder in the marketing planning and investment cycle becomes awakened to the potential for achieving heightened levels of performance.   That is a good thing. 

Interested in learning more about the benefits of an “Advertising Financial Monitoring” program?  Contact Don Parsons, Principal at Advertising Audit & Risk Management at dparsons@aarmusa.com for a complimentary consultation on this topic.

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