Tag Archives: agency holding companies

Agencies vs. Consultants: What Does the Future Hold for Marketers?

24 Nov

pro vs conHave you formed an opinion yet on the battle between traditional advertising agencies and management consulting firms for marketing and advertising supremacy?

Many have, citing profound differences between these two types of professional services providers. The basis for the beliefs are centered on a range of characteristics attributed to each type of firm, including; company culture, strategic focus, business processes, talent pools, breadth of capabilities and ability to provide integrated solutions.

The question to be asked, as management consultants continue to push into ad agency territory (largely through acquisition) is; “Are the differences between these entities meaningful?” Or will the blending of these two types of firms ultimately result in a level playing field among the large agency holding companies and international consultancies?

Most pundits suggest that the differences are very real, with consultants largely grounded in a strategic focus on how to boost a company’s performance, and agency services centered on building brands by leveraging traditional media channels and touchpoints. Clearly both perspectives are valuable in their own right. Along with these differences, other complicating factors are at play that will determine the ultimate outcome.

  1. Marketers seem to be increasingly focused on improving in-market performance, which is becoming the principal means of validating the efficacy of their advertising programs. Metrics such as awareness, consideration and brand purchase intent are all well-and-good, but at the end of the day organizations are more interested in topline growth, market share expansion and bottom-line profits.
  2. There have been profound shifts in consumer purchase behavior and questions raised about the validity of the traditional purchase funnel used by marketers to map a consumer’s progression from awareness to action. In today’s digital-centric world of transacting business the path to purchase is not as linear as it once was.
  3. Research among younger shoppers suggests that marketers can no longer pre-suppose that brands matter. Certainly not to the extent that they once did. In an industry where it is projected that companies will spend in excess of $1.0 trillion on marketing services in 2017 (source: GroupM, 2016 “Global Ad Expenditures Forecast”) this is quite alarming. According to Havas Worldwide’s 2015 annual index of “Meaningful Brands” it was determined that “only 5% of brands would truly be missed by consumers U.S. consumers.” Driving this trend has been the emergence of the 75 million plus U.S. millennial target segment, whose trust in brands has been eroded as have their perceptions of genuineness and brand authenticity.

These trends may point to a larger shift, where consumer purchase behavior is more readily shaped by relationships, peer input and social influences rather than by branding. Thus the ad industry’s model of pushing brand messaging through a variety of media channels as a way of creating awareness and consideration in the hope of driving purchase intent may not yield the results it once did. It is likely that this traditional approach will be supplanted by social engagement and social selling as consumers take control of the pre-purchase learning and competitive evaluation portion of the purchase decision making process.

This could allow management consultancies to curry favor among marketers under pressure to drive performance in the short-term. The consultancies ability to offer integrated end-to-end solutions including; organizational design, transformational strategy development, user experience design, data analytics, technology support and increasingly branding and marketing expertise is considered to be quite compelling to many Chief Marketing Officers.

With so much at stake, it is certain that the agency holding companies and global consulting organizations will continue to invest in transforming their businesses to better serve marketers seeking to evolve their approach to achieving in-market success. In the words of Jeff Bezos, Founder of Amazon:

“We expect all our businesses to have a positive impact on our top and bottom lines, Profitability is very important to us or we wouldn’t be in this business.”

Is the Agency Holding Company Model Viable Going Forward?

19 Oct

dreamstime_m_35343815The pursuit of excellence is less profitable than the pursuit of bigness, but it can be more satisfying.” 

 ~ David Ogilvy

It is not our intent to suggest that scale does not have its advantages. There are multiple instances, within the professional services sector in general and specifically within the ad agency community, where size translates into meaningful benefits for clients.

That said, since Papert, Koenig, Lois went public in 1962 and other advertising agencies soon followed suit, the ad industry has undergone dramatic change. Ad agency IPO’s begot an uptick in agencies acquiring other agencies, which Marion Harper, CEO of McCann Erickson pioneered with the formation of The Interpublic Group of Companies in the early ‘60’s. This was then followed by the “unbundling” phenomenon of the late ‘70’s and ‘80’s.

Fast forward to 2016, where the top five agency holding companies; WPP, Omnicom, Publicis Groupe, Interpublic Group and Dentsu account for over 70% of the world’s estimated 2016 ad spend of $542 Billion (source: eMarketer, April, 2016). Further, each of these holding companies have broadened their acquisition strategies to further penetrate the larger $1.0 Trillion global media and marketing services category.

As a result, the portfolios for the top five agency holding companies contain between dozens and several hundred firms covering a myriad of marketing disciplines including, but not limited to:

  • Creative agencies
  • Media agencies
  • Digital agencies
  • Social Media agencies
  • Brand activation firms
  • PR firms
  • Relationship management firms
  • Programmatic trading desk operations
  • Research and audience measurement firms
  • Media properties

It is clear that the agency holding companies have successfully pursued and achieved “bigness.” The question is; “Has the holding company model achieved “excellence?” The answer may well depend on which stakeholder group one belongs to. Shareowners will likely have one viewpoint, suppliers and employees another and clients perhaps yet another perspective.

In the early days, the primary role of the holding company was to pursue efficiencies across their agency portfolios, while leveraging cross-agency synergies and driving strategy across their portfolio firms. Four decades later, this has evolved into holding company “agency” solutions consisting of cross-firm, multi-disciplinary client service teams served up to the holding companies top global clients.

Yet, the holding companies are struggling to define and evolve cultures, eliminate inefficiencies and break down silos across the numerous agency brands and marketing services firms that they have acquired. All while wrestling with issues and opportunities tied to the rate and rapidity of technological change and its impact on the business of creating and placing ads and not least of all… technology’s impact on consumer media consumption and purchasing behavior.

Today, the agency community is facing challenges related to attracting and retaining talent, evolving remuneration systems and regaining advertiser trust, all while being mired in a very public dispute with advertisers, publishers and ad tech providers regarding the issue of transparency.

Simultaneously, serious competitors have emerged, threatening the ad agencies stranglehold on advertising, media and marketing services. Consulting organizations such as Accenture, IBM Interactive, Deloitte Digital and PwC Digital now offer comprehensive, end-to-end consumer solutions, which include branding, graphic design, creative and media services to complement their analytical, strategy consulting, enterprise digital solutions and customer experience design skills.

This new breed of competition has monolithic brands, established cultures and highly trained, intelligent, flexible global workforces. Also looming on the competitive horizon are firms such as Adobe, Oracle, SalesForce, Facebook and Google that continue to focus on serving up marketing services and support to advertisers on a direct basis.  

Perhaps most importantly, the ad agency holding companies may not control their own destiny. At least not to the extent that they once did, when serving as valued, trusted advisors to their clients providing high-level strategic support and maintaining solid C-suite level relationships. Further, advertisers today have shown an openness to evaluating alternatives to the traditional client/ agency model, which has favored the aforementioned consultancies, technology and media firms along with in-house solutions.

It is certainly too soon to count the holding companies out, as they remain a formidable force in the industry. The question is can holding company leadership successfully chart a new course for leveraging their scale and talents to boost their relevancy in the years to come. What advice might one of the industry’s most iconic leaders offer to his holding company contemporaries?

“Leaders grasp nettles.” ~ David Ogilvy

 

Are Advertisers Fully Realizing the Benefits of These Production Trends?

2 May

digital production managementPerhaps one of the more significant trends within the advertising industry in the last decade has been the advent of digital asset management platforms and the continued move toward the decoupling of creative development and cross platform production.  

These innovations have resulted in a number of meaningful benefits for advertisers including; the ability to maintain consistent brand standards across the globe, minimizing required production lead times and reducing expenses in this area.  Agency holding companies to have been the beneficiaries of improved efficiencies tied to their horizontal strategy of creating in-network production centers to serve clients across their network of agencies.  There have been numerous reports from agencies indicating that this de-coupled, centralized approach to advertising production can generate savings for their clients in the range of 20% to 50%. 

There is another trend which is positively impacting production efficiencies… “offshoring.”  Ironically, the practice of offshoring is not talked about quite as openly or as often between advertisers and agencies.  Considered a global best practice in the digital production sector, the ability to leverage an advertiser’s digital asset repository from anywhere in the world has fueled the rise of digital production hubs in markets such as Bogota, Colombia, Sao Palo, Brazil and New Delhi, India.  The reason is straight forward.  These markets provide access to a growing talent pool of digital production specialists, while offering comparatively low labor costs that can be as much as 70% below that of North American and Western European markets.  

In our agency contract compliance auditing practice we review numerous client-agency agreements complete with agency staffing plans, labor and studio rate sheets and direct labor cost work-ups.  Of note, it is rare that these documents provide any transparency into an agency’s use of in-network production centers or their utilization of an offshoring strategy.  Rather, we see agency overhead and direct labor rates by function, which reflect more traditional staffing models and costs affiliated with U.S. creative hubs such as New York, San Francisco and Chicago.     

The obvious question to be asked is; “Are advertisers fully participating in the efficiency gains related to these practices?”  Based upon our experience, too often advertisers do not have the requisite transparency into this area to assess the extent to which any realized production efficiencies are flowing through to their bottom line.  As the twentieth-century U.S. architect and engineer, Richard Buckminster Fuller once said: 

“None of the world’s problems will have a solution until the world’s individuals become thoroughly self-educated.” 

Interested in learning more about your true production costs?  Contact Cliff Campeau, Principal at Advertising Audit & Risk Management at ccampeau@aarmusa.com to schedule your complimentary consultation on this important topic today. 

 

Agencies as Media Owners

17 Mar

agencies as media owners

Over the course of the last several decades media owners and media agencies pursued aggressive growth strategies largely fueled by merger and acquisition activity to consolidate their power and achieve a “leg up” in their respective negotiating positions.  So it comes as no surprise to anyone in the industry when you step back and assess the size and leverage of today’s top three agency networks; Publicis/ Ominicom, WPP and Interpublic Group.   

What complicates matters for advertisers is the emergence of the agency as “media owner” model ushered in by the rapid growth of programmatic buying and digital media arbitrage.  The essential question is clear:

“Doesn’t a media agency have a conflict of interest when it has a fiduciary obligation to secure the best available inventory at the most advantageous rates for an advertiser if they also resell media (as part of their recommended inventory) which they have purchased directly from publishers to achieve a financial gain?”

This is a dilemma complicated by the lack of transparency inherent with programmatic buying, which already limits advertiser transparency into the caliber of the inventory secured on their behalf and or the CPMs paid for those exposures.  

There are a number of dimensions that need to be addressed in the context of a traditional client-agency relationship in the wake of this phenomenon:

  1. How will an advertiser shape its media agency network and assign roles and responsibilities to protect its self-interests of objectivity, competitive pricing and an optimal return on its media investment?
  2. What media components might an advertiser bring in-house?
  3. In the ongoing dialog regarding “Big Data,” can advertisers realistically view their media agencies that are also media owners, as impartial partners, to be entrusted with sensitive, highly confidential data?
  4. How should media agency remuneration systems evolve to reign in the percentage of their gross media investment which is currently ending up in an agency’s pocket (i.e. fees, commissions, rebates, margin spreads, etc…)?

There is no standard, there are no guidelines… this is a “new chapter” in client-agency relations which is unfolding before our very eyes. 

So it was with great interest that I read a recent article on the More About Advertising website entitled; “Five ways for clients to find out what’s really going on as media agencies become media owners.”  The author, Andy Pearch, Director of MediaSense suggests that “the old media audit to pitch model has been broken by these developments” and that advertisers “legacy supplier management techniques need to evolve.”  The primary reason for this, in the author’s eyes, is that media agencies have become “market makers” where they, not the traditional media owner, sets the price of the media. 

In light of the growing leverage which agencies are able to exert on the media process, Mr. Pearch suggests that advertisers will have to learn how to “negotiate with their own agencies for a better market position.”  On the topic of transparency Pearch feels that “it is naïve to hope that the most dominant agencies will cede competitive advantage and margin by becoming sufficiently transparent.”

Two of his more intriguing recommendations include the need for advertisers to “take a tougher line on cases of non-transparent practice” and failure to comply with contract terms.  Additionally, Pearch suggests that advertisers both re-think their dependency on a single-supplier media agency model and, for larger organizations with the appropriate depth of resources, “consider setting up their own trading desks.”

We live in an interesting and dynamic time for the advertising industry with technology ushering in an era of rapid change that will continue to impact both consumer media consumption patterns and an advertiser’s ability to deliver their message in an appropriate, targeted manner.  It is our belief that during this time of sea change, advertiser transparency and control should not be sacrificed in the ongoing pursuit of cheaper CPMs.  The challenges identified here are not likely to be limited to digital media as the trading desks potentially expand their media coverage and agencies seek to extend media arbitrage opportunities.  In the words of Hippocrates:

“Extreme remedies are very appropriate for extreme diseases.”

 

 

Why Agency Overhead Matters

30 May

overheadAt the ANA’s 2013 “Advertising Agency Financial Management” conference I attended an interesting session surrounding perceived misconceptions about the role of agency overhead rates in assessing the efficiency of an agency.   

My takeaway was twofold.  One, I agree with the premise of the speaker’s presentation that “overhead rates are not efficiency metrics.”  And secondly, overhead rates are both an important and often little understood component of any agency remuneration program.  Ironically, many advertisers spend little time in familiarizing themselves with the various components that make up agency overhead.  Further, most client-agency agreements are weak with regard to defining the composition of the overhead rate which gets applied as part of the compensation calculation.   

To be fair, this is an area where often time advertisers and agencies can “agree to disagree.”  In 2006, the ad industry’s two leading advocacy groups the Association of American Advertising Agencies (4A’s) and the Association of National Advertisers (ANA) jointly published a “Compensation Guide” that delved into this very topic.   

Let’s start with why agency overhead matters.  In short, it is a primary component of the multiplier utilized in marking-up agency costs to arrive at a total compensation rate in a “Cost-Plus” or “Labor-Based” fee arrangement.  Therefore, determining what is included in or excluded from overhead rate calculations has a direct impact on the fees paid by the advertiser to the agency.  Detailing these inclusions and exclusions within the agency Agreement is of utmost importance to promote clarity.  It should be noted that these are not static measurements; overhead rates vary within holding companies, from one agency brand to another and across geographic locations.  For advertisers utilizing services in numerous offices across an agency network, this can be an important consideration. 

The basic approach in the application of overhead is to base the allocation on the client’s  pro-rata share of the agency’s direct-labor costs.  However, sophisticated advertisers can and do negotiate overhead rates utilizing custom methodologies.   

It is in the advertiser’s best interest to understand the individual components included in the aforementioned categories prior to negotiating overhead rates.  Does “Indirect Labor” include agency personnel time invested in new business development?  Are other non-billable new business costs embedded in “Corporate “Expense?”  What parent and or holding company costs are assigned to the “Space & Facilities” and or “Corporate Expense” categories.  Transparency into this area is vital for advertisers to begin to understand the differences in overhead rates across agencies and geographies and will result in a much greater level of comfort when discussing this topic with their agency partners.  As well, costs that the agency is including into the overhead pool should be verifiable, and the client’s allocated portion should be recalculatable.  Such that the agency is not covering their overhead costs more than 1x across the client base.  Lack of transparency in this area can lead to abuse opportunity and inflated fees. 

Just as important as defining “what” is included in overhead and negotiating the overhead rate, is monitoring what this rate and or the resulting multiplier (i.e. direct-labor costs% +  overhead allocation% + profit rate%) is applied to.   

As an example, are there hours from individuals at the agency incorporated into direct-labor costs that should not be?  For instance, freelancers, independent contractors and or consultant time investment should not have overhead applied and therefore not be allocated to agency direct-labor costs.  The expense for these individuals’ involvement on client business should be handled on a pass-through cost basis and billed to the client with no mark-up.  The subject of part-time and or temporary W-2 employees is a topic for conversation between the advertiser and their agency.   

So while, overhead rates may provide limited insight into agency efficiency, they do have a significant impact on an advertiser’s agency fee investment and therefore the components of overhead need to be understood, discussed, defined and tracked. 

Interested in finding out how an advertiser can verify whether its agency is adhering to what has been mutually agreed to be included in overhead?  To learn more about advertising agency overhead and or agency remuneration practices, contact Cliff Campeau, Principal at Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation.

Social Media Can Teach Us a Lot

15 Nov

social mediaI’m being polite.  The real point of this article is “Advertisers Beware.”  After serving as an agency account director and client-side marketing executive, I thought I had heard it all. However, after becoming involved in marketing accountability consulting my eyes were opened… or so I thought.  

Recently, a post by an agency media professional on a social media group to which I belong caught my attention.  The two-part question had to do with: 1) Whether or not an agency buyer should request unspent monies back from the media; and 2) If so, was the agency entitled to keep those funds.  What was surprising was not the question per se but some of the responses from group members, largely media buyers and sellers, suggesting it was appropriate for either or both of those parties to retain an advertiser’s unspent funds.     

Either the advertising industry has lost its moral compass or there is an urgent need for training and education in and around agency and media stakeholders’ fiduciary responsibilities to the advertiser.  As British philosopher and social critic Bertrand Russell once said: 

“We have two kinds of morality side by side: one which we preach but do not practice and another which we practice but seldom preach.” 

In our agency contract compliance auditing practice the need for education and a greater level of financial controls on the part of the advertiser is played out on a regular basis.  It is not uncommon to identify aged media credits that are extremely old or to learn that prompt payment discounts, volume discounts or AVB’s that have been earned by the advertiser have not yet been “processed.”  

For too many years the advertiser community has turned a blind eye toward many of the industry’s practices regarding agency and media use of advertiser funds.  These include items such as the interest income earned on float and the retention of compensatory media weight.  However, if there are stakeholders within various facets of the media purchasing cycle that are unclear about the need to return budgeted, but unspent funds to the advertiser than we should all take heed.  

This is obviously a serious issue and importantly one where there should be no debate.  The only answer to the aforementioned question is that media agencies and media owners have a fiduciary responsibility to their clients.  Any unused funds, media credits, compensatory media weight for underdelivery, prompt pay discounts and or rebates should go back to the advertiser, plain and simple.  Let’s remember, it is the advertisers’ money being invested, not the agency’s and not the media properties. 

Further, on the topic of AVBs, policy action is required by the ANA and 4A’s as it relates to the growing use of volume rebates both globally and within the U.S.  Advertisers should be reassured that their agencies are planning and deploying their media budgets in an optimal manner based upon sound, fact-based analysis tied to maximizing the advertiser’s return on media investment.  The faintest specter of allocation decisions being skewed by the presence of an AVB offered by the media to an agency holding company is simply inappropriate. 

However, as we all know, education and the enactment of industry policy takes time.  Consequently, in the short-term the best way for an advertiser to monitor their marketing investment may be through the use of independent contract compliance auditing.  

A good approach would be to begin with upgrading agency contract language to provide the requisite legal and financial safeguards to protect the advertiser’s interest on these topics and to incent all parties to conduct themselves in an appropriate manner.  This would be followed by some combination of contract compliance monitoring, performance assessments, billing reconciliations and time-of-staff/ fee reconciliation reviews.  In the end, this type of accountability program will both protect an advertiser’s interests and clearly communicate its expectations regarding “appropriate” behavior among its agents and 3rd party vendors when it comes to their financial obligations.  

Interested in learning more about the benefits of compliance auditing as a means of improving transparency into your marketing investment and control over the stewardship of those funds?  Contact Cliff Campeau, Principal at Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation on the topic.

What’s Fueling Agency Holding Company Profit Growth?

27 Aug

agency holding company profitsAccording to a new report from Marketing Services Financial Intelligence, agency holding company profits for 2011 were up almost 30% on an 8% revenue increase.  The firm tracks publicly traded holding companies such as WPP, Omnicom, Interpublic, Havas, Publicis and Aegis along with some smaller organizations.  Of note, it was reported profit margins also rose for the group, “averaging 15%.”

Clearly, in spite of what has been a tough global economic climate, the agency holding companies continue to perform well from a financial perspective.  In addition, they have continued to expand their footprint via a robust level of merger and acquisition activity as well.

So what can we make of the stellar results?  Certainly, life is good for the holding companies.  Perhaps more intriguing is to ponder how a collective of holding companies managed to achieve a 4X multiple on profit growth vis-à-vis topline revenue.  On the surface it’s easy to understand, control expenses and boost the margin yield on incremental revenue.  However, the agency business falls into the “professional services” category.  Their primary expense is direct labor.  So as revenue increases, so do direct labor costs.  Right?  If not, how do you add business without expanding staffing coverage at the same rate?  Wouldn’t this negatively impact client service levels or the caliber of the work?

So if agency staffs are growing commensurate with revenues, what is the source of the extraordinary profit?  While the answer may be complex and varied there are certainly aspects of the agency holding company model that likely have contributed to this growth:

  • Increased utilization of agency owned resources/affiliates on existing client business ranging from in-house studios to trading desks, barter firms and production companies.
  • Improved employee utilization rates, whether in the form of associates working longer or devoting a higher percentage of their time to billable activity.
  • Non-transparent revenue growth on existing client business including but not limited to interest income associated with float, growth in agency volume bonification (AVB) revenues along with other vendor discounts and credits.

Let’s be clear.  There is nothing wrong with an agency holding company making money.  Further, there is nothing wrong with the aforementioned practices as a means of driving profitability.  The issue that advertisers should more clearly understand relates setting transparency standards and clear financial rules between themselves and the agency.

As a first step, to understand the current state of affairs and use it as a basis for improvement going forward, it is a best industry practice for the any advertiser to implement a detailed contract compliance audit.  This initial review boosts the advertiser’s understanding of the agency’s billing practices, and their basis, to assess time value of money treatment, fees vs. agency time-of-staff investments, AVB calculation methodology, adequacy of financial terms, manual vs. system treatment and the like.  The advertiser can then answer the questions – “where are my financial risks?” and “how do we mitigate them?”

Once accomplished, then perhaps the advertiser won’t have to “ponder” agency holding company profit growth rates and can join their agency partners in celebrating their hard earned financial success.

If you would like to gain the benefit of what we’ve learned first-hand through our agency contract compliance auditing practice and would like to schedule a complimentary consultation on “Transparency in Action,” please contact Don Parsons, Principal at Advertising Audit & Risk Management at dparsons@aarmusa.com.

Agency Trading Desks and the Issue of Transparency

9 May

With the rise in digital advertising budgets and the dramatic expansion in the level of inventory available from publishers, advertising agency holding companies have developed a viable alternative to ad exchanges for securing a portion of their clients’ digital media inventory needs.  This is being done through the use of agency trading desks.

Simply put, a trading desk is a separate holding company service entity that integrates a demand-side platform with other technology and a wealth of consumer data to deliver targeted audiences at scale.  While primarily focused on display advertising, this dynamic method for purchasing media on a real-time basis is expanding to the buying of online video, search, mobile and social media.   This approach leverages an auction based model to buy unsold publisher inventory at efficient rates relative to pre-procured media.

The benefits to the advertiser can be significant when it comes to audience buying and ad impression optimization relative to content/ context based digital media buys or purchasing packaged buys through an ad network.   Given the relative newness of this approach combined with the complexity of the service offering and the limited understanding of trading desks among advertisers there remain concerns about the approach tied primarily to what is perceived as a lack of transparency.  This in turn has resulted in questions ranging from how agencies are compensated for this service (“Are advertisers  double paying their agency partners?”) to the potential for an agency’s objectivity to be compromised as they become both a buyer and seller of inventory (buy from publisher at one price, resell to clients often at a premium).

There are a number of ways for advertisers to enhance transparency into the trading desk operations of their agency partners.  The first is to check your agency letter-of-agreement to determine if there is language related to the agency’s trading desk operation.  If not, check to determine if a separate agreement with the trading desk operation was executed and read through the agreement carefully.  Secondly, engage your agency in dialogue about whether or not they are currently using buying digital media on your behalf through their trading desks and if so, what percentage of your overall digital buy is being channeled through the trading desk.  If the agency is not utilizing their trading desk for your digital media buying, ask whether or not it would be appropriate for your business model and what percent of your digital media buy would be a candidate for this approach.

With the answers to these questions in hand, it is time to discuss how the agency expects to be compensated for this service.  Compensation could include any or all of the following; commission on executed media buys, fee for service, incentive compensation tied to performance (i.e. cost per action, cost per lead, cost per acquisition) and mark-up on the media purchased by the trading desk and sold to the advertiser.  Further, inquire whether or not the trading desks earns rebates or discounts from publishers or technology partners tied to volume and if so, how is your pro-rata share calculated and passed through to you.

It is important to note that the trading desk model employed and the approach taken will vary by agency, so asking questions and establishing guidelines on how to evaluate both the efficacy and efficiency of this approach is critical before allocating a portion of your digital media budget to this channel.   While questions remain with regard to this emerging agency service, the level of risk represented is no more than that represented by ad networks.  Having direct conversations with your agency about the approach, costs, reporting and performance metrics will go a long way to ensuring that you have a sound understanding of how your investment is being handled.

Finally, incorporate a “Right to Audit” clause into the agreement which you execute with the trading desk operation to contractually insure your organization access to the date required to support your desire for full transparency. If you would like to learn more about this area and or how AARM can assist you in assessing the relevance of this approach or analyzing the performance of your agency’s trading desk, contact Cliff Campeau, Principal at ccampeau@aarmusa.com for a complimentary consultation on the topic.

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