Tag Archives: marketing accountability initiative
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We Know We Should Audit, But…

30 Mar
Hesitation

We’ve all seen the look on the face of an anxious toddler as they prepare to jump into the waiting arms of a parent in a pool.

The child wants to leap, knows there is little risk, trusts their parent and knows that the feeling of satisfaction related to their action will far outweigh their apprehension, yet they hesitate to take the plunge. This scenario can be analogous to organization’s considering an independent contract compliance audit of an advertising agency partner.

Managers’ go through a series of considerations when weighing whether or not to conduct an agency compliance and financial management review, including:

  • It’s not that we don’t trust our ad agency partners
  • It’s not that we don’t believe our agencies are putting forth their “best efforts” to safeguard our marketing investment
  • It’s not that we don’t have confidence that our marketing team is effectively safeguarding our marketing budget

But…

  • We have never audited this aspect of our SG&A
  • Marketing spend is a material expense
  • Our C-suite executives are asking questions regarding risks and controls
  • Over time, our agency roster has grown and spending has increased
  • We read the trade press and are concerned about fraud, brand safety, adherence to fiduciary standards and the like

In the end, Finance, Procurement and or Internal Audit leadership know they should undertake this important risk reducing work. They also realize that an outside specialists provides valuable industry expertise. Yet, they often cannot get to “yes.” 

Why the hesitation? The reasons are many; Marketing indicates that the timing is not right, we don’t have the budget, we’ve conducted internal reviews ourselves, our agency is a trusted partner, we’re considering transitioning agencies… and the list goes on.

The good news is that all rationale cited for not moving forward with comprehensive testing of  ad agency partner billings, costs and contract compliance can be readily addressed. The audit process is not time consuming, poses no relationship risk, is allowed for in the client-agency agreement, and most importantly the benefits far outweigh the cost / risk of the audit not proceeding.

Audit results yield a combination of historical financial recoveries tied to billing errors, unauthorized mark-up, unreconciled jobs, and outstanding credits.  Financial true-ups and learning far outpace the initial audit investment. And most importantly, the work yields forward looking process improvement, contract language improvement, financial refinement, and risk mitigation opportunities to generate cost savings and peace of mind.

With proper oversight, we have seen concerns regarding agency accountability replaced with a sense of trust and confidence. Key benefits in a market sector noted for its lack of transparency, murky supply-chains and lack of trust.

Where does your organization stand on this important accountability practice? Perhaps the words of Daniel Wagner, a widely published author on current affairs and risk management, can embolden organizations to take the prudent action:

“Some risks that are thought to be unknown, are not unknown. With some foresight and critical thought, some risks that at first glance may seem unforeseen, can in fact be foreseen. Armed with the right set of tools, procedures, knowledge and insight, light can be shed on variables that lead to risk, allowing us to manage them.” 

Marketing Accountability. Who Owns It?

3 Nov

marketing accountabilitySeems like a straight forward question.  And the answer is vital to the success of an organization’s marketing accountability initiative. 

From a functional perspective, should it be Marketing, Finance, Procurement or Internal Audit?  Should the CMO, CFO, CPO and or their lieutenants take the lead?  And of course the real zinger; “Whose budget will cover the cost of the initiative?”

Simple questions?  Yes, but with answers that have organizational implications that frequently pose significant impediments to fielding a marketing accountability program.  The reasons cited range from “We’re short-staffed” to “We want to do it, but budgetary constraints won’t allow for it this FY.”  Thus, for most advertisers, their marketing accountability initiatives are DOA.  It’s a shame when you consider the hundreds of $millions in marketing spend committed annually with little in the way of contract compliance auditing, financial reconciliation, performance monitoring or independent oversight. 

The obvious question for stakeholders is: “Would you play it so loose if it were your own money?”  Probably not.  Truth be told, accountability is everyone’s responsibility and is a pillar of good corporate governance.  The tone is typically set by the CEO and over time, becomes part and parcel of an organization’s culture. 

From a marketing perspective perhaps the best model to consider is a multi-functional team of internal stakeholders from Procurement, Marketing and Finance with the source of funding being the marketing budget and the CMO serving as the leader of the initiative.  Why Marketing?  Because Marketing will be the primary beneficiary of the resulting process improvements, efficiency gains and financial true-ups that are typically realized as part of an accountability effort.  Further, while business results, brand building, strategy development, analysis and leadership are skills required of the CMO position, accountability and responsible stewardship of the organization’s marketing investment are vitally important elements as well.

In the end, the organization realizes a number of benefits that will improve the efficacy of its marketing spend, boost ROMI and improve the performance of their marketing services agency network:

  • Enhanced agency stewardship systems (i.e. contracts, compensation and evaluation systems)
  • Improved controls, transparency and reporting
  • Efficiency gains
  • Improved financial stewardship practices

So what are the critical components of a marketing accountability program?  At its root, it begins with the clear articulation of the organization’s business objectives, marketing goals and expectations of each stakeholder group involved in the marketing process.  One of the most critical stakeholder groups is the organization’s marketing services agency network.  A well-conceived marketing accountability program will help both advertiser and agency align resources with the organization’s goals.  In turn, these decisions will ultimately drive decisions regarding roles and responsibilities, deliverables, agency staffing, remuneration and the criteria that will be utilized to assess performance. 

Successful accountability management programs are not one-and-done propositions.  They involve implementing and executing a system which has an ongoing monitoring component.  Often times, this may include utilizing independent auditors to help instill the requisite feedback and control processes into the culture of the advertiser and each member of their marketing services agency network. 

Marketing accountability and the attendant activities associated with these initiatives (i.e. performance monitoring, compliance testing, independent auditing) form the basis for organizations to ensure that the millions of dollars spent on marketing are tracked appropriately.  More importantly, these actions will afford an advertiser the opportunity to drive each of the stakeholders that comprise their marketing supply chain to extraordinary performance.

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