Tag Archives: Marketing Accountability

Advertisers, Did You Get What You Paid For?

2 Dec

contract compliance auditingGiven the complexity and opacity of the advertising ecosystem, at least from a billing and reconciliation perspective, it can be very difficult for an advertiser to assess if their organization received full value for their advertising investment.

Consider that most agency billing to clients is done on an estimated basis, that supporting invoice detail is often limited and that seldom is 3rd party vendor invoice documentation contained with an agency’s billing to the advertiser. Not to mention the fact that production jobs can take several months to close, that media post-buy analyses typically occur three to six months after a campaign’s initial month-of-service billing or that agency time-of-staff summaries may only be provided semi-annually or at year end… if at all. 

Many advertiser/ agency agreements provide guidelines to help mitigate some of the concerns that may arise with regard to the notion of receiving full budgetary value.  Document retention clauses, expense billing detail requirements, accounts payable timing parameters and audit rights language are examples of the terms and conditions which are negotiated into agreements to safeguard advertisers. Ironically, very few advertisers take advantage of these contractual protections to conduct detailed reviews of the billing and financial stewardship portion of their respective agency partners’ performance.

However, pressure has begun to mount from stakeholder groups within client organizations that are not directly involved in the agency relationship management loop to provide a higher level of accountability when it comes to the disposition of their marketing funds.  Further, functions such as finance, internal audit and procurement have even stepped up to provide funding and or personnel support to help their counterparts in marketing implement billing, financial management and contract compliance reviews of their agency networks.

This type of testing and analysis should be welcomed with open arms by both the Marketing Team and an advertiser’s agency partners. Let’s face it, marketing teams, which are often resource constrained, have their hands full with their primary responsibility… demand generation. Further, some of the competencies and experience which best lend themselves to conducting financial testing may not be represented on staff within the marketing group. Similarly, agency finance teams have become both accustomed to and quite adept at entertaining advertisers and or their audit partners in conducting billing reconciliations and contract compliance reviews.

If such support is not forthcoming, marketers may want to actively solicit the involvement of their corporate services peers to implement a marketing accountability initiative. Inviting this type of internal scrutiny has more benefits than negatives. Consider the words of Edward Coke, the noted English barrister, judge and politician:

“Certainty is the mother of quiet and repose, and uncertainty the cause of variance and contentions.”

Removing any uncertainty regarding the organization’s advertising investment and the efficacy of each agencies billing and reconciliation processes has asset value for marketers which extends well beyond answering the basic question; “Did we get what we paid for?”

 

 

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.

“What’ll You Have …?”

14 Dec

pabst blue ribbonRead on to learn the answer to this iconic brand jingle lead-in. 

“The Giants are at the Patriots’ six yard line, Manning hands off to Bradshaw who punches it in for a touchdown as the Giants take the lead…”  Time for a beer and bathroom break, or do the assembled masses remain glued to their seats to be regaled by the much anticipated commercials?

The world’s greatest advertising spectacle, the Super Bowl, is rapidly drawing near.  With the prospect of reaching 100 million+ viewers, some 35 to 40 advertisers will line-up to pay on average $3.7 million for a 30 second TV spot… exclusive of production costs. 

After all, everyone remembers Apple’s “Sledgehammer” spot, Coca Cola’s “Mean Joe Green” commercial and the ever popular Budweiser “Frogs” execution.  Maybe so, but are these and a handful of other examples simply the anomalies from 46 years of Super Bowl advertising?  Let’s face it, the Super Bowl is a time to gather with friends and family to enjoy a few libations and perhaps even to watch a little football. 

As much as Madison Avenue would like to think that the event has evolved to be as much about the commercials as the game, practical experience might suggest otherwise.   Fact check time;  Does anyone remember  Miller Lite’s  “Evil Beaver” spot from the 1998 Super Bowl or the 2nd Story Software “TaxAct”  commercial from 2012?  Thought so.  Just because an advertiser coughs up millions of dollars for a 30 second shot at reaching a fraction of the 100 million+ potential viewers or in creating a pop-culture phenomenon doesn’t mean they are guaranteed that their efforts will succeed.

Legalized gambling.  A reference often used in the context of the ever popular state lottery games, is an apt description of Super Bowl advertising.  The house, in this case the network, certainly wins and sure a few advertisers (gamblers) will let their annual budgets roll on one high profile execution that may even pay off.  If you’re GM with a marketing budget of $4.5 billion or Anheuser-Busch Inbev at $1.5 billion, the risks are minimal.  On the other hand, for some of the smaller advertisers such as Master Lock, McIllhenny Co. or Soda Stream who have braved these proverbial waters the potential consequences of failure are substantially greater.

We all recall the Monday at the office water cooler where everyone is re-living the prior evening’s game, the athletic performances, scoring highlights and yes… the commercials.  The conversation typically starts out with “did you see the one with…” and frequently ends with everyone with trying to recall the advertiser’s name.   To suggest that advertising recall is an unattainable goal would be an overstatement to be sure.  However with a viewing environment marked by sensory overload for a sports and entertainment spectacle such as the Super Bowl, breaking through the clutter is damn challenging.   Diligence and luck certainly play a role in realizing this objective.  In the words of the bard of Avon, William Shakespeare:

“Fortune brings in some boats that are not steered. “

Taking calculated risks is a component of every marketing resource allocation decision, precisely because there are no guarantees and the linear relationship between stimulus and response remains so nebulous.  It is for this reason that advertisers should seek to mitigate the risks associated with the performance of their advertising investments on a year-round basis, once resource allocation decisions have been made.  Unfortunately, too many organizations are willing to “roll the dice” when it comes to assessing contract compliance or vetting performance when it comes to their agency network and third-party vendor relationships.   The irony is that the link between cause and effect is more certain when it comes to contract and performance auditing than it is with any other facet of the advertising investment cycle.

Here’s hoping that you enjoy the 2013 Super Bowl and all of the attendant festivities.  But don’t be surprised when your guests or the bar patrons next to you respond to the question of; “What’ll You Have?” with an answer of Pabst Blue Ribbon as they’re being entertained by the spot with the Clydesdales or taking in the Bud Bowl.  And when the Super Bowl has come and gone and the buzz surrounding this year’s “Top Spots” has faded into memory, take a moment to reflect on how your organization can take the requisite steps to boost its chances for marketing success by embracing a comprehensive accountability initiative.  In the end, you will be glad that you played the odds and didn’t “let it ride.”

Interested in learning more about marketing accountability and how to implement the appropriate controls and transparency? Contact Don Parsons, Principal at Advertising Audit & Risk Management at dparsons@aarmusa.com for a complimentary consultation on this topic.

 

 

 

What is the Line Between Being a Maverick or a Rogue CMO?

13 Aug

rogue cmoContrary to the old adage, when it comes to business, rules are not meant to be broken.  Companies put processes, guidelines and reporting mechanisms in place to insure that their employees adhere to the expectations established by the organization and to provide their company with transparency into the decisions that are being made by its personnel.  Of note, these rules apply to each and every employee from the C-suite to the front line.

Thus, it is always intriguing, in the context of marketing executives, when the labels “Rock Star CMO” or “Maverick” or “Risk Taker” are attached to senior marketing executives.  More concerning is when those personalities buy-in to such labels and begin to believe that their actions are somehow exempt from the guidelines established by their organizations.  This does not reflect well on those individuals, their companies or the marketing profession.  Further, as evidenced by the recent fall from grace of GM’s Global CMO, the story typically doesn’t end well for those involved.

Some might argue that there is a fine line between those personality traits and business ethos that separate a “Maverick” marketer from a rogue CMO.  I would challenge that notion entirely.  Professional marketers understand the benefits of charting a bold course, or taking prudent risks in the context of their brand’s position and their company’s culture.  They recognize the need to achieve the buy-in of their senior management peers and to build consensus among the rank and file for the strategies to be implemented.  Importantly, they set about these tasks in a transparent and ethical manner.

There is no excuse for individuals that knowingly seek to short-circuit an organization’s rules and regulations.  There can’t be.  For if we excuse the actions of a CMO or a CEO or a CFO how can we hold others in the organization accountable?  How can we reassure our Boards and our shareholders that our corporate governance initiatives and controls are beyond reproach?

It is not alright to maneuver around corporate signing authority limits.  It is not appropriate to hide costs by spreading them around multiple budget line items.  It is never acceptable to hide the truth about one’s actions when confronted by corporate counsel or internal audit.  For those individuals who think differently and conduct themselves in an inappropriate manner, the price to be paid is a heavy one, both economically and in terms of the perceptions about that person’s character.  In the words of Charles Dudley Warner the noted 19th century essayist:

“We are half ruined by conformity; but we should be wholly ruined without it.”

Stalwart marketing professionals play by the rules, invite scrutiny and pro-actively embrace their company’s accountability initiatives while conceiving of and executing demand generation strategies.  That is the cost of entry for senior marketing executives.   For Finance, Audit and Procurement professionals the recent events at GM reinforce the need to establish controls to insure transparency into the investment decisions being made by the marketing team and their agency partners.  Not for a lack of trust or congeniality, but because it is a necessary check and balance to insure compliance to the organization’s accountability initiatives.

Interested in learning more about marketing accountability and how to implement the appropriate controls and transparency?  Contact Don Parsons, Principal at Advertising Audit & Risk Management at dparsons@aarmusa.com for a complimentary consultation on this topic.

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