Hw Use CI to Audit Ad Agency

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How A Forensic Market Audit Can Help Uncover Inefficiencies In Your Ad Agency’s Costing And Production Turnaround by David Lithwick INTRODUCTION TAKING CREDIT FOR RESULTS THAT HAVE VERY FAILING TO ADDRESS THE REAL PROBLEM LITTLE TO DO WITH ADVERTISING Forensic competitive intelligence can be as effective in surfacing inefficiencies in If an auto manufacturer signs off on a Assume sales were very high in July. your ad agency’s cost and production $1,000,000 point -of -purchase program The agency believes the main reason for turnaround as it is in uncovering to stimulate sales at 8 Calgary the high sales is due to their new ad competitive threats. “ Forensic” dealerships, did the agency really creative. If, however, you were to call translates to investigation, including investigate why sales are sluggish Environment Canada, you would learn sifting through databases, carrying out instead of assuming that impactful POS that July had the greatest number of microanalysis and working backward to material will generate additional sales? sunny days on record. If you then reconstruct key components. Whether What if the real reason for sluggish contacted your competitors, you would you are a forensic accountant, forensic sales is because the sales reps have not also learn that they enjoyed extremely pathologist or CI analyst, meticulous been trained to sales effectively. They strong sales during the summer. And if investigation and ...

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• Publié par: Chiev
• Nombre de lectures: 58
• Langue: English

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How A Forensic Market Audit Can Help Uncover Inefficiencies In Your Ad Agency’s Costing And Production Turnaround by David Lithwick I NTRODUCTION  T AKING C REDIT F OR R ESULTS T HAT H AVE V ERY Forensic competitive intelligence can be F AILING T O A DDRESS T HE R EAL P ROBLEM  L ITTLE T O D O W ITH A DVERTISING as effective in surfacing inefficiencies in If an auto manufacturer signs off on aAssume sales were very high in July. your ad agency’s cost and production $1,000,000 point -of -purchase programThe agency believes the main reason for turnaround as it is in uncovering to stimulate sales at 8 Calgarythe high sales is due to their new ad competitive threats. “ Forensic” dealerships, did the agency reallycreative. If, however, you were to call translates to investigation, including investigate why sales are sluggishEnvironment Canada, you would learn sifting through databases, carrying out instead of assuming that impactful POSthat July had the greatest number of microanalysis and working backward to material will generate additional sales?sunny days on record. If you then reconstruct key components. Whether What if therealcontacted your competitors, you wouldfor sluggish reason you are a forensic accountant, forensic sales is because the sales reps have notalso learn that they enjoyed extremely pathologist or CI analyst, meticulous been trained to sales effectively. Theystrong sales during the summer. And if investigation and analysis is what drives make no effort to greet a prospectiveyou spoke to their ad agencies, you you to achieve results. The same tools customer, assess the customer’s needs,would discover that some competitors employed to pinpoint and assess a take the necessary time to explain thehad even cut back on their summer ad competitor threat can be applied to car’s features and benefits, invite thespending, because of the weather detecting errors in how your agency customer for a test drive or make anydriving in enough business. invoices your account or mishandles an effort to follow up. Regardless of how ad campaign. In other words, the goal R OUNDING O FF E XPENDITURES much $ is invested in store of CI is to guide you to the real issues merchandising, if your sales support is Whether it is an estimate or the actual that should be addressed. flat, your sales will remain so as well. billing, dollar amounts are frequently Spending the $1,000,000 on store rounded off. Two questions to W HY I NVESTIGATE I NVOICING ? advertising ends up only being a band consider: Errors in invoicing that remain aid solution. With hundreds of expenditures undetected will bleed out your budget that can be incurred in an ad and create distrust. Even if the errors S PENDING M ORE $T HAN N ECESSARY T O campaign, are these expenses are unintentional, the onus falls onyou A CHIEVE T HE R EACH AND F REQUENCY rounded off? to track them down and to come up O BJECTIVES And if they are, are they rounded with a strategy to eliminate them. Assume that the goal of your upcoming off in favor of the agency? newspaper campaign is to reach 75% of W HY C ONDUCT CIO N A DVERTISING I MPACT ? the population. According to your F AILING TO S ECURE A C ORPORATE D ISCOUNT It can be difficult, if not impossible, to agency, $505,000 is needed for the Agencies frequently arrange for directly correlate sales performance to media spend. Had the agency taken the corporate buys, whereby they will advertising impact. Hence, it is time to thoroughly cost out the purchase a block of time on TV and run appropriate to use a precision tool such program (including reviewing the commercials for different clients. In as Forensic CI to help assess advertising previous year’s spending and return the agency is rewarded with a performance. performance), they would have realized purchase discount by the station. Two that the $505,000 for media insertions questions to consider: E XAMPLES will result in 90% reach or 15% more than what is necessary. $20,000  The following examples illustrate how How many times does the agency Forensic CI could have been used to pass the discount to their clients? ($505,000 - $485,000) will be spent uncover unsuspected problems: unnecessarily.  Does the agency try to get discounts for corporate buys?

1 This article first appeared inImprints, the monthly magazine of the Professional Marketing Research Society (www.pmrs-aprm.com).

Checklist to Pinpoint Inefficiencies of Your Agency 1. 15. Does the agency’s qualifications Does your agency break out the Does the agency survey you for feedback include company names for invoice according to the various on how satisfied you are with their references? products that you advertise? servicing? 2.Is there clear indication that the 16.Does agency reconcile performance S CORING agency has or will be hiring against specific advertising objectives? ƒIf you answer ‘yes’ to all 20 questions, experienced personnel to service your your agency is managing your account? 17. Does the agency avoid over- business the way they should be.  purchasingTV spots and over- 3.Are you sure that the agency will delivering in GRP’s (reach x ƒIf you answer ‘yes’ to 15 -19 forward you creative and media briefs frequency)? questions, make sure your agency before they are acted upon? makes every effort to address those  18. questions that were answered with a Does the account manager email you 4.Are you receiving media buya summary of each meeting you have ‘no’. discounts from the volume purchases with him/her? by the agency? ƒIf you answer ‘yes’ to 10 –14  19.Do you receive the contact report questions, warn your agency that 5. unless cost and production Is the font size in the estimates large within 24 hours of the meeting? enough for you to read, or are they turnaround is improved, you will cut trying to hide something? back on the amount of work you give  them. 6.Is your agency spending your budget on what the actual job cost versus the ƒIf you answered ’yes’ to 9 questions or less, consider changing your agency estimated amount? 7.Are all expenses consistent with their C ONCLUSION decimals (or are some in round Whether it means unearthing skeletal numbers and others not)? remains to determine the true cause of death or sifting through old media 8.Do management fees account for a estimates and actual buys to pinpoint proportionate % of total overspending, the role of forensic expenditures? investigation is to uncover hidden information and then consolidate this data 9. into meaningful results. And Are you rebated for any errors in the media buy? whether you use CI to evaluate new  marketopportunities, monitor competitor 10.Does the Account Supervisor check initiatives, benchmark competitor best statements, before they’re sent out? practices or audit your agency’s invoicing  procedures,the role of CI is to be help 11. level your playing field. Are explanations provided when actual spending is 10% more than estimated? Asthe case study demonstrates, an  understandingof forensic CI can help 12. make your ad agency more accountable in Are invoices being sent with a cover letter from account services? eliminating both invoicing errors and  performanceinefficiencies, which could otherwise go undetecte 13.Are details given regarding the hourly rates charged by Account Directors, Managers and Coordinators? 14.Do all billing statements include year to date spending? 2 This article first appeared inImprints, the monthly magazine of the Professional Marketing Research Society (www.pmrs-aprm.com).

Case Study Assume you work for a telecom and have been asked to recommend whether to renew the contract with your agency. Your boss questions the agency’s due diligence in running cost efficient, impactful advertising. You develop the following objectives to guide the investigation: 1.Pinpoint cost and production turnaround inefficiencies by the ad agency. 2.Demonstrate how these inefficiencies negatively impact profit. 3.Benchmark fee structures from a sample of agencies servicing competitors. 4.Benchmark programs by competitors to insure that key deliverables (i.e. time lines, response rate, etc.) are met. You then carry out the study and summarize your findings according to six sources: F OCUS G ROUP I N -H OUSE A UDIT  B UYER S URVEYS  A GENCY S URVEYS  A RTICLE  F OCUS G ROUP S URVEYS T RANSCRIPT (4 agency16 surveys with in7 surveys with adExplains how a8 participants eachDiscussion focused documents assessedhouse advertisingagency accountcompany completed3 minion strengths and (Procedure timingmgrs. (5 banks, 4directors (MacLaren,successfully surveys.weaknesses of guidelines, agencytelecoms, 4courier JWT,Cossette, implementedtools participants’ evaluation process,companies and 3Oglivy Mather,to manage their ad-Participants work inrespective agency. media estimatesinsurance FCB,Vickers relatedcosts. marketingand Costefficiencies and letter of agreementcompanies) Bensonand advertisingfor meetingdeadlines  Calexis)Director ofcompanies whowere addressed.  Purchasingat theyearly spend  company,featured $2lmn+in in the article, wasadvertising. interviewed. O BSERVATIONS  O BSERVATIONS  O BSERVATIONS  O BSERVATIONS  O BSERVATIONS  O BSERVATIONS Agencies believe Agency Qualityand meeting they are diligent inCo. carried out theClient dissatisfactionAgencies are documentation iscommitments are preparing accuratestudy by tearingwith their agencygenerally poor at “boiler plate”.critical factors. estimates, apartevery aspect ofperformance isproviding clients Terms are not Pricing and fee controlling projecttheir advertising toattributed to poorwith program customized to breaks were not costs, and providingunderstand who wasplanning by theresponse rates and Client’s needs. cited as prime detailed invoices.buying whatagency, costanalysis based on an Accountability and drivers. services.overrides, delays,audit of each ad performance Clientscan leverageand strategicinitiative. Two success factors: measurement is this belief to imposeThey took backdisconnect. (i.e., careful identification frequently absent. their requirementseverything theiragency wouldThey tend to be too of program’s on planning,agency did notdevelop rigidin their The focus of therequirements and managing andspecialize in, and bycreative/campaigns thinking,by material is on thedetailed project reporting on directcontrolling thosemore from theirfrequently relying agency. Littleplanning. mail programs.tasks, avoidedperspective thanupon predefined emphasis given to agency mark-ups.from the client’s).concepts and the client.  approachesin designing ad  programs. 3 This article first appeared inImprints, the monthly magazine of the Professional Marketing Research Society (www.pmrs-aprm.com).

S UGGESTION Take control of project monitoring by implementing review procedures to follow. A window of opportunity exists for the Client to negotiate more favorable terms and fees with the agency. Insist that the agency makes an effort to standardize documentation and to ensure that estimates are detailed, accurate and customized.

S UGGESTION Advise your agency what reporting procedures are needed. Carefully review and sign off on all aspects of a project before any work commences. Strive to understand all aspect of their ad programs

S UGGESTION Insist on detailed reviews that compare actual to planned costs. Work with your agency to identify options so they keep within budget when overrides occur. Instruct your agency on the type of billing documentation that best suits your needs.

S UGGESTION Cos. should analyze their own needs and buying patterns to determine what can be produced most efficiently internally and what can be obtained most effectively by the agency.

Leverage corporate purchasing power.

Identify a principal agency for core services & preferred supplier for niche services.

S UGGESTION Ensure that your agency conducts a needs assessment at project outset and this understanding is reflected in the critical path planning. Insist upon Immediate notification of any changes in planned costs. Get copies of invoices from subcontractors and a breakdown of project costs by category.

S UGGESTION Insist that your agency not only quantifies feedback on the success rates achieved, but translates this into a measurable return on investment for each project. Provide direction to your ad agency. Manage the project closely.

4 This article first appeared inImprints, the monthly magazine of the Professional Marketing Research Society (www.pmrs-aprm.com).