Media auditing: One of the most fraught issues in advertising

Auditors assess the return on investment from advertising. Not everyone is a believer

To suggest that media auditing is a contentious issue in Irish advertising is akin to claiming that Elvis Presley got his kicks from doing rubber leg movements on stage. Trying to get people from both the client and agency sides of the business to speak on the subject can be fraught. Nonetheless, many major Irish advertisers believe media auditors serve a useful purpose in terms of accountability.

Media auditors are largely hired by clients to analyse and assess the return on investment from advertising spend. Audits began by focusing on the medium that accounted for the biggest budgets: TV. The discipline later extended to press, radio, out of home, cinema and, of course, digital. However, nostalgia is not what it used to be and things grew more complicated.

In announcing itself to Irish marketers recently, Media Marketing Compliance (MMC) arrived with a bold headline: “Lack of attention is costing Irish advertisers millions.” MMC managing partner Stephen Broderick claims that many brand owners are not auditing their advertising properly and need to avoid spend “falling between the cracks”. Sabre rattling and a generous dollop of “Well, he would say that, wouldn’t he?” was the reaction.

Broderick, a founder of UK media compliance company Firm Decisions, which the larger Ebiquity acquired 12 years ago, says the supply chain between advertisers and agencies has become exceedingly complicated. In halcyon days, an agency traded directly with the media owners, but now a multiple of parties can be involved, all looking for a fee, commission or mark-up.

Lack of transparency

Industry bodies such as the World Federation of Advertisers (WFA) point to the need for more transparency. “Like most other global markets, Ireland has been sleep-walking into a situation where they lost control of the money,” Broderick said. “Some agencies are selling media that was the client’s in the first place, or there are cash rebates and free space.”

Broderick claims that some clients are happy for their agency to keep the media rebates and deduct the amount from the annual fee they pay, but it can cause problems. Rebates are being replaced by media owners giving agencies free space instead of cash. However, only the cash rebate is deducted off the fee, resulting in clients losing out as some rebates are converted into free space.

Free space rebates can end up in the inventory deal a client buys off its agency, so the advertiser ends up buying free space twice. Such deals create a system where neutrality and independence are questioned. How do advertisers know if their agency is buying the right media for their brand? Are they going with the medium that gives the biggest rebate or the most free space?

MMC says these problems cost medium-to-large advertisers in Ireland between six- and seven-figure sums annually. Over three to five years, he believes it could amount to tens of millions of euro. Broderick says that if Irish advertisers are to break the cycle, they need to adopt compliance audits in line with their EU counterparts. He refrains from naming MMC’s Irish clients, merely saying that they act for “the Irish arm of most of the country’s major advertisers”.

Eddie O’Mahony, who heads up Core’s trading division, agrees that there’s a problem with transparency, driven by the way agencies are paid through media rebates and client fees. “Having two forms of remuneration is problematic,” he says. “The industry needs to move towards a sustainable fee model which replaces the existing complex practice fuelling scepticism and mistrust.”

Strategic thinking

Former Core digital boss Justin Cullen is now a shareholder in Junk Kouture, the Irish exporter of sustainable fashion through competitions aimed at secondary students worldwide. Cullen says he has never met a media auditor who understood the nuance of good strategy and creative thinking. “In my experience,” he says, “they only got in the way of good strategic thinking – advertising isn’t a widget down to a unit cost. The blame for the race to the bottom has to partially lie at their door. It’s that lowest common denominator, which results in agencies requiring new remuneration structures.”

Cullen believes that media auditors are good with spreadsheets, but when it comes to digital, they are back in the dark ages. “People don’t need to audit their lawyer, their accountant or their architect, they build relationships on trust, so why do advertisers hire media auditors?” Cullen asks. He quotes the maxim: “Finance is always right, until strategy proves it wrong.”

Who audits the auditors? One major Irish consumer marketer said that despite all that’s said about audits, clients are well versed in the trading deals that are done. Her job as a brand guardian is to ask questions of both the media buyers and the media owners, and sign off on deals. For advertisers that can afford it, it helps to do an audit once or twice a year, she added. So, despite good intentions, it would appear that the agency-auditor partnership will persevere along the lines of never the twain shall meet.

Michael Cullen is editor of marketing.ie