Big media is uniquely vulnerable. Most media dollars are spent in TV, where the buying process is Afghanistan. Shoot first and sort the bodies later. How else could there be an $8 billion dollar upfront, over the phone, in two weeks?
Add to that the intangible purchase, the volatile pricing, the certain suspicion that others bought it cheaper-and you have an edgy situation. This is not the careful way big business likes to do business, and that makes big business nervous. Call in the auditors.
A little known fact: Media auditing was invented by big advertising agencies to beat down the new buying services. In the 1960s, these early media independents were telling clients, "Your agencies pay full price. ... We can buy TV for a lot less and we'll split the difference with you."
Agencies knew that would be like letting rabbits carry lettuce, and for a brief period went into the auditing business to keep the rabbits honest, and to keep them from multiplying.
Today it's not so much a question of honesty. Few clients think the media agency of record is pocketing loose change. Their finance people spot check the invoices and audit the books. But many advertisers feel formal oversight is good in media, where critical functions and large sums are involved. It's not rabbits and lettuce. It's diligence, best practice and being sure.
The problem is "auditing" doesn't get it quite right. Media planning and buying is an ongoing process, not an event. It's more like quality control in Detroit. You want to be sure the car door fits before 250,000 of them are stamped out. Similarly, you need to know if media plan goals are being met as the money is being spent, not after you've spent it. But the auditing measures can't be too simple.
Consider this story. The Planning Ministry in the old U.S.S.R. had production goals for every factory. One in particular, a brass foundry, had an annual target of 350,000 pounds of finished brass lamps. Each year it beat the target easily by shipping lamps with an average weight of 170 pounds. In Russia these were called "elephant lights."
measures that fool
The moral is a single-number system is easily fooled. Performance measures that concentrate on cost-per-thousand are no exception.
Low CPMs can be trade bait for things, such as low ratings, a one- or two-supplier deal, edgy program content, uncertain scheduling. Each carries a cost. Oversight means looking at other things, such as rating level, daypart, program and supplier dispersion, weekly reach, weeks on air, and weeks at or above plan weight as well as CPMs.
Another problem: The competitive focus advertisers force on media auditing is crazy.
In the U.S., no third party can tell an advertiser whether it is paying more or less than the competition. For that you hire an industrial spy. Besides, "Am I paying less?" isn't the best question. It's better to ask: "Are we planning and buying as well as we can?" and "Is what we buy being delivered to spec and when we need it?"
Now that is the agency's assignment, but it remains the client's risk, which suggests the client can't be passive.
Besides, good clients make bad auditors. It's a paradox, but you need auditing more when the client-agency relationship is good than when it isn't. Those clients aren't comfortable closely questioning agency claims of superior planning and buying. AORs are only human. Nobody's perfect, but we all pretend.
Some media agencies think auditing just makes work. And some client managers feel oversight is what they're being paid to do. Fair enough. But other agencies see it as a way to keep an account long-term and some managers welcome the help.
Despite conflicting views, more media auditing here in the U.S. is inevitable. Global advertisers want global standards and auditing is standard in many other countries.
But the biggest reason auditing will happen here is because of the media agency, not in spite of it. Auditing is the flip side of the consolidated media assignment.
In the past, a large advertiser could count on its several brand media agencies to keep it informed-and keep each other alert. The dynamic was competition.
Our current system is a loose tooth. The advertiser is captive to a single media AOR. No matter how trustworthy the AOR, best practice requires a second view. Smart agencies understand this and will make auditing their point-of-difference. The "We invite auditing" slide will be popping up in new-business presentations across the country. And some AORs will even offer to share the costs with major clients. It's just good business.
Advertising is too often like buying a melon where you have to spend the money to find out if it's any good. It remains one of the few high-risk purchases a careful corporation will make.
Intelligent auditing is a simple way to reduce the risk.
Erwin Ephron is a partner in Ephron, Papazian & Ephron, New York, a media consultancy (www.EphronOnMedia.com).