Tension aside, media audits taking root

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Two years ago, Ken Slater, founder of Hawk Media, gave up trying to make a business out of auditing media. Even though Hawk was a pioneer in the space when it opened its doors in 1982, audits were expensive to carry out and the compensation marketers were offering wasn't lucrative. Besides, Mr. Slater said people viewed audits like a visit from the Internal Revenue Service: Nobody looked forward to them.That is excepting a marketer's procurement officer.

Today, the business of media audits is booming. Even the big general audit firms such as Ernst & Young and Accenture are getting into the game. Last November Accenture purchased Media Audits to boost its Marketing Sciences practice, and by last month it had already picked up Ford Motor Co. as a client to measure its media and evaluate optimal media for Ford's U.S. product launches.

The reason: The 2002 Sarbanes-Oxley Act tightening financial reporting and "clients who are financial people and not marketing people," says Garth Hewitt, senior VP, Hawk Audit, which Mr. Slater sold to Cable Audit Associates' MediaAnalysisPlus. It is now common that auditors "look at all your buys thoroughly as a dentist poking at your teeth," Mr. Hewitt says.

The issue of audits has raised the ire of many executives at media agencies, some of whom are willing to speak about it if they remain anonymous.

While media buying and payments would appear to be a clear-cut business deal, there are gray areas in the margins of the business, says the head of one media buying agency. Among them are issues such as the part of a program a spot runs.

Expense flagged

Another sore point is the cost involved by the media buying shops in participating in the audits. "The client pays the [audit] firm but does not recognize the time it takes the agency to handle the [audit] requests. There are true and real expenses," says one media executive. In the case of total media audits, expenses could be in excess of $100,000 in terms of manpower costs over a year because it involves junior and senior staff, which has to talk through the strategies as well.

While auditing may be one way to come to grips with the old media, the new media are out of its grasp. "Clients are asking for innovation-anything digital," says one media buying executive. "Do you think those things are audited-no."

Eric Scheck, senior manager, Accenture Marketing Sciences, says Sarbanes-Oxley is one of the prime drivers for media audits, along with marketers who are asking, "How do I know I'm doing the best I possibly can" with media buys? "It's a fair question," he says.

He agrees that issues outlined by the media agency executives were "fair concerns." But he adds, "nobody likes to get constructive criticism" and Accenture provides "constructive actionable guidance."

Like Mr. Hewitt from Hawk Audit, he says that agencies don't mind working with Accenture, citing what he calls "collaborative relationships."

As far as fears that auditing firms are amassing competitive information in databases, Mr. Scheck says he signs a non-disclosure agreement with all of his clients and none of the information is shared among clients. "We will tell a client, relative to the market against a set target on a percentage basis from our proprietary poll, how they are doing. It is intended for feedback only."

If an agency does well or improves its output as a result of an audit, Mr. Scheck says, those results can be used in pitches to win new business. He says the agency can use the audit information to improve its negotiations to get a better result for the client. "Who would have a problem with that?" he asks. "We are not here to put anyone out of business; we are called in to provide an objective view."

"When you look at these [auditing] companies, they're always talking about savings and improved performance," says Karen Macumber, president of Fulgent Media Group, Boston.

No pats on the back

It's a sad day for the industry, she adds, when marketers are hiring auditors to go in and second- guess their agencies. "These consultants aren't in there to give the agencies a pat on the back."

Many executives, however, believe audits improve the relationship between marketer and media buying shop. Monica Karo, chief strategy officer, OMD North America, and managing director, OMD USA West, says that at the end of an audit, media buying agencies doing a good job "have a little hard-core data to prove it."

She says TBWA has been successful working with the European model of auditing as it has evolved in the U.S. with Media Performance Monitor America, the U.S. operation of European media audit company Billetts.

MPMA has audited media buys for Nissan and two undisclosed clients of OMD's. Ms. Karo says she appreciates MPMA's methodology, which is both quantitative, scrutinizing price and costs relative to a benchmark, and qualitative, weighing the results based on the programs designated by planners. "This is just another tool," says Ms. Karo. "It's more strategic focused but not based on cheap, cheap, cheap."

Contributing: Patricia Riedman

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