The US Association of National Advertisers’ (ANA) seminal investigation into media agency practices has made tough criticisms of the way they make their money from media owner rebates. But this has also resurfaced claims from Sir Martin Sorrell, chief executive of agency group WPP, that media auditors and consultants have conflicted interests too. To understand whether these claims have substance, we have to look at the history of media auditing.
One of its creators worked in an adjacent office at my first agency and was always testing the concept on us, his media buyers. From the off there was hostility. Media buyers felt that advertisers’ price needs were met by market competition and, frankly, they didn’t much like being checked up on. In those days competition for scarce prime media was great and the major media were the power brokers.
But his business, which became Media Audits in the 1970s and is now part of Accenture, appealed to advertisers and other players entered the market. The most significant and enduring was the media-agency-turned-consultancy founded by John Billett, which became the company today known as Ebiquity.
Agencies must accept need for auditing
As media choice gradually opened up (we’re still decades before the internet here), so auditors’ offerings broadened from price auditing into giving advertisers a second opinion on their agencies’ recommendations. Consultants also started to venture opinions on whether an advertiser should stick with their media buyer or twist and put their business out to pitch, offering advice on candidate agencies and help in managing the pitch processes too.
Then along came commercial departments – later called purchasing and then procurement – which had a real taste for what auditors did. They still do.
“Rebuilding trust will require some give and take on all sides. One key way of doing this is to have high, common standards”
Throughout, perhaps understandably, agencies have sought to diffuse the threat by undermining and discrediting auditors and consultants. Many have seized on the notion that it was in auditors’ business interests to foment dissatisfaction at brands, which might lead to more lucrative pitch consultancy work, and have alleged a conflict of interest.
The trouble is that by doing this they are effectively dissing their clients’ stewardship of what are often very large sums of money. Having worked among and represented most of the UK’s largest advertisers for 20 years, I can tell you that this seldom has the desired effect, instead undermining trust and stiffening clients’ resolve to exercise their own choice.
In my experience, agency and auditor alike know a bad performance. They also understand that the best, most sustainable results come from a process of continuous learning and improvement. So a bad performance is unlikely to lead to business being put out for pitch unless it’s a serial offence – in which case it’s richly deserved and there is a process to be managed, whether by the client itself or an intermediary that might be a consultant.
Credible auditors required
It’s important to distinguish here between two types of media auditing. ‘Performance auditing’, referred to above, is not true auditing but one of a number of differing processes to give advertisers a commentary on their agency’s media buying. ‘Compliance auditing’ is a specialist, forensic practice governed by professional standards to ensure contracts have been honoured.
There is evidence that at least one agency group has tried to get clients to agree to use only its ‘recognised’ performance auditors. Meanwhile, Sorrell has been outspoken in suggesting WPP’s clients should use one of the ‘big four’ accountancy firms – KPMG, Deloitte, PwC and EY – for compliance auditing. The latter would rule out the likes of FirmDecisions, the Ebiquity subsidiary which advised the ANA on its critical report and with which WPP’s media arm GroupM is currently engaged in separate litigation.
Giving agencies power over the choice of performance auditor could arguably influence the ensuing audits themselves, however there is a legitimate agency grievance here.
Advertising is a young person’s game and some media buyers made redundant through the years have turned their hands to performance auditing. These one-man bands have tended to lean heavily on personal ties for both custom and information and don’t have the systems or data to audit a major media buyer credibly, but they can still sow doubt and damage valuable relationships, there simply being no professional standards in place.
As for compliance auditing, some feel that the big four may have the general competences but not the specialist knowledge to probe into what is now acknowledged to be a pretty murky world. Yet in truth, several now have pretty highly-developed specialist practices.
As things stand, any advertiser client can choose whomever it wishes to comment on the stewardship of its investments. Although it might appear that there’s no incentive for them to choose a dud, there’s no protection from it either.
Many of the industry’s current woes and frictions pivot around trust. Rebuilding trust will require some give and take on all sides. One key way of doing this is to have high, common standards, and a code of practice for media auditing would help bring some welcome order to things. The UK ad industry alone is worth £20bn year, the large majority of that spent on media, so the stakes certainly justify such professionalisation.
Bob Wootton was director of media and advertising at ISBA and is now principal of Deconstruction and an advisor to pitch consultancy MediaSense, which has has proposed a media auditing code of practice.