Marketing Math Blog

Agency Stewardship: Can Advertiser Perspective Drive Success?

By Advertisers, Advertising Agencies, Marketing Agency Network No Comments

partnershipHow do you view your advertising agencies? As strategic partners or vendors? Are you committed to a long-term partnerships or situational relationships?

The answers to these questions shape an organization’s view and treatment of its advertising agency network members. In turn, the approach taken contributes greatly to the level of success that each of those relationships achieves. 

There is an adage that suggests all advertisers receive good service from their agency partners, but great clients receive extraordinary service and superior results. Having spent time on both the agency and client side, I have seen this maxim play out many times. Advertisers that value the perspective and appreciate the efforts of their agency teams attract better, more highly motivated agency team members. 

Agencies that are embraced as valued consultants are more willing to invest in those client relationships. They delve more deeply into understanding key issues impacting an advertiser’s business and go above and beyond when it comes to deploying time and resources to deliver impactful work that can drive a client’s in-market success. 

In most organizations, the monies invested in marketing and advertising are material in nature. Advertisers invest these funds with the goal of driving demand for their brands and building strong end-user relationships that result in profitable business growth. Successful marketers understand that strong agency relationships lead to higher returns on their advertising investment. More importantly, they have acted on those beliefs, developing tools and processes that allow them to be more effective in the stewardship of their agency partners.

C-suite exposure, cross-functional interaction, frequent and effective strategic briefings, streamlined approval processes and candid two-way communication are emblematic of the practices that successful advertisers employ when it comes to managing their agency network. It is no surprise that these same traits are reflective of organizations that take a long-term view of their agency relationships and embrace the notion of a “partnership” when it comes to strategic marketing service providers. 

As Brad Sugars, business speaker, author and entrepreneur once said: “Business is all about relationships… how well you build them determines how well they build your business.”

Super Bowl Advertising: Much Has Changed Since 1967

By Advertisers, Media No Comments

Super BowlFox Broadcasting recently announced that it had sold 95% of its inventory for the 2023 Superbowl. The average rate for a 30-second spot will likely top $7 million.

The growth in the appeal of the Super Bowl to advertisers and the price they are willing to pay is remarkable when you consider that the cost of a 30-second spot in Super Bowl I in 1967 went for $42,000.

Equally as compelling is the unique impact of the Super Bowl broadcast, with the game being broadcast on over 225 different television stations in approximately 180 countries garnering over 110 million viewers.

Interestingly, if we go back just 10 years and adjust the price paid by advertisers using the annual CPI increase the rate for the 2023 broadcast would be $4.8 million for a 30-second spot…  much less than the $7 million per spot achieved by Fox Broadcasting.

The reason for the rate differential is very simple, supply and demand. Demand is driven by the strength of the NFL “brand,” the cultural impact of both the game and the broadcast and the showcase that the broadcast represents for advertisers.

After all, not many other programs attract viewers that are as keen to see the advertising as they are the game itself. It is for this reason, that according to Fox Broadcasting the 2023 event will feature more than twenty “new” sponsors representing over $100 million in ad revenue.

No doubt advertisers investing to run their commercials during the Super Bowl are hoping that their ads can go beyond simply elevating brand awareness and appeal to attain the cultural impact that past iconic Super Bowl ads achieved:

  • Coca Cola – “Mean” Joe Greene
  • Apple – Macintosh (1984)
  • Anheuser Busch – “Bud” “weis” er” Frogs
  • Pepsi – Cindy Crawford
  • Wendy’s – Where’s the Beef?
  • Snickers – Betty White

Already looking forward the Super Bowl LVII broadcast and this year’s commercial offering.

Can Your Agency Support Its Billings to You?

By 3rd Party Vendor Billing Management, Advertising Agencies, Billing Reconciliation, Contract Compliance Auditing, Right to Audit Clauses No Comments

agency financial managementOnce ad budgets have been approved and purchased orders issued, your ad agency generates an invoice based upon estimated costs. Theoretically, this estimated billing is reconciled to actual costs once a job is closed or a campaign has run its course.

Do you know if the process is occurring in an accurate manner, on a timely basis?

Why the question? Firstly, ad agency invoices are not accompanied by third-party vendor invoices that support the billed amount. Secondly, those invoices are often submitted directly to an advertiser’s accounts payable department that is simply checking to make sure the “billed” amount does not exceed the approved purchase order amount.

Thus, the only way a marketer can vouch for the accuracy of the agency’s billing is to periodically request and review agency financial support. This can be done through internal audit or by an independent contract compliance and financial management auditor.

If your organization is not testing the accuracy of its agency billings, corrective action should be taken.

The good news is that client/ agency agreements require an ad agency to retain documentation to support its billings and entitles the advertiser to review that support to assess the accuracy and completeness of the financial detail.

Thus, if you haven’t already taken such actions the path forward is clear… inform your agency partner of your desire to enact your contractual audit rights and issued a request for the requisite files to conduct an historical review of agency billings. This would include third-party vendor costs and payments to those vendors along with agency time-of-staff detail to support its fee billings.

Such reviews are designed to identify potential billing errors, overbillings, aged media credits, earned credits, rebates and discounts that have been earned, but not yet returned, the status of approved but unused funds and the time that it takes the agency to close jobs and process payments to third-party vendors. Given the material nature of advertising spend, fact-based reviews of agency billings are a sound practice that is consistent with an organization’s governance and accountability standards and controls.

Unfortunately, when it comes to auditing this important area protestations from client-side marketing personnel regarding the need for or timing of such reviews or the potential impact on a preferred relationship can scuttle an organization’s efforts in this area. While we appreciate this perspective, we have found such views to be unfounded. In the words of Indian Prime Minister Jawaharlal Nehru: “Facts are facts and will not disappear on account of your likes.” After all, outside of marketing/ advertising spend, how many other suppliers invoices are paid without supporting documentation or a review of such detail?

Experience dictates that periodic financial reviews help to improve processes and tighten agency reporting, providing advertisers with a clear line of sight into the disposition of its funds at each stage of the advertising investment cycle.

Advertising agencies for their part are accustomed to these reviews and have the personnel and processes in place to comply with their clients’ contract compliance and financial management audit requests. In the end, all stakeholders benefit from such reviews. The learnings, financial recoveries and future savings related to identified process improvements identified as part of the audit are important, but no less so than the peace-of-mind that advertisers acquire, knowing that their advertising funds are being properly managed.

Ageism: A Missed Opportunity for the Ad Industry

By Advertising Agencies No Comments

ageismWould you be surprised to learn that only 6 of every 100 employees in the ad industry are over 50 years old? When compared to the percentage of the population adults 50+ make up and the percentage of household expenditures represented by this group, this is anemic to say the least.

The fact that such a small percentage of A50+ comprise the ad industry’s labor force is concerning on multiple levels. Ageism aside, given the current talent crisis and the evolving structural changes being considered by the agency sector, it seems as though organizations would benefit by engaging and retaining a greater number of mature, experienced professionals. So why is this group underrepresented within the ad industry workforce? Hopefully, the agency sector’s diversity initiatives will find a way to remedy this imbalance … Read More

Can Treading Water Be Considered Progress?

By Client Agency Relationship Management, Marketing Agency Network, Marketing Procurement No Comments

Treading WaterThis is certainly one question that could be asked after reviewing the Association of National Advertisers (ANA) 2022 report, “Procurement: The Good, The Bad, and The Ugly.

After twelve years since the ANA’s initial report on this topic, marketer and agency perceptions of the role, performance and acceptance of procurement have shown little improvement. While there is a grudging sense of “we’re in this together,” according to this report, client-side and agency stakeholders have not fully coalesced around a common set of goals. Thus, it is no surprise that success for this triumvirate remains elusive:

“Coming together is a beginning. Keeping together is progress. Working together is success.” ~ Henry Ford

Even within client organizations, while most of the marketing and procurement respondents felt that their relationship was “extremely” or “very” healthy, the perception gaps between these two groups when it comes to procurement’s role and performance relative to both its responsibilities and within key disciplines was alarming. Contrasting views in these areas would suggest that the “relationship” between the two functions is more superficial than meaningful. If there was objective, candid communication on these key variables, one would expect a more unified view of procurement’s contributions among team members.

The other striking observation was the continued negative pre-disposition toward procurement held by agency respondents. Most notably, while 54% of procurement respondents characterized their relationships with agencies as “extremely” or “very” healthy, only 15% of agency respondents felt the same. Further, while half of the procurement respondents expressed satisfaction with their marketing and advertising knowledge, no agency respondents shared that point of view. While this perspective may have been justified twelve years ago, it seems unexpectedly harsh and unfair today given the 51% increase in years of “marketing procurement experience” among procurement respondents or that agency personnel are not engaging in meaningful dialog.

Justified or not, agency attitudes in this area will need to be addressed if the relationship between procurement and agency personnel is going to improve. By way of example, commentary offered by select agency representatives and by the American Association of Advertising Agencies (4As) ascribed to the stilted view that to remedy their current perspective, procurement personnel should focus their efforts on “value optimization” versus “cost reduction.”

Newsflash, cost reductions are both an element of an organization’s value optimization efforts and a necessary action during difficult economic times or when performance doesn’t meet expectations. Thus, it is unfair to attribute blame to procurement for an enterprise’s expense management initiatives. This is no different than from the approach taken by agency holding companies and independent agencies when dealing with their suppliers, employees, advisors, and landlords during times when fiscal tightening is required.

Based on our experience, assuming marketing is motivated, we believe marketing is perfectly positioned to take the lead in breaking through the current malaise. Given their P&L responsibilities and attendant responsibility for effectively stewarding their organization’s marketing and advertising investment, they are uniquely qualified to drive stakeholder understanding and respect for procurement’s role and responsibilities.

To this end, the ANA report offers several meaningful recommendations for progress, which are centered on the need for all parties to work together in a more collaborative and productive manner. Importantly, the ANA rightly suggests that this begins with a focus on the relationship between marketing and procurement to gain alignment and present a “unified front” to their organization’s agency partners.

There is much at stake for each of the parties and mutual success is achievable. However, this will require an attitude reset and a renewed commitment to respecting one another’s unique roles and contributions.

“We may have all come on different ships, but we’re in the same boat now.” ~ Martin Luther King, Jr.





How Will Economic Uncertainty Impact Your Media Budget?

By Marketing, Marketing Budgets, Media No Comments

costRising inflation, supply chain disruption, COVID-19 and war in eastern Europe are some of the factors contributing to the economic uncertainty facing marketers today.

In light of the current economic climate organizations are assessing their ad budgets and weighing the need for and the impact of media budget reductions. As a result, many advertisers have shifted their focus to improving working media levels in an environment where ad budgets will be closely scrutinized (internally) over the coming months.

One means of increasing working media is to conduct contract compliance and financial management reviews of your agency network partners. Updating MSA language, reviewing billing detail, reconciling fees and evaluating process improvement opportunities will yield hard dollar recoveries and future savings that can be reinvested back into a marketer’s “go forward” budget.

With a complex, multi-layered and often murky media ecosystem advertisers a formal accountability and transparency review process will also generate learnings that can improve brand safety, reduce fraud risks, drive efficiencies and importantly, improve the client-agency relationship Read More

Data Ownership Issues Complicate Things for Advertisers

By Advertisers, Media No Comments
programmatic agency sourcing

Data Ownership

As an advertiser it is imperative to ask one very important question when it comes to data ownership and the phase out of third-party cookies; “Do your client-agency agreements establish standards and expectations sufficient to safeguard and manage your organization’s data?”

While the following article addresses some of the data related complexities in changing media agency partners it also raises key data issues such as ownership, transparency and interoperability that advertisers must have a working knowledge of and the MarTech tools necessary to protect their interests.

How are you approaching data interoperability? Taking a wait and see approach or proactively scoping out potential solutions? … Read More

Can Advertisers Insulate Themselves from CTV Ad Fraud?

By Ad Fraud, Media No Comments

fraudInteresting article on CTV, open auctions, DSPs and ad fraud.

From an advertisers perspective the story sounds all too familiar; “it’s not uncommon for fraud and frequency issues to prevail. Ads may be shown in undesirable surroundings, to fake viewers in misrepresented inventory, or to the same audience on repeat.” Yet CTV is the fastest growing sector of the digital ad market.

Perhaps advertisers should take a more cautious approach, tamping down spend levels until issues such as fraud, server side ad insertion and measurement can be addressedRead More

Programmatic Risks Remain

By Ad Fraud, Media Transparency, Programmatic Buying No Comments

Flying BlindIf you’re an advertiser spending more and more of your ad budget on programmatic media should you be concerned? Consider one of the findings from the 2020 ISBA/ PWC study, which uncovered a “black hole at the heart of the advertising supply chain – 15% of spend, a figure amounting to £2.6 billion (approximately $3.1bn) could not be tracked. It could not be attributed to any parties in the supply chain, and therefore was missing, vanished into nothingness” Read More 

Ad Agency Financial Challenges Require a Balanced Approach

By Advertising Agencies No Comments

ad agencyA recent article from The Drum, a UK based trade publication, raises interesting questions being faced by agencies as they look to the future.

Importantly, balancing the need to attract, develop and retain talent with the pursuit of their organization’s financial goals. It is the author’s belief that the pressure to reduce costs is being felt primarily at the networked agencies.

If accurate, the holding companies may need to get serious about consolidating their agency brands, reducing duplicative resources, trimming overhead and investing in front line employees that are responsible for servicing clients and doing the work Read More