Virtually all client-agency agreements contain a “Right to Audit” clause, yet few advertisers are committed to conducting contract compliance or performance audits. Which raises an interesting question; “Why negotiate this clause into an agreement if the organization doesn’t intend to conduct an audit?”
Auditing a supplier’s compliance or performance is good practice, not a negative reflection on the supplier or the strength of the relationship with the client. Auditing in a post Sarbanes-Oxley world is a corporate governance best practice, part of an organization’s fiduciary responsibility to its shareholders. Further, the marketing budget often represents a major portion of the organization’s selling, general and administrative expense. Auditing enhances transparency, improves processes and controls and insures that the legal and financial safeguards established by the advertiser in the contract are being adhered to. Further, audits provide substantive benchmarks on performance that form the basis for a mutual commitment to “continued improvement.”
So if the process is a positive one, the question remains; “Why do so few advertisers audit their marketing suppliers?” Unfortunately, U.S. based client-side marketing professionals and the agencies that make up their marketing vendor network don’t always take the view of audits as a positive, albeit necessary process to properly steward a firm’s marketing investment. The premise is simple, “trust but verify.” The winners when a client conducts regular, audits of their vendor network are the groups that fear it the most… marketing and their agency partners. Ironically, even in the context of a dissolution of a vendor relationship, client organizations often forgo their right (if not responsibility) to conduct an audit. Exit audits can yield valuable insights, yield process improvements, insure that all billing and fees have been properly reconciled and that all intellectual property rights and assets have been properly transitioned.
The following quote from an anonymous source may best sum up the premise behind an audit; “In God we trust, all others we virus scan.” An effective audit process does not single out a particular supplier and pursue them in a vindictive manner. Rather, it determines a schedule, methodology and defines an approach that encompasses all members of an organizations marketing vendor network in a fair, even-handed manner.
Let me start by saying that I am not casting doubt on Ogilvy’s position regarding the recent allegations brought by an employee in Federal Court that they overbilled their IBM client by several million dollars between 2006 and 2011.
