Advertising and media spending trends
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Transcript of Advertising and media spending trends
The Auditor’s Role In Media & Advertising Stewardship R&C Internal Audit Roundtable
April 23, 2014
PwC
Financial Stewardship Audit Determine accuracy and timeliness of payments and expenses between advertiser and agency. Identifying opportunities to improve process.
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5 Contract Assessment Comparing agency contracts to PwC’s leading practice checklist including assessment of any performance related incentive schemes.
Agency Compensation Assessment Determine accuracy of agency compensation, including any bonus/malus. Review staffing allocations and changes over time.
Creative Production Audit Determine accuracy and timeliness of payments and expenses. Identifying opportunities to improve process.
Media Performance Assessment Validate delivery and determine compliance to buying guidelines. Benchmark performance relative to fair share and competition.
Agency Compensation
Assessment
Media Performance Assessment
Financial Stewardship
Audit
Creative Production
Financial Audit
Media & Advertising Assurance
PwC’s Media and Advertising Assurance Services
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April 2014
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Media and advertising assurance services solutions…
• Drive process improvements and leading practices
• Identify cost savings opportunities
• Evaluate effectiveness and efficiency of media and advertising spend
• Establish framework for efficiency throughout the media and advertising processes
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April 2014 R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
Strategic solutions Operational solutions Compliance solutions
• Customer/client development and
relationship management
• Marketing planning
• Media planning/process development
• Marketing ROI/effectiveness analysis
• Marketing mix analysis
• Business process assessments
• Comparables analysis and
implications assessment including
competitor analysis
• Media spend management analysis:
- Media cost
- Media quality
- Media data/reporting
- Media mix/analytics
• Organizational design assessment
• Procurement/sourcing strategies and
implementation assessments
• Advertiser/agency IT security controls
assessment/privacy
• Third party data and controls studies
• Internal controls assessment
• Marketing technology automation
• Contract compliance – financial
stewardship across multiple categories,
including but not limited to:
- Media planning and buying
- Production cost
- Agency compensation
- Direct marketing
- Internet and new media
- Events and sponsorships
- Social media
• Media audit
- Buying performance (e.g.,
audience delivery, etc.)
- Traditional and digital media
(search, impressions/clicks, etc.)
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Today’s discussion
Your Agency Universe
R&C Industry Media Spend
Key Trends
Media & Advertising Spend- a hot topic for R&C Internal Audit
Panel Discussion
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April 2014 R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
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Your Agency Universe
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April 2014 R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
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The agency universe
• Advertising
- General Market
- Multi-Cultural Markets
• Creative Production
• Media Planning/Buying
- Traditional
- Internet and new media (digital)
- Social media
• Direct Marketing
• Promotions/Events Marketing
• Sports Marketing
• Public Relations
• Brand/Marketing Consulting
• Customer Relationship Management (CRM)
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R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
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Typical steps of the end to end media process
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April 2014
Budget
Pla
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Buy
Pay
1. Initiate annual preliminary allocation
2. Determine media planning rates
3. Develop communication strategy
4. Develop strategic media plan
5. Approve annual budget
6. Develop detailed media buy
7. Execute purchases
10. Resolve discrepancies
8. Receive invoices
9. Process invoices
11. Perform initial media reconciliation
12. Analyze media performance
13. Conduct back end audit
14. Reallocate resources
Shared
Agency Led
Advertiser Led
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Retail & Consumer Industry Media Spend
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April 2014 R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
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Retail & Consumer Industry Media Spend*
• Significant spend
- Retail & Consumer industry measured media spend was
over $35 Billion in 2013
- Does not include below-the-line marketing spend
◦ Creative production
◦ Direct marketing
◦ Public relations
◦ Agency fees
• Shift from traditional media to internet & new media advertising
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April 2014 R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
Media Type 2013 Total $ (in 000’s) * 2013%
Magazines 7,270,000 20%
Cable TV 6,330,000 18%
Network TV 5,240,000 15%
Newspapers 3,910,000 11%
Spot TV 2,700,000 8%
Internet Display 2,230,000 6%
Internet Search 2,090,000 6%
Syndication 1,390,000 4%
SLN TV 1,110,000 3%
Local Radio Sum 1,040,000 3%
Outdoor 730,000 2%
National Spot Radio 430,000 1%
National Newspapers 420,000 1%
Network Radio 380,000 1%
Sunday Magazines 270,000 1%
B-to-B 190,000 1%
Local Magazines 80,000 0%
Hispanic Newspapers 80,000 0%
Hispanic Magazines 30,000 0%
Grand Total 35,920,000 100%
*R&C industry media spend was pulled using industries that fall within the retail & consumer spectrum including : retail, department stores, food & beverages, liquor, beer & wine, foods, apparel & accessories, cosmetics & beauty aids, footwear, jewelry & watches, games & toys, and personal hygiene & health. Source: Kantar
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Media & Advertising Spend-a hot topic for R&C Internal Audit
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April 2014 R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
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Accountability , Complexity and Transparency
• Move toward marketing accountability: - Cost and ROI
• Increase in media complexity: - Outlets and intermediaries
• Big agency consolidation:
- Limited choice, sister companies
• Rapidly evolving practices and technologies: - Data visibility and management
• Questions around financial transparency: - Discounts, rebates
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Benefits • Increased transparency
• Improved agency relationships
• Maintain competitiveness
• Financial due diligence
• Cost savings opportunities
• Process improvements
• Verify “proof of performance” and delivery
• Compliance and contract assessments
Areas Typically Reviewed • General billing and compensation
• Media services and agreements
• Creative services and agreements
• General agency operations and workflow
• Media placement schedules and post-buy reports
• Media buying guidelines
Agency Reviews Help Gain Control over Marketing Investment
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April 2014 R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
Typical Questions Answered • Did the advertiser receive what they paid for?
• Did advertisements actually run as planned and bought?
• Has audience delivery been accurately calculated by the media buyer and reported to the advertiser?
• Does advertiser’s scope of work and agreed-upon labor hours for Brand X or Project Y prove to agency labor reporting records?
• Are fee reconciliations being performed?
• Were production out-of-pocket costs billed in accordance with contract guidelines?
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Panel Discussion
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April 2014 R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors
Moderator:
Jonathan Spira- PwC, Director, Media & Advertising Assurance Services
Panel Members:
Susan Claremont- Weight Watchers, Vice President, Internal Audit
Lynn Laskiewicz- Walgreens, Director, Strategic Sourcing-Marketing
Jackie Weiner- PwC, Director, Media & Advertising Assurance Services
Thank you
Jonathan Spira Director Media & Advertising Assurance Services PwC 300 Madison Avenue New York, NY 10017 646-471-8016 [email protected]
Jacqueline Weiner Director Media & Advertising Assurance Services PwC 300 Madison Avenue New York, NY 10017 646-471-4327 [email protected]
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