Does Your Media Agency Contract Protect You in These 8 Critical Areas?

 

The client/agency relationship’s foundation is built upon the long-form contract that is memorialized between the two parties. This is the key document where, among other things, an advertiser’s rights regarding transparency and work product / data ownership are established.

Cortex Media does not provide legal advice since we are not attorneys but we have vast experience working with our clients’ legal counsel and procurement teams on the commercial aspects of media agency contracts.

Every media or contract compliance/invoice audit we perform requires a review of our client’s agency contract to understand what they are entitled to or not from a commercial perspective. The contract review ensures we are evaluating the work consistent with the specified deliverables and the commercial terms of the contract.

In many cases, we see that a client’s agency contract is “evergreen” and may have been memorialized 5 years ago, or even longer. As the industry evolves at breakneck speed, media agency contracts need to be updated to reflect the current commercial environment.

With new relationships, its paramount to begin with the proper protections. Below, we have highlighted the 8 key commercial areas that are critical for an advertiser and need to be at the top of the list as part of any contract negotiation.

How is your contract protecting you in these areas?

1. What is the scope and breadth of your audit rights? What is excluded from review?

2. Is the agency required to disclose information on brokered media deals?

3. Does clear language exist regarding the return of any discounts and rebates? Are all benefits being transmitted to you?

4. How are you protected in any cases of conflict of interest…in which the media agency makes purchases through related/owned agency parties or may involve co-mingled negotiations for agency owned inventory?

5. What are your rights around data ownership, custody and protections?

6. Do you have clear ownership of negotiated media rates and other work product?

7. Do you have detailed KPIs for agency performance that are specific, actionable and measurable?

8. How have performance-related bonus/malus compensation plans been structured?

Addressing “transparency” between client and agency starts with the right contract language which outlines the core services to be provided by the agency and the commercial conditions under which the agency should operate.

Cortex can work with your legal and procurement teams to include the necessary conditions for a clear, fair and long lasting relationship with your media agency.

Note: Cortex Media is an independent firm providing services to brands at every stage of the media process, from helping to find the right agency partners to performance tracking and evaluation to financial reconciliation and strategic consulting.


How Are You Managing Your Investment on Facebook?

 

According to an Advertiser Perceptions study reported last month by Ad Age, 40% of marketers say they plan to conduct an audit of their Facebook business this year. This is amid growing concern surrounding such issues as fake news, fraud and misleading metrics.

1. Last year, Facebook revealed that there was a miscalculation in their reporting for both weekly and monthly reach of posts as well as over-reporting video views. Cause for concern among advertisers is driven primarily by the fact that historically they’ve had to rely solely on Facebook reporting for measurement as the platform hasn’t allowed significant 3rd party evaluation.

Given that Facebook represents 35%+ of total US display spending (per e-marketer) and more than 2/3 social ad spending, the news was concerning.

Facebook has begun to take steps to improve the transparency with advertisers. Earlier this month, Mark Zuckerberg that Facebook was “committing to an audit by the Media Rating Council (MRC) to verify the accuracy of the information we deliver to our partners.”

In addition, Facebook stated that it’s “verification partners will receive more detailed information about ad impressions on Facebook and Instagram” down to the milliseconds that an ad was on a screen.”

Facebook’s recent actions reinforce the critical need for advertisers to stay more involved in the tracking and measurement of their Paid, Owned and Earned activities.

As a marketer, what approach should you be taking to Facebook?

1. Access your account to ensure that you know how your campaigns are set up and the objectives for your buys.

2. Establish the “right” KPI’s to ensure that you get what you are paying for not only for Facebook but across ALL partners.

Note: Cortex Media is an independent firm providing services to brands’ at every stage of the media process, from helping to find the right agency partners to performance tracking and evaluation to financial reconciliation and strategic consulting.


10 Key Learnings of Conducting a Financial Audit of Your Media Agency

 

The term "transparency" has now become a part of any discussion as it relates to client/agency relationships. From the ANA/K2 report from in June to countless other articles and blogs, the term "AVB" has been brought into focus in the US media agency discussion and it is not going away any time soon.

While the impact of AVB’s is important, it is only one aspect of the transparency issue in the complex client/agency relationship.

The media investment consistently represents the largest percentage of a brand’s overall marketing investment. At Cortex Media, we see frequent cases in which the brand doesn’t spend enough time or resources to mitigate the risks associated with working with their media agency.

The lack of focus, knowledge and/or weakness in internal controls leads to doubts about the services provided by the agency and creates opportunities for errors and/or omissions in the part of the agency to go undetected by the brand.

A financial audit of your Media Agency is an important “annual check-up” on the strength of the control environment and how the Agency is managing the brand’s finances.

Below, we have highlighted some of the key learnings that brands’ can glean from a 3rd party media agency financial audit; all of which will help to provide further transparency in the brand/agency relationship as well as understanding the strength of existing controls within the Clients financial management system:

1. Does the current agency contract address my needs and protect my brand’s interests?

2. Is my contract up to date with current industry standards as well as new technologies and buying practices such as programmatic/trading desk buys and barter?

3. What is my internal budget control process?

4. How do I ensure that advertising spend is properly authorized, executed, monitored and reported (brand and agency)?

5. Is brand marketing and the agency following the prescribed procedures or are they circumventing controls?

6. Is verification of performance taking place and is there proper separation of duties in that regard?

7. Is there adequate transparency to all underlying 3rd party costs?

8. Is the brand paying for extra work that should already be included in scope?

9. Did the media run as scheduled and was creative production completed?

10. Where there any AVB/rebates or credits and were they properly reported and returned to brand?

Addressing the “transparency” issue starts with the right contract language that provides outlines the core services to be provided by the agency and the necessary language to provide protection of all brand assets.

It is also important to have a clear understanding of the brands’ specific internal controls and those of the agency. Media is a business with complex pricing structures and industry-specific practices that require the right specialists with relevant media experience.

Note: Cortex Media is an independent firm providing services to brands’ at every stage of the media process, from helping to find the right agency partners to performance tracking and evaluation to financial reconciliation and strategic consulting.