Who Audits the Auditor?
As the thirst for media audits increases, how can the industry ensure that global standards of best practice are upheld and unethical behaviour is weeded out?
A casual glance at media audits reveals little to suggest concerns are afoot. Yet media auditing has risen up the client agenda and is rustling feathers.
As advertisers increasingly request reassurances that agencies are making the most effective media investments on their behalf, so the prevalence of audits and auditors has risen in the region. With that rise has come concerns over the robustness of benchmarks, the arbitrary lowering of media inventory prices, auditor remuneration, and conflicts of interest.
It’s a sensitive topic and one that will only increase in importance, as procurement departments demand greater checks on how agencies are spending their money.
The key components of such audits are rigorous scrutiny of what was spent, what was delivered, the context of the media market, the context of competitive advertisers, adherence to plans and contractual obligations, and the outcomes (media metrics) achieved. At the heart of all this are media benchmarks, which act as reference points via a pool of comparable data. The size and scope of such pools is of paramount importance.
“Auditing without pools is like navigating with a compass when you could be using a satnav,” says Martin Sambrook, who is in charge of international business development and client service at Ebiquity, a leading independent marketing and media consultancy based in London. “You might be heading in the general direction but you don’t know when you’ve found the destination you should be at.”
“An auditor’s business is data-driven,” adds Philipp Vogeler, founding partner at
AUDITS’ KEY COMPONENTS
AJCME, which provides media audits and advisory services to the media industry across the Middle East and North Africa. “Adequate analysis can only take place if the platform on which the analysis is done is robust. In the case of competitive benchmarking, pools are critical. The absence of a robust pool shall generate a weak benchmark. This will not do justice to the task at hand. If we take away the data from that, we shall act as consultants and not as auditors. There is an inherent difference between the two.”
It is this inherent difference that causes some concern. Auditing and consulting do not sit well together and this bothers many – both agencies and auditors alike. It does so for two reasons.
Firstly, because it highlights potential conflicts of interest. In the US, the Sarbanes-oxley Act of 2002, which was enacted in reaction to major corporate and accounting scandals, stipulated that an auditor cannot serve as a consultant for the same business. The essential fear is that auditors may not criticise companies they also consult for, and vice versa. In short, they could be compromised.
“Whereas the Sarbanes-oxley Act only refers to financial auditors (not all the work which media auditors are tasked to do is financial auditing), we see this separation vital and in the interest of our clients and business,” says Vogeler.
Secondly, there is the threat of unfair competitive advantage. As global consultancies such as Accenture and Deloitte (both of which offer auditing services) become more and more involved in the marketing communications field, agencies are concerned that they are being audited by ‘competitors’, thereby giving those competitors access to valuable data and economics. This information could, in theory, be used to beat agencies at their own game, although the big consultancies say they have firewalls in place to separate their businesses. Nevertheless, some agencies are concerned.
“Auditors need three things: a) absolute impartiality (so cannot be involved in the transactional chain at all); b) deep subject matter expertise; and c) robust data points,” says Mark Gay, head of international media at Ebiquity. “Given that general consultants such as Accenture, Deloitte, PWC etc. are all heavily investing in digital agencies they are vested in the transactional chain so they fail on ‘a’. On ‘b’ they could employ media planning and trading experts but there is little evidence they do so on any scale. And ‘c’ requires long term investment in the process, which again is not evidenced.”
Are agencies therefore within their rights to say that an auditor must not be in competition with them? “Yes,” Gay states simply. Internationally, Accenture, which is headquartered in Dublin and occasionally operates in the region, has seen its objectivity questioned. Even Ebiquity was criticised by former WPP CEO Sir Martin Sorrell for having one subsidiary, Firmdecisions, audit agencies over their contracts with advertisers, while other parts of the business manage pitches and audit media spend. The situation is further complicated by media consultancies or specialist agencies offering evaluation of client/agency relationships.
In the Middle East, Medpush, the newest entrant into the region’s auditing market, describes itself as a media consultancy, not an auditor. As such, its offering includes media auditing, agency/ client evaluation, pitch management and ROI modelling. Samir Ayoub, the
Auditors need three things: a) absolute impartiality; b) deep subject matter expertise; c) robust data points. MARK GAY Head of International Media at Ebiquity AUDITING AND CONSULTING Auditing without pools is like navigating with a compass when you could be using a satnav. MARTIN SAMBROOK Head of International Business Development and Client Service at Ebiquity With more than 20 clients, Medpush’s pool is comprehensive enough for us to be able to use the benchmark from that pool. SAMIR AYOUB Founder and CEO of Medpush