John Billett shares his thoughts on the flaws of the traditional media audit and how markets should consider monitoring media price performance in future.
Today’s media audits are rarely delivering. They don’t tell advertisers what they really need to know and they may even be helping media agencies earn performance cash for delivering below average buying rates.
There are multiple reasons for this but at the heart is the fact that brands and even procurement people have bought into the myth that the discount is everything.
Everyone thinks that if they get a 5% discount on the pool of audited companies they are doing okay. Then they stop thinking about the total price they actually paid and the media reach that paid placement delivered.
The first problem is that the norm is an inflated figure: Opaque agency holding company practices and the limited reach of the traditional media audit mean that a 5% discount against the pool could be as much as a 10% premium on the true average.
The second is that because so many contracts provide rewards for agencies that can demonstrate they are buying at a discount to the pool, advertisers may even be rewarding their agency for below average performance.
Audits were set up in this way because there were large differences in prices paid for similar inventory and no one other than media owners and the largest advertisers had an adequate insight on market prices. It was like buying stocks and shares with no FTSE index! So average prices were useful and hence discount distance from the average, whether positive or negative, became a currency.
Times have changed, however, and we need to shift mindset and stop thinking discount and revert to some media basics: price, reach and change over time.
We’ve got to get back to the absolute price and how that has been improved year on year and we’ve got to get rid of incentive payments that are based on false metrics.
It sounds pretty simple but to do this we need to change culture at clients, especially among procurement managers, media owners, auditors and agencies. We’ve got to break the mold because the basis on which the discount is currently applied is open to abuse.
The current situation is like going food shopping and only buying the three for two offers, without looking at the price of each item. Only a few people may do that at Tesco, but in media practically everyone is doing something similar.
While media auditors have contributed to the challenge by failing to recognise the problems their process is causing, media owners are happy to go along with it. In part because their trading currencies are also similarly removed from audience. Press trading currencies of per column centimetre or per page, for example, bear no resemblance to the audience the page or column centimetre actually delivers.
And understandably, agencies are happy with the current system because it means they can be paid incentives for delivering below average performance.
The norm has become meaningless.
So faced with metrics that have lost sight of the audience and the reach that media delivers, we’ve ended up with a merry go round in which people are playing the system rather than focus on customer – advertiser – value.
At ID Comms we are creating a new kind of audit and performance review equipped for the digital age, one that at its heart monitors media value rather than media discounts.. The central aspect must be absolute price and the ability of the agency to improve buying performance year on year.
This applies to digital channels as much as traditional media. Future innovations in media auditing have to put digital media at the centre of the methodology, not just apply the same inflexible rules from TV to the complexities of digital media trading.
For advertisers that consider digital media as an important component of a high-performance marketing plan, media auditing needs to evolve quickly to monitor digital media investments more effectively.
So, the next time your agency boasts about the wonderful discount they’ve delivered, ask them about the absolute price and how much it’s reduced year on year.
Ask them about the cost per reach and how they’ve managed to reduce that metric.
Because all other measures are hokum. Always have been and always will be.
Then, ask them how these metrics can be effectively applied to your investments in digital channels.
This article was originally posted on M&M Global on 5-Aug-13
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