The Auditors 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. 1 2 3 4 5 Contract Assessment Comparing agency contracts to PwCs 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 PwCs Media and Advertising Assurance Services 2 April 2014

PwC 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 3 April 2014R&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.)

PwC Todays discussion Your Agency Universe R&C Industry Media Spend Key Trends Media & Advertising Spend- a hot topic for R&C Internal Audit Panel Discussion 4 April 2014R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors

PwC Your Agency Universe 5 April 2014R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors

PwC 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) 6 April 2014R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors

PwC Typical steps of the end to end media process R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors 7 April 2014 BudgetPlanBuyPay 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

PwC Retail & Consumer Industry Media Spend 8 April 2014R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors

PwC 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 9 April 2014R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors Media Type 2013 Total $ (in 000s) * 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

PwC Media & Advertising Spend-a hot topic for R&C Internal Audit 10 April 2014R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors

PwC 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 11 April 2014R&C Internal Audit Roundtable: Media and Advertising Risks for Internal Auditors

PwC 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 12 April 2014R&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 advertisers 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?

PwC Panel Discussion 13 April 2014R&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 Jonathan.h.spira@us.pwc.com Jacqueline Weiner Director Media & Advertising Assurance Services PwC 300 Madison Avenue New York, NY 10017 646-471-4327 Jacqueline.weiner@us.pwc.com This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. 2014 PricewaterhouseCoopers LLP. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers LLP, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.