This presentation highlights the risks and challenges around advertising and media expenditures and how internal audit can add value to their organizations within this area. Presented at the Creating value and trust: Navigating risk and meeting customer expectations, PwC's Internal Audit Ethics and Compliance Retail and Consumer Roundtable for internal audit and ethics and compliance executives, April 2014. For more information, visit: http://pwc.to/1rbVnlY
Text of Advertising and media spending trends
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 [email protected] Jacqueline Weiner Director
Media & Advertising Assurance Services PwC 300 Madison Avenue
New York, NY 10017 646-471-4327 [email protected] This
publication has been prepared for general guidance on matters of
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