Checks and balances

Agencies and spenders debate the need for media audit

Should media audits be encouraged? Talk to the big advertisers and the answer is yes.

Says Philips India's chief executive officer K Ramachandran: "I do believe that a rigorous and tested methodology to assess whether a company's media spend is effective, will add value. If media audits deliver this, we need to take note."

But if you talk to the advertising agencies, the answer is not so clear cut.

"It is difficult to say whether it (media audit) is required in India or not, but it is a good system as it introduces checks and balances," observes C V L Srinivas, managing director, Maxus India.

The debate on media audits is gathering momentum as two independent media audit companies "" Strategic Media Networks and Spatial Access "" have already set up shop in India in less than a year. Rumours are that a large ad agency may set up its own media audit unit.

Besides, the consultancy company Ernst & Young's media audit practice (they call it assurance business) has quietly expanded in the last five years.

However, that's not the only reason why media audits are in focus. At the heart of the issue is the Rs 6,000 crore that advertisers spend on buying media through the agencies and the lack of transparency in the business.

Sandeep Vij, president, Optimum Media Solutions says, "Lack of transparency probably stems from media (especially television) becoming extremely complex as well as the bulk deals that agencies ink with media owners."

The advertiser's anxiety is also attributed to consolidation in the media buying business where nearly 70 to 80 per cent of the total buying is controlled by a handful of agencies.

"The agencies are big and have clout. Obviously clients want certain checks on them," says Srinivas.

Also, as companies are under bottomline pressures, media (advertising) being a big investment, is under the scanner.

So what exactly do media audits do? "Media audit firms help to create benchmarks based on current market practices. They provide advertisers and agencies with a means of comparison to improve their negotiations or develop strategies to manage differential pricing methods adopted by media owners," explains Meenakshi Madhvani, Spatial Access' managing director.

Media audits help arrive at benchmarks in media planning, buying and implementation, says Gavin D'Abreo, former marketing head of Goodlass Nerolac who encouraged such audits as part of "corporate governance" in the organisation. Auditing ensures that agencies transfer the volume discounts to their clients.

It also evaluates the planning process: whether the agency has considered all media and sub-media and got the right mix. In fact, media expert Ambika Srivastava's outfit, Strategic Media Networks, also conducts communications audits.

Curiously, advertising professionals have some reservations about media audits. The argument is that it can be effective in processes and systems, and less so in media planning and buying.

"Media Planning is both an art and a science, and the media product is a result of a deep understanding of the brand, the consumer, the markets, all of which an agency which has an on-going relationship with a client, can accumulate. It is difficult to expect an audit company to master all of this in a short span of time and pass judgements on the strategy," observes Srinivas.

Even a media buying audit can be complicated as a "rate" cannot be judged in isolation. "It needs to be seen with the 'value adds': the bonus spots, the day part mix, the sponsorship value and so on. Unless the audit captures all the variables that effect the 'rate', it cannot get the true picture," believes Srinivas.

Madhvani counters: "Any item of expenditure needs auditing. More so, when it is controlled by the agency and not the advertiser. Even a Rs 50-lakh capital expenditure is not cleared without the board approval in a company, but crores are spent on advertising without the MD knowing if it was needed at all," she says. Planning and buying are clearly measurable concepts, she adds.

Besides, clients must see if the audit company has an adequate, authentic and the latest "pool" of data on media buying, clients and the markets, feel planners.

"They must be done by experts like Ernst & Young and PricewaterhouseCoopers," says a planner. The two independent outfits in India are said to be struggling for business.

Madhvani claims that her company already has 15 clients. "Media audits call for media knowledge and skills. Across the world the business is dominated by smaller firms," she says.

Lastly, Optimum Media Direction's chief executive officer, Sandip Tarkas says that media audit must not be a witch hunt. It has to be an inclusive process involving the advertiser, the media services agency and the media owner.

Many advertising professionals insist that the Indian market is not yet mature for media audits, but Philips' Ramachandran says that such a measurement system keeps the edge sharp, discourages "clubby" relationships, encourages professional relationships, and enhances the bang for the buck "" something all advertisers want and media reps promise.