The Auditors Role In

Media & Advertising

Stewardship
R&C Internal Audit Roundtable
April 23, 2014

PwCs Media and Advertising Assurance Services

Financial Stewardship Audit

Determine accuracy and timeliness of payments and
expenses between advertiser and agency. Identifying
opportunities to improve process.

Media Performance Assessment

Creative Production Audit

4
5
PwC

Media Performance
Assessment

Validate delivery and determine compliance to buying

guidelines. Benchmark performance relative to fair
share and competition.

Determine accuracy and timeliness of payments and

expenses. Identifying opportunities to improve
process.

Financial
Stewardship
Audit

Media &
Advertising
Assurance

Creative
Production
Financial Audit

Agency Compensation Assessment

Determine accuracy of agency compensation,
including any bonus/malus. Review staffing
allocations and changes over time.

Agency
Compensation
Assessment

Contract Assessment
Comparing agency contracts to PwCs leading practice
checklist including assessment of any performance related
incentive schemes.
April 2014
2

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

Strategic 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

Operational solutions

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

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

Compliance solutions

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.)

April 2014
3

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

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

April 2014
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Your Agency Universe

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

April 2014
5

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)

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

April 2014
6

Budget

Typical steps of the end to end media process

1. Initiate
annual
preliminary
allocation

2. Determine
media planning
rates

5. Approve
annual budget

Agency Led
Advertiser Led

3. Develop
communication
strategy

4. Develop
strategic media
plan

Pay

Buy

Plan

Shared

11. Perform
initial media
reconciliation

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

6. Develop
detailed media
buy

7. Execute
purchases

10. Resolve
discrepancies

8. Receive
invoices

9. Process
invoices

12. Analyze
media
performance

13. Conduct back

end audit

14. Reallocate
resources

April 2014
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Retail & Consumer Industry Media Spend

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

April 2014
8

Retail & Consumer Industry Media Spend*

Media Type

Significant spend
-

Retail & Consumer industry measured media spend was

over $35 Billion in 2013

-

Does not include below-the-line marketing spend

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%

Creative production

Syndication

1,390,000

4%

Direct marketing

SLN TV

1,110,000

3%

Public relations

Local Radio Sum

Agency fees

Shift from traditional media to internet & new media advertising

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

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

April 2014
9

Media & Advertising Spend-a hot topic for

R&C Internal Audit

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

April 2014
10

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

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

April 2014
11

Agency Reviews Help Gain Control over Marketing Investment

Benefits

Areas Typically Reviewed

Increased transparency

General billing and compensation

Improved agency relationships

Media services and agreements

Maintain competitiveness

Creative services and agreements

Financial due diligence

General agency operations and workflow

Cost savings opportunities

Media placement schedules and post-buy reports

Process improvements

Media buying guidelines

Verify proof of performance and delivery

Compliance and contract assessments

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?

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

April 2014
12

Panel Discussion

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

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

April 2014
13

Thank you
Jonathan Spira

Jacqueline Weiner

Director
Media & Advertising Assurance Services
PwC
300 Madison Avenue
New York, NY 10017
646-471-8016
Jonathan.h.spira@us.pwc.com

Director
Media & Advertising Assurance Services
PwC
300 Madison Avenue
New York, NY 10017
646-471-4327
Jacqueline.weiner@us.pwc.com

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