One-Third Of Your Advertising Is Wasted Unless…

 

“On average, 30% of an agency’s effort is wasted due to poor briefing” – quote from Association of National Advertisers in the preface to the 2011 ANA Financial Management Conference May 2011.

“The biggest cost of advertising is paying for ineffective campaigns. My estimate is that 35% of advertising dollars are wasted due to mis-targeted, mis-scheduled commercials.” – quote from Erwin Ephron: lifetime achievement award winner from Advertising Research Foundation.

With an aggregated investment of over $1 billion: “37% of advertising budgets are wasted.”What Sticks by Rex Briggs and Greg Stuart

 

Three independent, learned sources agree that roughly one-third of advertising spend is wasted due to poor client guidance.  They reached their conclusion after reviewing data from three different vantage points: hundreds of campaigns in ROI analyses or media mix models or other accountability platforms.  Most disturbing clients do not seem to be doing much about this, especially when it comes to selecting a new agency.

Most reviews today are conducted without the engagement of a search consultant.  Ad Age published a piece on this subject decrying that practice: from the agencies’ standpoint in terms of getting a fair shake and the client’s in terms of conducting a professional search.

This Fall the ANA and the 4As will publish the results of a study they did on best practices in agency search.  Indications are that they will be addressing this issue. However, just last Spring the ANA offered a case study as an example of how an agency review should be run.  The search was managed by the client’s Procurement Group (without a search consultant) to select a new media agency.

Here are the things Procurement mentioned and did right:

✓  They selected a list of contenders
✓  Contenders gave a credentials presentation
✓  Four finalists were selected
✓  They received a briefing by the client
✓  An Auditor checked media buys
✓  Procurement negotiated compensation

Here are the things they did not do (or failed to mention)

And we are not the only consultants to notice these omissions.

• No mention of identifying what was wrong with current agency
• No mention of screening criteria used to select contenders
• No early discussion of a compensation framework
• No details regarding agency economics and benchmarking
• No mention of incentives
• No mention of preparing a strategic challenge
• No mention of chemistry checks
• No discussion of handling agency transition
• No mention of monitoring agency performance over time
• No mention of a method for ensuring process improvement
• No mention of accountability in terms of ROI

If a Search Consultant left these things out, they would be considered unprofessional.

For the most part, procurement people are not as media-fluent as they need to be to conduct a media search.  Media always had its own language and set of metrics to understand, but nowadays with all the new media platforms and the need to have an integrated approach, the subject has become infinitely more complicated.  Unless someone is really experienced in media strategy and tactics, they cannot possibly lead a thorough search for a new media agency.  That holds for media auditors as well, who may be able to monitor the results of media buys, but are not in a position to evaluate media strategy.  If the strategy is off target, it doesn’t matter how efficient a buy is, commercials will be delivered to the wrong people, thereby wasted.

Real Value from a Consultant

We did a study. Going back three years, we followed the client/agency relationships of newly appointed media agencies. Of those searches listed as being managed by a Consultant all are still together.  Even if a consultant is hired to advise behind the scenes, the outcome is likely to be better.

Signing a corporate contract without an attorney or filing a corporate tax return without an accountant is generally acknowledged to be a bad idea. Similarly, a knowledgeable consultant is in a much better position to run a “best practice” search and to simplify a complicated process to render a better outcome.

For an account of any appreciable size, a consultant fee would amount to less than a tenth of one percent of the media spend to conduct a search.  Considering that a third of the media spend might be at stake, that is very inexpensive insurance. Search consultants offer great value. Particularly when the outcome could result in a huge increase in both savings and ROI.

To learn more about us or receive a free presentation on this subject, call 646-459-2325 or email mike@drexlerfajen.com or steve@drexlerfajen.com.

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