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Management

Do you employ a supply chain management agency and do you have full visibility of their activity and spend?

Media Marketing Compliance can help to ensure there is full transparency between you, your agency and the media vendor.

Our focus

Advertisers often employ companies to deliver or manage certain aspects of an advertiser’s marketing activity, this can include using specialist agencies to buy high volume purchases on behalf of the advertiser. These agencies utilize their purchasing power across their roster of suppliers to deliver lower prices and savings to advertisers.

These types of arrangements are especially common when dealing with point of sale or print suppliers. The pricing that the supply chain management agency is able to leverage across all its clients is often lower than any arrangement a single advertiser will be able to negotiate on its volume only.

Advertisers and agencies often employ “gain share” arrangements whereby any pricing benefits and savings generated over and above agreed benchmarks are shared by both the agency and advertiser, therefore incentivizing the agency to deliver maximum cost savings to the advertiser.

Advertisers will often generate significant benefits from these types of relationships, however Media Marketing Compliance audits commonly find that advertisers are due additional amounts over and above the savings disclosed by the agencies. These issues include:

Overstatements or mark-ups paid by advertisers on third party supplier costs

Gainshare arrangements under–reported often due to:
- Incorrect or older benchmark data used in gainshare calculation
- Supplier costs not reflective of amounts actually achieved by agency
- Number of supplier quotes obtained not in line with agreed tender process
- Supplier quotes not based on actual invoiced amounts

Lack of transparency in supplier tender process including:
- Agency utilizing suppliers with whom they have a financial interest.
- Agency utilizing suppliers with whom they have a volume rebate.
- Weak rationale for awarding non-lowest price bids.

Agency commission rates can be overcharged either due to:
- Incorrect agency commission levels uploaded into agency finance systems, especially when spanning different types of activity or multiple contracts.
- Supply cost base used to generate commissions is incorrect.