success stories
Identification of Non-Compliance and Restructuring of Objectives
11MM Mexican pesos
to be refunded by
the media agency
Media Auditors identifies up to 11 million Mexican pesos to be refunded by the media agency for a prestigious retail company in Mexico. Through our audit, we not only identified the agency’s failure to meet its commitments but also assisted the client in restructuring objectives for their new contract.
A major retailer, operating numerous stores in Mexico and involved in various types of business, is among the top 100 advertisers in the country. With a marketing strategy focused on its core target and over 50% of its investment dedicated to television and digital media to boost its e-commerce platform.
About
our client
CHALLENGE
Uncertainty and Expectations with the New Agency
We faced a client who had just completed a pitch and was starting to work with a new agency. The client was experiencing significant uncertainty and had high expectations from the new team and all the commitments made during the pitch.
In a typical pitch process, agencies often promise a range of results that may be very challenging to achieve in practice, all in an effort to win or retain the account. When clients are properly advised, they include all the commitments made by the agency during the pitch in their service contract. As a general market practice, auditing media agencies is always necessary, especially when dealing with a new agency.
In this project, we found a client with the following concerns:
- Will the agency be able to meet the media optimization commitments?
- Is the team oversized for my account?
- Will they be able to retain the team and manage turnover?
- Are the rebate levels in line with the market? Will they be fully returned? Will there truly be transparency?
SOLUTION
Contract
Audit
First, Media Auditors conducted a thorough analysis of the contract between the client and their agency, identifying all commitments.
Once the audit points were defined, Media Auditors initiated the audit process by agreeing on timelines and procedures with the agency. A series of templates were sent out with the required information and deadlines were outlined.
After analyzing all the data and audit information, a draft of the results was presented to the agency, providing an opportunity to justify and clarify any issues. Following the reconciliation of results with the agency, a final presentation was made to the client.
DELIVERABLES
On-time and in-full delivery of all reports stipulated in the contract and required by the client.
TEAM WORK
FTEs, turnover, new hires and terminations, salaries, and team size according to the budget.
MEDIA OPTIMIZATIONS
Compliance with Optimization Commitments.
BILLING
The amounts invoiced by the agency to the client must match the amounts paid by the agency to the media.
COMPENSATION
According to the team audit, the actual costs incurred by the team annually are compared with those stipulated in the contract.
REBATES / AVBS
Compliance with rebate returns according to the contract and analysis of levels versus market standards.
RESULTS
Conclusions
Key Findings Identified by the Audit:
- The agency is required to return over 80,000 pesos to the client for remuneration discrepancies.
- The agency must return SIX MILLION AND A HALF Mexican pesos to the client due to failure to meet media optimization commitments.
- Only 77% of deliverables were completed on time and as agreed.
- The team experienced a 56% turnover rate, compared to the market average of 44%.
- The team size is larger than the market average. The client’s investment per FTE is 28.6 million pesos, while the market average is 29.7 million pesos.
- The difference between the committed and actual rebates amounts to ALMOST 5 MILLION Mexican pesos in favor of the client.
In Summary:
- Media Auditors clarified that the agency was unable to meet the media optimization commitments as they were unrealistic, made primarily to win the account during the pitch.
- The team size is slightly oversized for the budget they are working with.
- The turnover rate of the team is higher compared to the market average.
- Actual rebates exceeded those stipulated by the contract, and the agency will return the full amount to maintain transparency.
Additionally, the audit findings highlighted that the current contract was not aligned with market realities. Therefore, upon completing the service, Media Auditors proceeded to advise the client on adjusting contractual commitments to align with current industry trends.
We identified agency non-compliance and assisted the client in restructuring the objectives of their new contract.
RECOVERY FOR THE CLIENT OF
11 MM PESOS
3,46% OF THEIR MEDIA INVESTMENT
AUDIT PAYBACK: 69 TIMES THE INVESTMENT
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