As the Indian media industry gets more digitised, the dynamics and structure of the media trading ecosystem are also changing, further complicating the landscape. Terry Edwards of FirmDecisions talks to BrandWagon’s Ankita Rai about the growing demand for financial compliance among advertisers and why they need to review and update their contracts with media agencies. Edited excerpts:
FirmDecisions partnered with Spatial Access to enter India last year. As you complete one year, how do you see the India business growing? Are Indian marketers and agencies open to the idea of financial compliance?
This country is facing similar issues related to the lack of transparency as its counterparts in the US and Europe. India has been added to the list of markets which global advertisers are keen to work with. India is now the sixth largest advertising market and has traits similar to that of markets like Italy, Spain, China and the UK. So we thought the time was ripe to enter into a JV with Spatial Access. As the global media industry gets digitised, we see a major change in how media is being traded. Commercial arrangements at the top have been dramatically changed by digital. Digital is the fastest growing medium in India. It presents an opportunity for advertisers in India to take a grip on this before the way how media is traded takes a grip on them. India is a big market and has many India-only big advertisers among the top 10 advertisers unlike developed countries. We expect 20% of our business coming in from India. We are focussing on the Indian market for growth and will offer media financial compliance auditing to both local and global advertisers in this market.
What can Indian advertisers learn from their peers present in more mature markets?
I do not think India is any different from other markets. It is a new market for us and it is important to create comfort among Indian clients and provide reassurance that we do not disrupt the day-to- day business or the relationship between the marketing team and agencies. In the history of FirmDecisions, no client and agency have ever parted ways, which has only strengthened the relationship. We have found issues with back office miscalculation, rebate, etc which maybe the agency does not know of. We always give agencies the benefit of the doubt and we want to bring that message across in India. In India, agencies do not know what to expect from us. That is the key pain point. The more we work in India, the more agencies will understand the process we have in place. Globally, agencies are aware of what we are looking at, what we have found and what we are going to report. We do not hide anything. Even before the client, agencies see the report.
What are the key rules of financial compliance that should be followed across agency contracts?
Any rebate received by the agency should make its way back to the client in the way it is provided — cash or freebies. It should be done not just on the agency level but on the group level. Advertisers need to have access to rebates and auditors have the right to validate it. When we go into audit, we go with the assumption that everything is right; that is the premise. A good contract should be simple and not complicated. Advertisers need to regularly check contracts and how they fit with current media trends. Invest in a contract with full audit rights over the media agency and make sure you have access to your records and data, to ensure transparency. Advertisers need to protect their interests, guarantee transparency of their investment and take control.
Digital advertising has become increasingly complex and the introduction of programmatic trading has further complicated the market. What are your thoughts on programmatic?
Digital advertising has many layers and has made the playing field less transparent. Our research shows that 60% of advertising spend does not go where it is intended to and everyone takes a little piece of it. Furthermore, 27% of all active advertiser/agency contracts include terms that prevent advertisers from obtaining full access to digital data for the purposes of auditing contract compliance. Therefore, advertisers need to understand their contracts and it should give them more transparency over digital investments. We have a separate digital function at FirmDecisions, headed by Federica Bowman. Over the last five years, digital advertising has become increasingly complex. The introduction of programmatic trading has complicated the market further. But it is not that you cannot audit programmatic or that it is not transparent. It is because the client may have signed a piece of paper that says it can’t be audited. There is nothing non-transparent about programmatic, except if the agency wants it to be. Every single transaction has a record in digital. It is as easy to audit as any other contract.
As marketers park more marketing dollars in digital, what advice do you have for them?
Advertisers need to have more transparency over digital investments. So we tell clients that do not make the same mistakes in India that some advertiser has done globally thinking that programmatic cannot be audited. If you have not signed away your right to audit, we can check what percent of impressions were human. We can check if the agency is spending the money in compliance of the contract, whether there are any loopholes in the contract or if agencies are maximising returns on your money. Digital contracts can be more complicated but they do not need to be. They are made complicated as that way it works best for the agency.
Which medium gives better RoI? Which is the best medium in terms of transparency?
The stronger the medium and the stronger the player within that medium, the lesser the noncompliance and hidden transactions. As you get to smaller media platforms, they may offer slightly lower prices, rebates or kickbacks to agencies. Mediums such as print and outdoor are fighting for growth in income. Print, for example, is struggling globally and therefore, small print players may offer slightly lower prices and rebates to the agency to get on the schedule. TV is a powerful medium in most markets and also the most transparent medium.