1. AVBs: A Declining Share Of Returns, But Still Worth Watching
Agency Volume Bonuses (AVBs) are becoming less relevant due to the rise of digital media. Traditional AVB channels like press and out-of-home are diminishing, and fewer agencies qualify for AVBs on digital platforms. Additionally, structural changes in agency trading models, such as inventory media, have reduced the emphasis on AVBs, with more of these bonuses now passed directly to clients. Yet, it remains key to stay vigilant and ensure any applicable bonuses are accurately reflected.
2. Unbilled Media: An Ongoing Concern
Unbilled media remains a significant issue, with strong potential for the return of monies, particularly in markets where pre-billing is standard practice, such as the UK. To prevent discrepancies, ensure that unbilled dates are clearly documented and managed within your contracts.
3. Inventory Media: The New Frontier for Audits
Inventory media represents the largest growth area, and largest share of returns, in recent media audits, with findings and issues consistently increasing. Advertisers must ensure value is delivered through fair pricing and that all opt-in approvals are clearly codified in contracts. Key steps include:
- Defining inventory media clearly in contracts to assure appropriate risk and reward balance.
- Securing detailed, line-by-line approvals for media plans.
- Setting and tracking yearly caps on inventory media volume.
- Codifying pricing and value delivery.
- Implementing penalties for non-compliance with terms.
4. Non-Client Revenues: Increasing Transparency Demands
Non-client revenues, such as incentive programmes, are expanding rapidly but often lack transparency. Contracts should mandate clear reporting from the agency through to the ultimate vendor level to ensure full visibility.
5. Technical Costs: Need for Increased Oversight
As digital media spend rises, so do technical costs related to programmatic buying, ad serving, and other digital verification. Ensure your contracts include explicit guidance on these costs and schedule regular audits to confirm value is being maximised.
6. Complex Fee Structures: Need for Enhanced Oversight
Agency fee structures have become more complex, shifting from simple to complex commissions, retainers, performance-based fees (PRFs), and hybrid models. This evolution demands detailed audits to ensure that remuneration aligns with actual service delivery and that all aspects of the fee structure are thoroughly examined.
7. FTEs and Resource Management: Ensure Compliance
Changes in workforce management, including working-from-home (WFH) and increasing juniorisation of teams, necessitate rigorous resource and timesheet testing. Ensure contracts have clear protocols for verifying timesheets and resource costs to confirm that promised commitments are met.
Protect Your Budget and Maximise Value
At FirmDecisions, our more than 500 audits across 94 markets this year have identified an average of 3% of agency billings in potential returns. Regular compliance audits and well-defined contracts help you maintain control over your marketing budget, address recurring issues, and enhance transparency.
