For far too long, advertisers around the world have found it almost impossible to secure the competitiveness of their media prices. Media agencies have been incentivised to avoid transparency over both pricing and media placements, leaving their clients frustrated and worried in equal measure.
For challenger brands, this lack of transparency has major implications. It becomes more difficult to take on established players in the market when you are unsure whether you are getting maximum value from your media budget. It becomes more challenging to secure a competitive edge when you are already fighting against brands that are more well-known, more trusted, and have a higher media spending power. And it becomes more difficult to get your agency to do the best job possible for you when you have no way of holding it accountable for any of the spending you have commissioned.
Today though, advertisers are starting to fight back. Many are using external consultants to improve media transparency by conducting detailed media performance reviews. But this is not the only option available to advertisers keen to understand the full landscape of their media spend.
In this post, we’ll outline why media pricing audits are even more relevant and required today, and the key steps you can take to ensure any media pricing audit you commission is successful.
Understanding the need for media pricing audits
Media disparity is a huge issue in the media industry. Due to poor quality media agency contracts and media processes, one advertiser can be charged significantly more than another to buy the same media inventory.
To be clear: we are not talking about minor differences in costs.
Best-in-class advertisers, with large financial muscles to flex and agencies desperate to keep their business, can secure the best inventory at very competitive prices.
In contrast, smaller advertisers – or challenger brands who have not yet built enough advertising media expertise in-house to have best-practice contracts in place – can end up paying up to 70% more for exactly the same media inventory.
To compound things further, the inventory they do buy at these inflated prices can often be of worse quality than the inventory their competitors secure. So they are not only paying almost double. They are paying almost double for something not even equal in worth.
How can advertisers assess the competitiveness of their media prices?
All advertisers, whether large, multinational giants or growing challengers, should be constantly focused on improving their media performance. The key to maximising your return on advertising spend (ROAS) is being sure that your media agency is a) getting the best possible rates on your behalf and b) passing those rates directly to you.
Imagine your business is spending 50% more than its competitors for the same media inventory. As a responsible leader, procurement or media manager, it is your responsibility to make these discoveries and correct them as soon as is physically possible.
That’s why assessing the competitiveness of your media prices through a benchmarking process is critical. If you have never benchmarked your media prices before, you should consider this an urgent addition to your To-Do list.
However, checking the competitiveness of your media prices is not an easy task. In fact, there is only one rudimentary way to try to do this without outside help:
- First, complete a year-on-year comparison of your media prices.
- Next, compare the year-on-year increase or decrease against the World Federation of Advertisers’ average net media price inflation figures by country and by media channel.
- If you discover that your net media price inflation was 20% on television in a certain market, and that the WFA’s reported average inflation rate on the same channel in the same market was just 5%, then it is clear your prices have increased at a much higher rate than the industry average. This is evidence of a loss of price competitiveness and a warning sign that further investigation is needed into your media agency’s wider performance.
Yet while it sounds simple, the process and technique of conducting an accurate year-on-year benchmarking process can be both complex and challenging. That’s why we developed Media Price Efficiency, a two-hour online course that takes you through every step of the process.
Taking your media pricing audit to the next level
External media auditors like Abintus can conduct media pricing audits at an even more detailed and accurate level, offering a range of benchmark reference points such as market, media channel, year, target audience, format, seasonality, and quality level. For example, even in a relatively small market like the Netherlands, we can provide benchmarks in television, out-of-home (OOH), cinema, display and video, and paid social media.
The whole process takes just eight weeks to deliver.
With an Abintus Media Pricing Audit, which is designed to identify the competitiveness of your media prices in relation to your media quality, your media prices and quality are benchmarked against other advertisers in your market aggregated in our database.
The subsequent analysis, which is completed in parallel with your overall media audit package, assesses your spend at a granular level and involves us collecting detailed information on both your spend and your media agency.
At the end of the process, you receive a comprehensive report of your price position against our benchmarks, overall, and by media channel. These findings are also incorporated into your Starter or Advanced Audit Package.
The real-world impact of effective media pricing audits
Media pricing audits provide clear, actionable intelligence and insight into your media spend.
A recent Abintus client tasked us with a thorough media pricing audit and analysis. After working through our rigorous and proven process, the data showed the client’s TV prices in an identified market were 23% more expensive than our aggregated database benchmarks.
The next stage of our media transformation program reduced the client’s TV prices by 44%, making its final TV prices cheaper than our average benchmarks. This freed up space in the client’s media budget, allowing it to purchase significantly more inventory for the same overall spend as at the start of our engagement.
Make a media pricing audit your next strategic move
In a difficult, complex and opaque media environment, it’s clear that challenger brands need to maximise every possible opportunity they can. When the odds are stacked against you, and larger competitors are fighting to keep you small, there is no room for anything other than laser-like precision in your spending choices.
That means putting time, effort, and resources into making sure you are 100% on top of every penny or cent of your media spend. Because only by getting full transparency on your media prices – and auditing their competitiveness – can you guarantee that you are not wasting crucial budgets that could be better directed elsewhere.
Remember, though: this can all be achieved in just eight weeks. That means two months from now, you could be enjoying significantly cheaper media inventory – or the peace of mind that comes from knowing your media agency is already operating with best-in-class principles in how it handles your account.
Ready to get started? Contact us today for an initial consultation about your media pricing audit options.