Not many weeks beforehand we were talking to our friends at The Orange Partnership, who do a similar type of work to us, just with big construction contracts rather than consumer brands and their advertising and media agencies. After the first warm beverage, our thoughts turned to putting our respective worlds to rights. Interestingly, they are finding that the natural desire to trust is one of the biggest risks from a financial perspective to the smooth running of a construction contract. We agreed that yes, the natural desire to trust is a risk factor we face as well, and, in our world, it often manifests itself in the length of the relationship between the senior management of the brand and the agency.
We know we have fulfilled our role properly when we leave an agency behind feeling fairly treated, relationships intact,
On the face of it, if done insensitively, our role as independent contract compliance auditors can stir up the commercial equivalent of a hornets’ nest. That’s partly why we will never use inexperienced graduates, who are learning on the job and have not worked in a senior operational Finance role, to perform an audit of an agency. We know we have fulfilled our role properly when we leave an agency behind feeling fairly treated, relationships intact, and our client has much improved clarity and transparency over their financial dealings with the agency. I know, we probably should get out more!
The nature of brands and agencies is that, surprisingly often, the relationships between key individuals have been established not just over a few years but a few decades. Consequently, we often find that the view from the brand is they can trust their agency 100%. At this point, our professional nose starts to smell out something to investigate! Of course, it’s fine to trust, but how do you actually know that everything is working as intended? How regularly are you verifying that the financial side of your agreement is being dealt with fairly and squarely, as laid out in the contract?
After some reflection, we concluded that our role is also to protect the brand team’s reputation, especially key individuals within that team.
After some reflection, we concluded that our role is also to protect the brand team’s reputation, especially key individuals within that team. After all, if you had personally signed the contract, wouldn’t you feel better protected knowing that everything was in order rather than trusting and hoping? We want to make sure that no one can ever accuse you (or the rest of the brand team) of being too close to your agency. We want to make sure you don’t have the embarrassment of some difficult conversations with your internal audit team or Finance Director.
Not that long ago we had one such situation with a Marketing Director. There was no question, or even hint, of any impropriety. He was exposed, however, and his professional reputation could have been damaged by it through no fault of his own. So, how was he at risk? Very simply, he was the only signatory on his brands’ media plans and production estimates. When we pointed this out to him, the light bulb went on immediately. He quickly proceeded to change the governance procedures so there were 2 signatories on all brand media plans and production estimates, in line with corporate guidelines.
Another circumstance we sometimes find is where we talk to a marketing or brand director and ask them whether they have the delegated authority to approve a change to the agency contract. You would think the answer is, ‘Yes of course, don’t be so stupid’. We often, however, get a blank look when we ask them whether that is reflected in the contract. More often than not a senior marketer actually doesn’t have the delegated authority to approve a change in the agency contract without reference back to a fellow Director or the Board.
Was it therefore an amazing coincidence that we had remarkably consistent messages expressed in that meeting with half a dozen experienced marketing directors? Well, yes and no. We all know that in business, reputation is everything. That’s as true for big brands and for individuals as it ever was. What struck me (and the procurement head in the room) was just how front of mind reputation management was for those very senior marketers.
So, to summarise, if you solely rely on trust within your relationships with your agency partners, then your own professional reputation could be on the line.