‘Audit my agency? Dare I even look?’

With agency relationships, a golden rule is: If you’re not checking, you can’t know what’s actually going on.

A large FMCG approached us after having a number of conversations about costs with one of its agencies, which simply did not seem to make sense. As a result it started to wonder whether it was being charged too much by the agency for the services being provided.

The Head of Marketing Procurement came to see us to ask our opinion. We went away to do some research and discovered that the agency had become substantially more profitable in both absolute and percentage terms a year or two after taking on the brand as a client.

We suggested to the brand that it carry out a compliance audit of the agreement in place and it put this to the agency. Interestingly, the agency refused to be audited. As you might imagine, this made us and the brand believe that the agency had something to hide.

It turned out that it did and this led to us being engaged to carry out audits of all the brand’s key marketing agencies and a number of direct suppliers of other marketing services encompassing creative, sales promotion, PR, brand, design, print and promotional risk management disciplines.

In every instance, we found out that the verbal commercial agreements in place had not been implemented in the way that the brand expected, which in turn led to us identifying a substantial six-figure sum in overcharges of which two thirds was returned promptly; the balance, we understand, is subject to legal process.

As a result of hiring Financial Progression, this large FMCG saw a cash ROI in excess of 10 times, gained confidence that it was not paying more than agreed and was able to put robust, written contracts in place with all of its key marketing agencies.

Share this: