Top 10 USA media performance criteria for agency contracts
By Lisa Niemeyer
Lisa Niemeyer of Media Management Inc explores how the simple task of defining expectations goes a long way to protecting the productivity of your media dollars in the US market.
Lisa Niemeyer is Chief Client Officer at Media Management Inc.
One of the greatest trends for accountability to the Advertiser in the past decade has been the addition of defined Media KPIs to agency contracts. Whether or not you decide to tie media buy performance to agency compensation agreements, the simple task of defining the expectations goes a long way to protecting the productivity of your media dollars.
Let’s get specific
All you parents, aunts and uncles out there, think of it this way: you can’t just tell your teenager to clean her room. You have to tell her specifically how you define a clean room (no empty snack wrappers, clothes in a drawer or laundry basket, bed made, maybe vacuumed or dusted), and give her a deadline and consequences (before dinner or you cannot go to the sleepover). Same thing applies to media.
You don’t hire an agency to order your commercials. You could hire a few assistants in-house for paper shuffling, but you need so much more. What you hire an agency to do is project and deliver audiences in front of your commercials at the right time and right place, at good rates that mitigate inflation, to your brand safety and effectiveness specifications, and responsibly manage your large working cash flow.
Performance criteria applied
There are 3 questions answered in every media audit: delivery, efficiency, responsibility. The foundation for performance in these areas starts with the agency contract, and below is a list of Top 10 media performance criteria to consider including.
- Delivery of the media plan impressions per quarter or campaign. Best practice is +/- 5%.
- Delivery of the media plan daypart and/or weekly goals. Best practice is +/- 10%.
- Delivery of the media guarantee per deal/station/vendor (national TV, CTV, local TV, local radio). Best practice is 100% within the guarantee period, and to fully recover any shortfalls within 6-12 months depending on the medium. Some advertisers also choose to hold the agency accountable to quarterly delivery guidelines within longer-term guarantee periods to ensure proper communications impact for each campaign.
- Adherence to brand safety requirements and Do Not Air lists. Best practice is 99.5% of spend is compliant for TV and 95% for digital (and compensation sought for the remainder).
- Requirements for valid human impressions (CTV and Digital). Best practice is 99% valid traffic for CTV and digital (less than 1% fraud as verified by third-party measurement).
- Minimums for viewability and/or video completion rates (Digital and CTV). Best practice is to establish expectations by media and buy type (e.g. 80% viewability for direct, 70% viewability for programmatic display, 70% of videos completed to at least 50%).
- Media pricing delivered within expected range, whether defined as X% below marketplace averages or no more than X% above prior year. Best practice is to establish an audit baseline and require the position to be maintained or improved in subsequent years (e.g. -10% versus marketplace averages, or +2% versus prior year). It’s crucial to define this metric as actual or delivered pricing and not planned/estimated.
- Timely invoice reconciliations and payments. Best practice is within 90 days after activity month’s end (or sooner for network TV or local TV/radio). Many advertisers will focus only on turnaround of funds once agency is paid, and then are stuck with adjustment invoices and/or post-performance reports coming through up to a year after activity ran.
- Expectations for percent of spend guaranteed or pay upon delivery, for media channels with evolving advertiser accountability (e.g. local radio station-level guarantees, local TV credits for under delivery). Best practice is for 95% of spend to have audience guarantees.
- Expectations for percent of spend monitored/measured independently (CTV, Digital Video, and National TV). Best practice is to deploy an ad verification research tag on 94% or more of impressions in CTV and digital video and to cap spending on TV networks not measured by Nielsen. These requirements limit seller-reporting of performance which hampers accountability.
There may be additional process-oriented requirements such as reporting requirements or vendor order terms that an advertiser might document alongside KPIs in the agency contract to encourage or reinforce best practices in the media supply chain. All of the above will go a long way in making sure your investments are as productive as possible.
For more information on closing gaps in the media supply chain, read MMi’s article Keep your Media Audit from Becoming a Negotiation.
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