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Auditors 'fuel paranoia'

News, 31 August 2016

SINGAPORE: The head of a large media buying agency has taken third party auditors to task, accusing them of a lack of knowledge and a short-sighted approach that has resulted in growing distrust between clients and agencies.

Ashutosh Srivastava, Mindshare's chairman and CEO for AMEA, Russia and emerging markets, laid the blame for the erosion of trust between client and agency on the role of auditors in the pitch process.

"They ask questions such as: Are you sure about what you're getting? Are you really equipped with the latest knowledge to ensure you get the right agency? You could make mistakes that cost you millions of dollars... They fuel paranoia," Srivastava told Mumbrella Asia.

He added that this has only been made possible by a "bizarre" pitch process which focuses simply on price of media and price of service rather than the many other things a media agency can now bring to the table.

"Auditors don't have the working knowledge of what can be done with a media agency," Srivastava said. "And some media agencies are faster than others at this time of change, so in that sense the business is not commoditised.

"Because of data and the tools and techniques we have, we are in a much better position than in any time in history to attribute cause and effect," he added.

Srivastava said he expected that in the near future the media agency business model would move to a more outcome-based approach. "You don't procure outcome-based service providers based on cost of input and cost of media inventory," he observed.

Srivastava also defended agencies' media-buying practices and their role as the principal acting on behalf of the client.

"If I am the principal, then what does it matter to you on what terms I operate with the media owner, and at what price I buy?" he asked.

"If procurement people and auditors want to drive media in the commodity business direction, they have live with the rules of that business.

"But if they want to hire an agency as a consultant to work with them and look after their interests, then don't treat them as a principal where the value they are getting is 20 times what you are paying them and expect them to survive."

Data sourced from Mumbrella Asia; additional content by Warc staff