Mitigating the Financial Pain Points of the Media Transaction Process What global finance and media executives need to consider when evaluating the right solution to meet their needs.
Digital (and programmatic) media buying continues to revolutionize advertising. Computerized buying, which generates vast amounts of campaign data, offers the ability to better target specific audiences, provides real-time optimization and helps manage media CPM (cost-per-thousand) rates on a global scale. With the promise of more precise targeting and the ability to glean better audience insights, global media buying agencies are fiercely working to automate their campaign and production systems to bring this added value to their clients. While there are several media buying solutions on the market, they were not all designed from the ground up to address the financial needs of agency executives. In fact, if you ask a finance or media executive about their greatest challenges or what keeps them up at night you may need to pull up a chair as the list can be long, including their inability to: easily reconcile campaign data against contracts scale operations without adding staff view revenues, gross margins and costs in real-time minimize campaign discrepancies to recover ad spend reduce disputes on costs and invoices close books in less time trust their reporting and get a handle on governance So what do global finance and media executives need to consider when evaluating the right solution to meet their needs? Through a series of what-if scenarios, this paper examines the key attributes they need to consider when evaluating media buying and operating solutions to ensure they make the right choice to mitigate the financial pain points of the media transaction process. What if you could easily automate the media financial reconciliation process? Finance and media executives understand that manual processes and antiquated technologies can impede their ability to scale global media buying capabilities. They need an efficient solution that can automate the financial reconciliation process to keep up with the ever-growing number of real-time buying platforms without adding more staff. During the evaluation process, it s important to consider a digital finance automation solution that can easily connect with the existing infrastructure without reinventing the wheel or requiring custom software development that wastes time and increases costs. A viable solution should also be able to process campaign delivery data across a variety of ad server vendors, publishers and trading platforms. 2 FUSIONSEVEN Mitigating the Financial Pain Points of the Media Transaction Process www.fusionseven.com
An automated platform will speed the reconciliation process, but it is important to find one with a sophisticated clearing engine that enables agencies to calculate correct invoice amounts, based on varying contract terms, with the ability to set an unlimited number of rules while processing billions of transactions. This is critical as programmatic advertising has the ability to generate billions of events every month. With these capabilities, agencies can deliver clean, accurate reports to clients with the ability to delineate specific, verifiable results. By embracing an end-to-end, automated solution, finance and media executive are able to decrease manual processes, increase control across the entire agency and leverage the expertise of their staff for more strategic endeavors. The ability to scale the number of contracts the agency can manage with greater efficiency provides a better return on clients media investment, which can either be shared directly with clients or used for additional media buys. See Figure A. What if you had the ability to evaluate gross margins, revenues and costs on a daily basis? A financial platform that offers the ability to access and process data in real-time will not only inform decision-making; in many cases, it will transform the entire media buying process because real-time processing leads to real-time interpretation. Choosing a platform that gives real-time visibility into financial data all in one place increases efficiency and helps justify spend decisions. It also improves an agency s ability to manage vendor payments downstream while accelerating client collections upstream to reduce float. Reducing the amount of float gives a CFO the ability to invest funds elsewhere, while reducing financial risk. 1 FIGURE A The data-driven complexities of media buying are plagued by a broken system that relies on Excel to provide financial clarity and efficiency. 7 Bill CRM I/O 2 Media Buy 3 6 Report Inventory & Deliver 5 Reconcile, Clear & Settle 4 3 FUSIONSEVEN Mitigating the Financial Pain Points of the Media Transaction Process www.fusionseven.com
FIGURE B A platform that offers real-time access and reports results across multiple currencies gives finance and media executives a centralized, holistic view of their business. Financial and Performance Summary Impres s ions C licks C onvers ions Total C ost R evenue 4,765,285,047 690,071 103,751 $5,343,767.25 $7,614,715.33 Impressions C licks C onversions C TR Total C ost R evenue Margin % 700M 600M 500M 150K Impressions C licks C onversions C TR Total C ost R evenue Margin % 400M 100K 300M Impressions C licks 200M 50K 100M 0M M ar 15 A pr 15 M ay 15 Jun 15 Jul 15 A ug 15 S ep 15 O ct 15 Nov 15 D ec 15 Jan 16 0K A dvertiser Impressions C licks C onversions C TR Total C ost R evenue Margin % Top 5 A dvertisers (Impressions ) C hateauville 692,697,028 179,863 92,545 0.03 % $750,226.42 $1,094,507.74 40.45 % F 7 3,281,741,326 182,289 9,584 0.01 % $3,042,656.61 $4,447,458.94 40.41 % Fusia Cocoa Q uintax Seven Safari 697,063,027 15,090,064 78,693,602 299,623 6,091 22,205 0 0 1,622 0.03 % 0.02 % 0.01 % $1,430,855.77 $25,775.77 $94,252.68 $1,896,493.61 $37,902.33 $138,352.71 31.35 % 30.87 % 32.98 % Grand Total 4,765,285,047 690,071 103,751 0.02 % $5,343,767.25 $7,614,715.33 35.66 % 15% 0% Impressions F 7 Fusia Cocoa 15% C hateauville Seven Safari Q uintax 69% Global agencies also operate in multiple countries with different currencies, so a platform that offers real-time access and reports results across multiple currencies gives finance and media executives a centralized, holistic view of their business. See Figure B. What if you could reduce discrepancies to near zero? Solving this key challenge might actually help with the future planning of media campaigns. While that might sound lofty, choosing a platform that allows agencies to automatically verify and reconcile reporting data against contracts to meet obligations with various ad server vendors, publishers and buying platforms will clearly produce campaigns that generate better returns. See Figure C. Despite best efforts, discrepancies are still a big issue for advertisers and publishers. The issue stems from multiple disparate advertising platforms statistics. Typically, discrepancies of up to 10 percent can be acceptable; however, at times they can reach 20-30 percent and more. There are many different reasons why discrepancies occur. For example, counting methodologies can differ between platforms, as each party can potentially count an impression at a slightly different point in the delivery 4 FUSIONSEVEN Mitigating the Financial Pain Points of the Media Transaction Process www.fusionseven.com
FIGURE C Being able to sync data across all media channels to reduce discrepancies helps agencies provide accurate reporting. BEFORE: Without using a Media Financial Platform Collect Media Transaction Data From Vendors After the Fact 60 120 DAYS Run Campaign I/O Start and End 30 Day Campaign AD NETWORKS & PUBLISHERS REAL-TIME EXCHANGES DSP, SSP DISPLAY MOBILE SEARCH MOBILE & TV BASE & 3rd PARTY AD SERVERS Uncover 10 30% loss due to discrepancies Negotiate make good and/or refund & deliver additional impressions to fulfill contract Results in lost revenue and time, lower campaign ROI and performance AFTER: Using a Media Financial Platform Collect Media Transaction Data From Vendors in Real-Time During Campaign 30 DAYS Run Campaign I/O Start and End 30 Day Campaign AD NETWORKS & PUBLISHERS REAL-TIME EXCHANGES DSP, SSP DISPLAY MOBILE SEARCH MOBILE & TV BASE & 3rd PARTY AD SERVERS Reduce discrepancies 80 100% by identifying and resolving issues in-flight Results in accurate reconciliation, higher campaign ROI and accurate accounting Proprietary Clearing Engine of an ad (i.e., publishers can count impressions at the time the ad request is sent, while advertisers can count an impression when the creative/ad is delivered.) It is common practice for discrepancies to be uncovered after the campaign is over by reconciling vendor invoices. At this point the campaign impressions have already been delivered, and if discrepancies exist, the only way to solve the issue is to deliver make good impressions, refund the difference or issue credit towards future delivery. This results in decreased campaign ROI and performance, in addition to the excessive hours spent to correct. The alternative is to insert a digital media financial platform in your process. When inserted into the campaign delivery process, a digital finance automation platform helps calculate true costs on a realtime basis. It has the ability to catch and 5 FUSIONSEVEN Mitigating the Financial Pain Points of the Media Transaction Process www.fusionseven.com
FIGURE D Finance executives and media buyers need an efficient system that easily reconciles, clears and settles campaign data against contracts to scale operations and provide real-time financial insight to reduce disputes and close books in less time. 6 7 Bill Report 5 CRM 1 Reconcile, Clear & Settle I/O 2 Media Buy Inventory & Deliver 4 3 Channels & Platforms CAMPAIGN FINANCIAL MANAGEMENT & INSIGHT Proprietary Clearing Engine Campaign I/O & Rules Data Collection Data Processing Self-Service UI Contract Management Analytics/Reconciliation 5 Business Intelligence Proprietary Rules Engine OUTPUTS ERP/Billing Systems Real-Time Reporting Business Intelligence resolve discrepancies in flight before they escalate into make good obligations that delay financial processing and require the agency to float more cash. In fact, solutions that provide this type of end-to-end automation can help executives realize a drastic reduction in campaign discrepancies by leveraging high performance rules applied by the technology often reducing discrepancies up to a whopping 80 percent 1. Being able to sync data across all media channels to reduce discrepancies helps agencies provide accurate reporting. What if you could trust your reporting and close your books in 24 hours instead of 24 days? Agency executives often find themselves in the hot seat when it comes to reporting campaign financials. The programmatic advertising boom has raised expectations 6 FUSIONSEVEN Mitigating the Financial Pain Points of the Media Transaction Process www.fusionseven.com
among marketers in terms of the speed and accuracy of the reports they receive. Marketers want reports to be unfailingly reliable, and the 10 percent contract variance that used to be the industry norm is no longer valid in a digital world. There s a huge opportunity for agencies to gain a competitive advantage by automating their data collection, financial reconciliation and invoicing processes with the right solution that delivers a best practices approach. In evaluating solutions, it s important to find one that easily reconciles contracts, minimizes discrepancies, and improves efficiency to put the agency ahead of the curve and minimize the risk of having to re-state financials. This instills greater trust and loyalty with the client even beyond the reporting itself. The opportunity cost for CFOs in not adopting a solution is high. The overall efficiency and flexibility of a trusted endto-end financial solution can provide the ability for CFOs to reduce the month-end clearing and reconciliation reporting to less than a day. CFOs should also evaluate the accuracy of calculations and whether they can be used for audit compliance. Calculations should guarantee accuracy, so auditing compliance can be streamlined. Searching for the optimal financial solution to automate media buying is obviously a decision with wide-ranging consequences for finance and media executives. But industry demands dictate that it s time to replace the old with the new. The first step toward discovering how to make the media buying ecosystem more efficient is for agencies to choose the right media finance automation solution to provide greater efficiency with the ability to scale to meet demand. Perhaps when more agencies adopt the right financial platform for their media buying, no one will need to pull up a chair to ask those in charge what challenges they face. Endnotes 1 Based on actual FusionSeven customer results. The Risk of Not Automating If a client doesn t ask you to make a change to your financial processes, then why should you? Unfortunately, if a client is asking you to make a change, it s probably too late and you ll likely lose them as a client. Clients want to work with agencies that are industry thought leaders capable of staying ahead of new technologies to meet their needs. That s a hard sell if your agency s financial prowess revolves around Excel spreadsheets. You might as well be using an adding machine and a slide rule. Finance and media executives, who manage millions of dollars on behalf of their clients, need a media finance automation solution that provides data transparency, improves efficiency and delivers greater returns on their clients advertising investment. In our digital age, there s no excuse for a discrepancy. And even the ability to reduce one error can make the difference between a profitable campaign and one that loses money. In fact, for publicly traded companies, it s an imperative to have the right media finance automation solution to provide accurate reporting and reduce governance risk. 7 FUSIONSEVEN Mitigating the Financial Pain Points of the Media Transaction Process www.fusionseven.com
About FusionSeven FusionSeven is a media finance automation company that offers a SaaS platform to automate the media buying ecosystem. The platform provides an end-to-end solution that delivers greater data transparency with the ability to apply rules that help easily reconcile contracts, deliver clean invoices and reduce float. It improves overall efficiency and flexibility with the ability to help CFOs close their month-end reporting in as little as a day. Ultimately, Fusion Seven offers agencies the ability to deliver greater returns on their clients media investment. With offices in New York and San Francisco, the company s high performance rules engine supports an agile platform that provides a highly scalable financial technology solution operating across 24 countries and supporting 150 currencies. For More Information Contact FusionSeven CRO Michael Jolly at mjolly@fusionseven.com, who can share more detail on how you can begin the journey of automating your financial processes to realize greater returns on your media buying. Copyright 2016. FusionSeven, Inc. All rights reserved.