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Success Stories:
Contra Revenue Decrease

STORY OF SAVES #1

ALL ASPECTS OF THE MEDIA TRUE UP

The full story

 

The marketer had put its LatAm media account into review. In order to have a full view of the agency's balance sheet, the marketer required a review and assessment of the agency billings. DG2 conducted a contract compliance review in 10+ markets. The overarching goal was to assess the performance of the agency in markets abroad, and steward the RFP and AOR exit process in a structured manner.

 

The project focused on 4 aspects of the agency billings: Media Rebates, Un-cleared Media, A/R, Cash Flow. 

DG2 performed the analysis in 4 weeks time, and continued to work with the agency and the marketer to align on all findings and resolve all issues.

 

Strong performance

DG2 gathered the billings and payments information from existing systems and job jackets. Based on a close and collaborative analysis of the service agreements and other agreements in place, all transactions were reviewed for accuracy and compliance with the contracts.

DG2 detected reconciliation issues, that had occurred repeatedly throughout the years in various markets. The Agency had not refunded $9.6M in marketer excess payments brought about by holding to uncleared media funds and accounts receivable credits, media rebates earned on marketers' buys and accrual of interest on working capital.

DG2 VALUE: $9.6M

Production Payments
Billing Prior to Services Rendered
Timing of Billing

STORY OF SAVES #2

CLARITY AND PROPERNESS

Main facts

 

With an history of misalignment between the brands and the agencies in terms of recurrent billing of out of pocket expenses, the marketer needed a thorough review to gain clarity and transparency. DG2 performed a full audit of the expenses that had been invoiced over a 3-year period. 100% of the items needed to be verified.

 

The project focused on 1 key category of the agency billings: Travel And Entertainment.

Project was completed in 4 weeks time, allowing the agency to collect required documentation for review.

 

Resolution

For a 3-year period, Agency had invoiced the Marketer $1M/year covering estimated T&E costs, $3M in total. Based on the Client-Marketer Agreement, the Agency was not required to provide the Marketer with any T&E back-up documents for its monthly billings.

With the full review of the expenses, DG2 detected the Agency had traveled via First Class/Business Class frequently, booked stays at 4 and 5-Star Hotels;  charged for air upgrades;  exceeded the Client Per Diem; and retained client assets from shoots. All these actions were in non-compliance with the Travel and Reimbursement guidelines. Having the verified and organized data in hand, marketer and agency were able to resolve and adjust.   

DG2 VALUE: $1.4M

STORY OF SAVES #3

DISCLOSURE OF REVENUE STREAMS

The highlights of this project

The marketer engaged DG2 to perform a full review and assessment of the agency billings. As with every billing review, the DG2 analysis goes beyond the agency invoices to reconcile actual costs of 3rd and 4th party suppliers. 

 

The project was centered on solving one key concern: Mark-ups on agency pass-through costs that were billed through the agency's affiliate.

 

Conclusion

DG2 gather the billings and payments information. Based on a close and collaborative analysis of the service agreements and other agreements in place, all transactions were reviewed for accuracy and compliance with the contracts in place.

DG2 observed the Agency had realized $1.1M in incremental annual fees based on applying a profit mark-up on agency pass-through costs that were billed through agency's affiliates.

DG2 VALUE: $1.1M

STORY OF SAVES #4

PROFITABILITY AND SUSTAINABILITY OF CLIENT-AGENCY PARTNERSHIPS

The focal point

The Marketer engaged DG2 to perform agreed-upon marketer-agency procedures to review and validate the agency’s P&L. The marketer-agency agreement established an agency compensation cap at 13.5% agency profit margin on the marketer's account. For the 3-year audit period, the Agency had self-reported a profit margin of 8.8% - 9.2%.

 

The project was centered on solving one key concern: Are fees paid in excess of profit margin cap?

 

Conclusion

DG2 secured and reviewed time sheets, payroll, benefit and overhead costs data. Instead of the self-reported 8.8% - 9.2% profit margin, DG2 observed the actual Agency profit margin was 28% - 32%, which resulted in a $6.1M client refund due to the Agency exceeding the annual profit cap.

DG2 VALUE: $6.1M

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