A conversation with Dan Tsang, director of internal audit at Expedia

In this digital age online marketing activities, including e-mail marketing, search engine advertising, and social media are among the most important ways to connect with customers and promote products and services. Such activities also come with strategic and reputational risks. Forward-thinking companies are conducting a thorough internal audit of online marketing efforts to ensure that they are getting what they pay for and managing the risks.

We recently spoke to Dan Tsang, director of internal audit of Expedia, about why companies should audit the digital marketing program, how to get started on such an audit, and what to look for regarding key risks.

"Most companies nowadays, regardless of if they are a technology company or not, have some kind of online presence," says Tsang. "The driver for conducting an online marketing audit is really based on the budget, size, and scale of its footprint in the online space." Just because a company doesn't sell directly over the Internet doesn't mean they aren't doing plenty of online marketing that needs to be assessed, he says. Online marketing is one of those areas that should be in a company's internal audit rotation, adds Tsang.

"For us being able to attract customers online is one of the key drivers to increasing our bookings, as well as our overall transactions, so it's very important for us," says Tsang. He says a significant portion of the company's spending is in online marketing. "For us its risk, since we are relying on a number of online channels, like search providers and social media channels, to identify potential customers and bring them onto our site."

Another risk that arises with online marketing is third-party risk. "Anytime you are dealing with marketing, you are dealing with a third party and there's going to be a data transfer request ... and we are receiving data from those sites on how effective the campaigns were, and how much money we spent in regions we wanted to target," says Tsang. Anytime there are third parties involved with business and cash flow that will raise the risk profile, he says.

To get started, Tsang advises a review of online marketing spending to determine where the bigger expenditures are. He says marketing is an area that audit shops don't spend as much time on, even though it can represent a large budget item. Next, the internal audit categorizes the spending by type, such as search engine marketing (SEM) and keyword purchases. An audit should ensure that the ads were provided, links went to the right Web pages, the volume of clicks was tracked properly, and the campaign was billed properly. "We do a soup-to-nuts review of how the SEM process would work from the setting of the budget, the regions selected, and how effective it was."

LISTEN TO THE PODCAST

Length: 25 min. 13 sec.
size: 11.5 MB