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UPDATE – Media Trading Practices Under FBI Scrutiny

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According to Ad Age, the FBI has turned to the Association of National Advertisers (ANA) and its members for cooperation with an ongoing “criminal investigation into media buying practices” of service providers.

There are a number of global media buying agencies caught up in the probe, but no word on larger local players being part of the investigation.

The FBI investigation was likely the result of the ANA’s own investigation amid complaints from members about transparency and contract compliance issues on the part of media buyers and the media suppliers.

The ANA probe resulted in the issuance of a K2 report in 2016 which supported member claims of some agencies withholding cash rebates from clients as well as other transparency issues, and a new, highly detailed, media contract template as well as best practices. While media buying practices and contract terms can vary by country, problems identified in the K2 report were not limited to international markets.

ANA members are encouraged to contact the organization’s lead counsel, Reed Smith, which serves as interface between the ANA and FBI, if they believe their media agency relationships warrant further scrutiny.

There is no indication at this time as to when the FBI investigation will be completed.

 

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams including building in-house media planning and programmatic as well as in-house creative and production operations. For more information, please visit our website.

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Agency Search: MedStar Health Selects Doner as AOR

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From AdAge by on : “MedStar Health, a healthcare provider in the Maryland and D.C. region, has picked MDC Partners’ Doner as its agency of record. The agency will oversee strategy, creative and production for the provider, which has 10 hospitals, a home health agency and more than 300 urgent care, physician practice and other care sites. The company previously worked with AB&C Creative Intelligence. Bajkowski & Partners led the search.”

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State Sales Tax Coming to Your Favorite eTailer

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According to eMarketer, the US Supreme Court struck down a 26 year old law last week that permitted pure play online retailers to avoid charging sales tax if they weren’t physically operating from that state.

With online sales forecast to grow six points from 10% of all retail sales to 16% by yearend, or more than $525 billion in sales, traditional retailers have felt at a competitive disadvantage against etailers for the past two decades.

On the flip side, online merchants have argued that having to manage tax collection for 45 states would be unduly burdensome for small etailers.

Will this move truly level the playing field and drive people back to bricks and mortar shopping for purchases they’ve shifted to online? Probably not.

For more details on the court’s ruling and implications, visit eMarketer.

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Media Trading Practices Under FBI Scrutiny

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According to Campaign, the FBI may be reviewing media trading and transparency practices in the US, and focusing on specific media companies and any role played by executives.

The article reports that neither the FBI nor DoJ will confirm or deny any activity around the matter.

However, it’s been a widely held belief that some action by the DoJ would take eventually place after the Association of National Advertisers (ANA) and its third party auditors issued its K2 Report (June 2016) claiming that media agencies in the US were, to varying degrees, pocketing media rebates and lacked sufficient transparency in their media buying practices.

According to an AdAge article published on the heels of the report’s release, K2 “cited 150 independent sources and ‘substantial evidence’ from 41 sources who reported direct knowledge of rebate deals occurring in the U.S. market. Of those sources, 34 indicated rebates were not disclosed or returned to advertisers.”

The report, however, does not name any agencies or media vendors, and according to the ANA, five of the six major holding companies at the time refused to make any of their executives available for interviews by its auditors.

The 4A’s leadership and some holding companies rebuked the report, citing a “lack of transparency” in the ANA’s investigative process as well as the report itself.

It’s been two years since the K2 report was released, yet according to a presentation by McKinsey at the ANA’s recent Financial Management Conference in Hollywood, Florida, the problems with media transparency and pocketing rebates is still pervasive despite a push by advertisers for greater transparency into the process.

Perhaps this is why larger advertisers are taking part or all of their media investment management in-house.

 

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams including building in-house media planning and programmatic as well as in-house creative and production operations.

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