U.S. Media Buying Probe May Ensnare Marketers

Ever since former Mediacom CEO, Jon Mandel, publicly alleged four years ago at a forum held by the Association of National Advertisers that media buying agencies were engaged in non-transparent behaviors in order to retain discounts and rebates that belonged to advertisers, investigations into such practices have not receded.

The U.S. Department of Justice investigation, which has been underway for nearly a year, just recently led to the subpoena of records from one major advertiser.

Until now, attention within the industry has focused on behaviors among media buying agencies, real or imagined, but today’s article in AdAge adds a cautionary warning to marketers:  some of you may want to lawyer up.

Why?

If investigators can prove any brand-side marketers approved of, encouraged or willfully ignored misconduct by their media agencies, they could be facing criminal charges. And someone on the agency side may strike a plea deal in exchange for implicating a client.

According to the ANA’s website, the purpose of its recently released whitepaper, Media Buying 2018 – Transparency at a Crossroads , co-developed with legal firm ReedSmith, is to “provide a historical perspective of the transparency issues and to outline the options that advertisers have to cooperate or not cooperate with the FBI.”

If you’re involved with media buying, either client or agency side, you may want to seek advice from your own counsel – both corporate and personal.

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams in the areas of agency relationship management, agency search, process audits, contract and SOW development and audits, and other marketing operations related areas. For more information, please visit our website.

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Five Major Holding Companies Cleared in DOJ Investigation

According to AdAge and Adweek, the Department of Justice closed its two year investigation into video production and post-production practices against five of the largest ad agency holding companies – IPG, MDC Partners, Omnicom, Publicis and WPP.

Apparently the DOJ has declined to comment on the status of its investigation which focused on whether ad agencies were awarding production business to their in-house departments over third-party providers in a ‘rigged bidding’ process.

The DOJ is still investigating media buying practices among the agencies, driven by the ANA K2 report citing serious problems that went against best practices and agency-client contracts.

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Agency Searches For Project Work On The Rise

Over the past 18-months, we’ve seen a definite increase in the number of clients asking us to facilitate agency searches for project work.

Some clients are looking to expand their agency roster brain trust, while others want to test-drive a relationship before committing to further involvement.

While the reasons are varied, there are best practices as to how these types of searches should be implemented and here are some helpful tips:

  • Clarity – The project scope, agency selection criteria, and search plan need to be clear, in written format and vetted internally. And have the proposed master services agreement, which clearly defines the relationship and terms, ready and available to share with participating agencies.
  • Brevity – The search should have a short completion cycle, no more than 4-6 weeks, and limit the number of agencies under consideration to 6 when developing the agency slate.
  • Sans RFI – Proper pre-vetting should make a full blown RFI unnecessary and for a project…good luck finding an agency wanting to complete your 30+ questions!
  • Be Social – Select 3-4 agencies from your initial roster and meet with them – in person, not by phone! Go to their offices. Chemistry and cultural alignment is key to success.
  • Spec Work?!  – Remember that this is a project, not an AOR search. Spec work is time-consuming and expensive for participating agencies, so unless you plan to pay them for it, don’t ask for it.
  • Ban FOMO – People always find an excuse as to why they need to be involved, but this is like taking your friends and family to your dates…and it actually doesn’t end well in the long run. Keep the agency selection team as small as you can make it, keeping it to those responsible for the project strategy and relationship management. If you’re an experienced and successful marketer, then you know how to make resourcing decisions. Still getting pressured? Use a RACI Matrix to manage your internal constituents’ involvement.

If you have questions or insights on conducting a project agency search, we’d love to hear from you.

 

Bajkowski + Partners LLC is a leading consultancy providing services to marketing and procurement teams in the areas of agency relationship management, agency search, process audits, contract and SOW development and audits, and a number of other marketing resource and marketing operations related areas. For more information, please visit our website.

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How to Prevent Fraud in Production Bidding

Advice from the DOJ

Back in 2002, the U.S. Department of Justice Antitrust Division secured convictions that led to prison time for six executives in the Grey Worldwide / Color Wheel bid-rigging scheme. Rebecca Meiklejohn, a DOJ litigator, led the case which involved kickbacks and bid-rigging for production work on two of Grey’s largest accounts, Procter & Gamble Co. and Brown & Williamson Tobacco Corp. (Note:  Grey was not the only agency that’s had isolated cases of misconduct by production staff.)

While speaking at the Association of National Advertisers’ Agency Financial Management conference back in 2005, Meiklejohn stated that it tends to be individuals within an agency that perpetrate these production related frauds despite any policies and best practices that agencies have in place. At the time, Meiklejohn recommended advertisers and their agencies require and enforce the following procedures to prevent procurement fraud:

  1. Competitive Bidding – all bids must be secured in writing with date stamp and prior to submitting bids to the client
  2. Conflict of Interest Policies – these need to be well defined and prohibit agencies from accepting any gratuities from suppliers
  3. Paper Trail – thorough production files must be maintained and include all original as well as revised bids and client authorizations, and all with date stamps
  4. Checks and Balances – agencies must have separate authority for awarding contracts from those approving supplier invoices, and clients must beware of telltale signs of improprieties, such as faxes without date stamps
Production Bid Management Challenges in the Digital Age

At Bajkowski + Partners, we’ve performed numerous process audits for clients that have included reviews of production management practices and we still uncover deficiencies within both the clients and their agencies. While we have not uncovered situations that indicate any intentional wrongdoing, we have seen several new production bid management challenges arise since production management went digital.

At the agencies, we typically find the following issues during a process and contract compliance audit:Continue reading

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