Volkswagen fourth major client to query Mediacom account
Volkswagen Australia has joined a band of blue chip clients of media agency Mediacom to say it is “reviewing” whether it has been overcharged for media space over reported irregularities on its TV reporting figures.
On Friday Mumbrella revealed external auditors have been brought in to look at accounts of major clients in Australia’s second biggest media agency including Foxtel, Yum Brands, whose brands include KFC and Pizza Hut, with insurer IAG emerging yesterday as the third client to be impacted.
This morning’s The Australian quotes Volkswagen Australia saying it is also “reviewing our accounts with Mediacom”, referring to the reporting on its campaign performance reports for television advertising, “in the light of the recent reports”.
Yesterday Mediacom CEO Mark Pejic confirmed the external audit, being conducted by Ernst and Young, would take “a number of weeks”. In today’s report GroupM chairman John Steedman says the “irregularities” are confined to a handful of clients of Mediacom Sydney that had been “ring-fenced” and did not extend to WPP’s other media agencies Maxus, Mindshare and MEC.On Friday, Mediacom’s CEO Mark Pejic said one member of staff has been fired and another suspended. It is also understood that as many as ten other staff members have resigned, although it is not alleged the staff resignations are due to any direct wrongdoing.
When asked by The Australian Steedman declined to comment on whether television airtime given to GroupM for free by television networks, known as “bonus airtime”, had been improperly used by Mediacom staff in their dealings with some advertisers.
Mumbrella does not suggest that the inaccurate figures were intended to deliberately financially disadvantage the clients.
Yesterday Mediacom CEO Pejic told Mumbrella: “We are working through the audit process to determine the extent and we are waiting for that audit to come through.
“I can’t speculate how long the audit period will take because I have not been in this situation before, so I am not sure.”
Updated 11:00am: Mediacom CEO Mark Pejic has confirmed to Mumbrella VW has been “asking questions of their business” following the other issues which have come to light, but insisted there was no evidence of similar irregularities on the Volkswagen account.
Updated 1:07pm: A Volkswagen spokesperson has confirmed the brand is undertaking a review with Mediacom “and will await the outcome of the review”.
“We have been in regular contact with Mediacom since the first reports and we are satisfied with the process we have undertaken to ensure their are no irregularities,” the spokesperson said.
Nic Christensen
If you have information about this story you can contact deputy editor Nic Christensen nic@focalattractions.com.au.
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It isn’t overcharging, it’s dodgey reporting. TV isn’t billed on delivery.
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@Pat, it IS overcharging if it is done to reach KPI thresholds that trigger extra payments to the agency
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Please debate from an objective viewpoint….
Are those additional free inventory due to good negotiation from the agency side and they are able to reap the benefits as a result? Client pay as they would have for those spots and it is not overcharging, but simply smart business.
OR
Are those free inventory savings suppose to be passed on directly to the client?
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@newsworthy – two words: Sarbanes Oxley. Look it up.
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There but by the grace of an auditor…
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Wouldn’t all MediaCom clients be asking if they are affected? I would have thought they were pretty silly if they weren’t asking…
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