Mediacom audit: Audience misreporting may have been because staff wanted good client reviews, says CEO

Pejic

The motivation for Mediacom staff who faked post-campaign reports appears to have simply been to get good reviews from clients, as the agency did not stand to gain financially, the company has said.

The practice entailed some staff in the Sydney office reducing client agreed audience targets for TV spots they had bought for Foxtel, Yum! Brands and IAG to make it look like they had hit targets.

TV schedules are generally measured on an agreed level of TARPs – target audience ratings points – a technical terms which refers to the percentage of people in a certain demographic who saw the ad. In effect, clients thought they had reached more people than they really had with their campaigns.

Whilst Mediacom and GroupM deny they financially gained from the forgeries, both Yum! Brands and IAG have told Mumbrella they are in discussions about compensation for what has happened, claiming it has had an impact on their business.

Mediacom’s parent company GroupM defended the decision to limit the scope of an audit by external investigators to just two years as “ commercial reality”, despite chairman John Steedman admitting “it is a possibility” it had been going on longer.

Steedman added: “Obviously from a commercial perspective you could go back 15 years but the problem is we would have to employ EY for a very long period of time.

“Foxtel was only in here from 2013 anyway and IAG was 2011.”

Steedman

The audit by EY also uncovered three other unnamed Mediacom clients with post campaign TV reports outside GroupM’s standard of accuracy, although the agency claims these fell into a “rational or accidental” category rather than deliberate misreporting. It added the clients had accepted those findings.

Mediacom CEO Mark Pejic strenuously denied the agency group, or any of its employees, had received financial gain from the practice, stating: “There is absolutely no financial gain for anyone at any GroupM company.”

However Nikki Lawson, chief marketing officer for Yum! Brands (owners of KFC), told Mumbrella she believed it had been disadvantaged by what had happened.

“We feel we have been disadvantaged,” she said. “We’re working with Mediacom on what compensation is appropriate. You can’t say we weren’t disadvantaged at all.”

Lawson declined to reveal the level of compensation Yum was looking for, but elaborated on the claim saying: “I don’t think GroupM has benefitted either. But by reporting the wrong information it has impacted what follow ups we do with media owners and what discussions we have.”

Sometimes TV networks give free advertising or “makegoods” to an advertiser when a promised audience has not been achieved.

In depth:

• Overview: Mediacom’s admissions
• GroupM’s value banks admissions and what they mean
• Marketers seek compensation over misreporting as IAG mulls review
• How GroupM is tightening its practices

She pointed out that Mediacom may have even have suffered if the result of the misreporting was that Yum did not spend its money as well as it could have done. “The way they are bonused with us is on sales results. For them to make us make bad business decisions would not be to their advantage at all.”

IAG’s head of marketing Jane Merrick also confirmed the insurance provider is talking to the agency about compensation.

GroupM is thought to have already spent substantial sums of money funding both the EY audit, plus a separate audit for Foxtel conducted by auditor PWC.

Pejic said the misreporting was limited to one trading team seated close together within the agency, and said 12 staff had departed the agency over it.

“In the discovery process, early on, we obviously asked a lot of questions of our staff and as a result a number of people were terminated,” he said.

“Throughout this process there were 12 people who have left this company in one way or the other as a result of this practice.”

Asked why staff would have taken these actions Pejic admitted he did not know, adding: “Nothing was available to them to gain from a financial aspect. Thinking about whether they were financially rewarded for the actions they took? Absolutely not.

“We don’t reward on individual client performance. We don’t reward on whether they hit their strike rates or whether their post analysis met the client expectation.

“I think it comes down to misbehaviour and shortcuts would be another plausible answer.

“When we asked them, and we obviously spoke to our staff, ‘we didn’t want to let the client down’ was a common response.”

Challenged on whether promotion would be an obvious motivator Pejic conceded: “I think it comes down to the root of the person’s behaviour and whether they think it reflect positively on them to get good reviews.

“It could be a motivator. It is so foreign to think that people would act in this way.”

Yum! Brands’ Lawson said she was surprised by the revelations as the staff were “good people” but added “I put it down to wanting to do better for the client”.

Pejic said that in the wake of the revelations of misreporting processes had been overhauled, making it impossible for junior traders to distort campaign results.

“Now if a buyer wants to gain access to that post campaign result, in any way shape or form, they will have to request it from the compliance team who will then ask the agency head to approve the request,” he said. “That stops any form of manipulation post the campaign.

“That is effective immediately.”

Steedman also defended the decision to only look at television misreporting and not other media stating: “Have clients raised concerns about other areas? The answer is no.”

Nic Christensen and Alex Hayes