Mediacom CEO Mark Pejic: Says he has been ‘open and transparent’ with the clients affected
Australia’s second biggest media agency Mediacom is facing a major challenge to its reputation after it emerged that it had overcharged at least two clients by submitting inflated claims on the TV audiences its campaigns had delivered.
One member of staff has been fired, another suspended and Mumbrella understands a further 10 have resigned over the affair which involves its clients Foxtel and Yum Brands.
External auditors have been called in to the agency after the ‘reporting discrepancies’ were found in the reports on TV audiences submitted to the advertisers.
Foxtel – which said it uncovered the problem as part of its audit process – spends a reported $50m a year via the agency. Yum Brands spends a reported $44.5m a year on its KFC and Pizza Hut brands.
There is no suggestion that Mediacom CEO Mark Pejic was aware of the inflated claims before they came to light. Mumbrella also does not suggest that the inaccurate figures were intended to deliberately financially disadvantage the clients. Pejic told Mumbrella:
“We’ve identified reporting discrepancies relating to one distinct area, which is television ratings, in a small number of our Sydney based clients.
“This has resulted in one employee being dismissed and another suspended, pending a full investigation and a small number of resignations over the last week.”
Mediacom is the largest media agency in WPP’s GroupM, which is in turn Australia’s biggest media buying group.
Foxtel’s chief marketing officer Ed Smith told Mumbrella: “Foxtel, as a result of its audit processes has uncovered some issues at Mediacom that we are working through with Mediacom and GroupM.”
Smith declined to comment on Foxtel’s future relationship with the agency.
Nikki Lawson, CMO of Yum Brands, told Mumbrella she had been unaware of irregularities until Mediacom got in touch to reveal the problem.
Lawson also said she expects to hear more in the next two weeks. Asked if Yum would review its relationship with MediaCom, she said: “Things happen. Obviously we don’t know the extent of what’s happened yet, so we will wait and see what what it’s all about.”
AdNews reported earlier today there had been a series of departures from Mediacom last Friday when the issue came to light.
Among those understood to have resigned are Jane Henderson, head of implementation planning and investment along with a further 11 members of staff also understood to be gone.
Ashley Earnshaw, head of content and partnerships has told Mumbrella that his departure was unrelated to recent events.
Pejic did not give specifics on everyone who had left, but told Mumbrella the media agency had been open and honest with staff about the issue.
“The key thing is we identified the issue with regards to television ratings. How did we do that? Because we do spot checks in our business,” he said, while also confirming external auditors would be called in to review the accounts.
“I have been open and transparent, firstly with all of our people, and definitely the clients that have been affected. It is a small group of clients and we are working with them to rectify the issue and keeping them constantly updated,” he said.
“In addition an external audit firm will also work on behalf of our clients to ensure we are running to global best practice, which I am sure we are. We have already put new procedures in place to ensure this isolated incident doesn’t happen again.”
Pejic said he would be open and honest throughout the coming weeks and that he was confident it was isolated. “We are committed to being the most open and honest company in the industry,” he said.
“We took responsibility and moved very very fast. We did not sit on this and I am definitely using this as an opportunity to ensure that this area gets better very very quickly.”
Nic Christensen and Alex Hayes
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Updated: Amendments have been made to this article since Mediacom revealed the results of its audit.
The headline previously read “Thirteen staff depart Mediacom after overcharging clients KFC and Foxtel”. This has been altered to reflect GroupM’s contention that clients had not been overcharged for inventory.
The second paragraph previously stated: “One member of staff has been fired, another suspended and Mumbrella understands a further 11 have resigned over the affair which involves its clients Foxtel and Yum Brands.”
This has been altered to reflect the fact GroupM says 12 people have left the agency as a direct result of the incidents.