IAG joins Foxtel and KFC in questions over whether Mediacom overcharged advertisers

IAGIAG insurance has joined the list of advertisers asking questions of whether their media agency Mediacom overcharged for TV advertising bought on their behalf

The insurance company, which has brands including NRMA and SIO, is the third to confirm it is examining whether the TV audience numbers reported to it by Australia’s second largest media agency were inflated.

Mediacom spends a reported $30m on behalf of IAG. On Friday Foxtel and Yum Restaurants, whose brands include KFC and Pizza Hut, both confirmed they believed they had been given inflated claims on the TV audiences Mediacom had delivered.

Mediacom has brought in auditors Ernst and Young to carry out an independent audit of its procedures. Mediacom has insisted that the problems are limited to a small number of clients serviced from its Sydney office.

Today in a brief statement, IAG confirmed to Mumbrella that it was involved in the issue too.  When asked whether the advertiser was aware of the discrepancies IAG Insurance head of marketing Jane Merrick told Mumbrella: “This is a matter for Mediacom. We will be working closely with their management on this issue.”

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.

Mark Peijic

This morning Pejic declined to be drawn on IAG’s involvement, reiterating it is a “small group of clients” impacted by the issues, and would not be drawn on whether it was the same staff working on the IAG account as for Foxtel and Yum brands.

Pejic told Mumbrella: “We had our internal auditors in all last week and we are engaging an external audit firm who will work on behalf of us and our clients to ensure that we are running to global best practice.”

Mumbrella understands the staff member who was dismissed over the incident was with Mediacom since 2013, but Pejic would not be drawn on how long the misreporting had been occurring before it was uncovered.

There is no suggestion that 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 confirmed Ernst and Young had been called in to handle the external audit, adding: “We are working through the audit process to determine the extent and we are waiting for that audit to come through.”

Pejic said the external audit could take “a number of weeks” to complete, adding: “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.

“As soon as I learnt about this issue I have dealt with it. We are working through and I will communicate openly and transparently.”

Nic Christensen and Steve Jones

If you have information about this story you can contact deputy editor Nic Christensen 

Any comments on this post may be subject to delay while undergoing careful legal consideration.


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