The Mediacom furore: the questions facing the industry
Today saw GroupM release details of the EY audit of Mediacom examining years of misreporting in its TV buying and also sees the group make fresh admissions about the use of so-called ‘value banks’ in Australia. Nic Christensen assesses the initial impact these revelations could have, not only on GroupM, but on the wider industry.
“I don’t understand it to be quite honest, there is no financial reward,” says John Steedman, chairman of GroupM, Australia’s biggest media buying agency group. “In my 40 years in the business, I was a buyer, and I have never seen this.”
As the industry learns the details the EY audit of Mediacom on what can be characterised as the deliberate faking of campaign reports for three multi-million dollar clients over at least two years, and the numerous revelations that have emerged in the wake of the discovery of this practice, one thing is clear: right now we are left with many more questions.
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Great summation Nic.
As you’re aware I have been one of the more vocal contributors to the debate today (and not using my pseudonym either, but my real name).
However, not all of my comments have been published.
I’m assuming this is for legal reasons?
Would you clarify please in order that any future comments I make on your excellent website are more tempered?
Many thanks,
Paddy Douneen
Hi Paddy,
Thanks for the feedback. And yes we’ve been moderating comments for reasons of defamation etc.
Cheers
Nic – Mumbrella
Will we see clients buying their media direct?
What do the publishers think about this as its them offering these value banked deals to lock in media spend?
This has been going for at least 30 years, maybe the introduction of auditors shut it down. In the mid eighties I discovered over reporting of 20 to 30% on a major national client by a large media team. The key figures involved decided it was better not to rock the boat and lose business over it. I left soon after.
This practice has been in place for years.
Silently – Media Companies would be celebrating that it has been exposed and they would be aiming to renegotiate and eliminate any form of Value Banks moving forward.
Agencies will be looking at each other trying to understand what extent each party benefited from these privately negotiated cash subsidies and importantly how will they fill the void moving forward !
Clients will be asking their agencies “what just happened” – although many senior clients know this has been occurring for years but could not find a reason to put aside differences and unite against agencies to stop the practice.
Finally – a few older retired agency folk (who have sold out or genuinely retired) will be laughing and counting their lucky stars they were not caught in their day.
It appears from what Mediacom and Faulkner have said is that the issue lies in falsifying the campaign objective in terms of ratings, reach, costs. CPM (or whichever metric is the clients focus), rather than the delivered ratings, reach, costs, CPM.
That is, Mediacom via E&Y and using Foxtel and Yum! as key audits, have (unless I have misunderstood) verified that the ‘delivery’ data was fine. The weakness was accepting the media agencies statement of what the campaign’s objective of ratings, reach, costs and CPM – which have been shown to be falsified.
In essence all the ‘heavy lifting’ of the audit has been done.
Surely then, checking that any audit or post-analysis has the CORRECT campaign objectives means that the results and calculations are correct.
As to Value Banks – a blight on our industry in my opinion. Fortunately they were not around when I was at a trading desk.
Read and comprehend Siri, whoever you are. We worked like dogs, built the business, made it successful, profitable and finally sold it. We worked on for one decade and 16 years respectively.
We were not “caught” as we did nothing wrong. Not one red cent went missing.
No, I’m not laughing. I’m bloody disgusted with the moral standards. I might be older than you, but I sleep straight in bed.
Got it now?
Alan – your point is noted respecting Merchant & Partners. I would not and could not question your old firm.
I only wish we could say the say for some others !
Like you I am disgusted at the moral standards and my other comments rest as printed.
Well said Alan.
There is a lot of obfuscation being thrown out there at the moment.
When someone gets caught out it is too easy to say that everyone is doing it or has done it.
This rather flippant posturing besmirches the names of people who made a success whilst maintaining their integrity.
DB