Sometimes the last people to realise that something is going on are the very people to whom the thing in question is happening. Or to put it another way, no amount of sticking your fingers in your ears and running around singing a merry tune to drown out the unpleasant news can make the unpleasant news go away.<\/p>\n
So it was and is with the US ad industry\u2019s denial that anything untoward is happening (and has ever happened) between the media agencies and the media vendors that could possibly lead to the agencies using client budgets to benefit them (the agencies) as opposed to the advertiser. And then up popped Jon Mandel, ex CEO of Mediacom in the USA.<\/p>\n
Mandel\u2019s comments at the ANA event a couple of weeks ago have put the cat amongst the pigeons. The flapping has indeed generated something of a mighty wind, and you suspect that no amount of \u2018move along, there\u2019s nothing to see here\u2019 will work. Simply, now that one of America\u2019s own has stood up and said \u2018here\u2019s what\u2019s been going on\u2019 things will never be the same again.<\/p>\n
To make the point, this week ‘AdAge’ ran an online poll on Mandel\u2019s claims. 84% answered \u2018yes\u2019 to the question: \u201cDo you believe that U.S. media agencies are receiving rebates from media sellers and vendors that they don’t disclose or pass on to clients?\u201d 74% said they considered this to be unethical.<\/p>\n
There are a few questions that the \u2018nothing to see here\u2019 brigade need to consider.<\/p>\n
First, no-one questions that these practices happen in many, many non-US markets. No-one questions that the agencies have been the beneficiaries. Now, if a tactic works well for you in countries A, B and C wouldn\u2019t you be tempted to try it in the biggest ad market of them all? Especially if someone at your holding company HQ is asking you why you can\u2019t do what those smart people in countries A, B, and C do.<\/p>\n
Next, US agencies have always been focussed more on the buy than the plan. Look at the upfront system, pretty well unique to the US which was designed to allow agencies to acquire limited premium TV inventory on what was originally three networks, and which inevitably involved agencies perming two from three. TV buys drove that system, not TV plans. The buy came first, which when you consider the complexity of the US TV market was not altogether surprising.<\/p>\n
It\u2019s a short step from there to making money on the buys.<\/p>\n
Finally, why on earth would Jon Mandel make this up, and not just him but the people in agencies that he claims to have interviewed? And if what he had to say was so transparently rubbish why would the ANA give him a platform to say it? Never mind that the ANA has rowed back from suggesting that \u2018every\u2019 agency is up to no good (which is not what Jon said in the first place); never mind that Procter and Gamble said \u2018we trust our agencies\u2019 (subtext: if anyone tries this stuff with us, they\u2019re toast); and never mind that GroupM came barrelling in to deny everything (no-one to my knowledge has accused them specifically of anything). The evidence points towards the fact that it is certainly not unknown for agencies to put buys that benefit them before plans designed to benefit their clients, and they shouldn\u2019t do it.<\/p>\n
In Nick Davies\u2019 brilliant account of the News International (as then was) phone hacking scandal, \u2018Hack Attack\u2019, he tracks how the practice of phone hacking became endemic at \u2018The News of the World\u2019. There were many fine journalists there, but this underhand behaviour took hold and simply became the norm.<\/p>\n