MediaCom: What now - will a raft of agency audits kick off?

By Rosie Baker and Pippa Chambers | 1 December 2014

The fallout of the recent allegations of overcharging clients at Mediacom is likely to impact the entire media industry – not just the GroupM-owned agency. It's likely to put pressure on the rest of the industry to clean house and show that practices across the board are up to scratch.

A wave of client-requested audits are expected and a number of agencies are already looking at putting in place internal audits to offer reassurance to clients that nothing untoward is occurring, with one media boss saying “we don't want our clients to feel like Mediacom clients”.

It's being contained to a Mediacom issue at present, with other media organisations keen to distance themselves from it, but many industry sources are concerned that it raises questions about agencies as a whole and tarnishes the reputation of the industry.

One senior media exec told AdNews: “Anything that raises questions around accuracy and integrity is not good for the industry – even the vast majority who are not doing anything wrong. The vast majority of clients are third party audited anyway, there are raw data files for TV auditing and clients can access them at any time.

“I can fully understand clients wanting a deeper level of scrutiny but it's not something we're suddenly on edge about. It's such a rare and extreme circumstance unless there is specific reason to [bring in external auditors] or industry self regulation changes accordingly, we're not suddenly going to look at doing anything that we aren't ordinarily doing.”

There are also fears that it will spread beyond TV audits with sources suggesting that it will “activate audits for every major client” and that those will look at everything – not just TV audiences.

The industry has gone to ground following the allegations and it's early days in terms of what is happening and what clients are demanding, but it's likely that clients across the board will be looking at what happened at MediaCom and asking questions of whether similar issues may occur at their own agency.

“Anything that happens like this is not good for the industry … it's not good for the wider industry, it's not good. Clients need to have faith in their agency and their reporting.... With big clients it's probably pretty easy to do if you wanted to, it sounds like a lack of process within the agency,” suggested one source.

“As a client, if your agency tells you something, you have to trust them. And a lot of clients are already audited. We're confident in what we do and clients are welcome to audit our processes and reports whenever they like.”

Other media agencies are split on what the fallout will be across the industry, with some downplaying the potential impact on other agencies.

CEO at Havas Media Australia, Mike Wilson, said: “Auditing is a fact of life for many industries, not just ours and if anything there is probably a greater presence of of audits now then ever before.

Wilson, who said the company has no additional plans to carry out an immediate audit off the back of the MediaCom saga, as the majority of its clients are already audited, said that agencies should welcome this and stressed that audits aren't about digging out dirt, but are about increasing efficiencies and evaluating the business.

In relation the recent MediaCom findings, Wilson said: “It's hard to comment on this when I don't know the full facts, but I don't think something like this is an industry-wide issue and I don't think this reflects negativity on the industry as a whole.”

Another agency source said: “It's very much not our problem. I genuinely don't know what happens next – its the first I’ve heard of something like this. It's still unclear as to what exactly has happened. I don't want to compare it but it sounds like Nick Leeson [the rogue trader] at Barings in the financial market. It's flabbergasting,” they said.

There are also suggestions that the damage in trust could mean a number of pitches coming out of Mediacom in the coming months.

The AANA declined to common specifically on MediaCom, but said it remains committed to improving “transparency and trust” across the industry.

“It would be inappropriate for the AANA to comment on specific relationship or contractual issues that arise between an advertiser and their agency. The AANA in collaboration with the MFA, gather in a Media Forum which has been set up to identify opportunities where both groups can work together to better the industry as a whole. Any specific incidents or  arrangements between agencies and clients must be dealt with at the individual level but as a Forum we will continue to discuss the issues and challenges in our industry towards the common purpose of creating greater transparency and trust.”

For more news:

Rogue traders: how Mediacom’s dynamite exploded

MediaCom exits linked to Foxtel and KFC overcharging

Raft of sudden exits hit MediaCom

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