Madison Avenue is running out of time to shape its own story. The trade group that represents companies like Procter & Gamble and McDonald’s, which spend $250 billion a year on advertising, has hired investigators to look into media buying practices. Charges of kickbacks that aren’t passed on to clients and opaque digital exchanges are alarming the brands. From giants WPP and Publicis down to smaller agencies, the findings could prove embarrassing.
The Association of National Advertisers, the group that boasts about 10,000 brands in its member base, chose K2 Intelligence, founded by Jeremy and Jules Kroll, and Ebiquity’s Firm Decisions to lead a “fact-finding” mission. The lack of transparency in some media-buying transactions has long been controversial. Ad agencies, which are supposed to be experts in messaging, seem to have missed the chance to address it head on.
The trade organization representing the ad agencies, known as the 4As, has been working with the ANA since the spring. A joint task force set up to develop transparency principles will release proposals soon. Nancy Hill, chief executive of the 4As, told Breakingviews that on several occasions it offered to co-sponsor the gumshoe project with the ANA.
In the end, though, the ANA is going it alone, and that makes the investigation look bad for the agencies at a time when they could do without more troubles. Ad shops are already under pressure from clients seeking to trim costs. This year, a plethora of blue-chip names ranging from Unilever to BMW have put their media accounts under review, leaving about $27 billion in contracts up for grabs.
That points to volatility in what has traditionally been one of the most stable, profitable parts of the ad business. Publicis, for example, on Thursday cut its organic growth target to 1 percent from 2.5 percent, blaming cuts in brands’ marketing spending and the distraction of having to defend accounts. Whatever the ANA’s private eyes reveal, it’s likely to give advertisers one more source of leverage over the Mad Men.