One Small Step Toward Trust

November 19, 2018

By Doug Wood

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Last week, MDC Partners, Omnicom, Publicis Groupe, WPP, and IPG announced that the United States Department of Justice (DOJ) closed its probe into whether advertising agencies were violating antitrust laws and unfairly taking commercial production in-house as opposed to using independent production companies. This announcement is welcome news. While press reports leave unclear if any of the other holding companies or their subsidiaries are still the subject of DOJ interest, the end of the probe of the five mentioned closes one of the chapters that has eroded trust between agencies and advertisers. We see that as good news and a step in the right direction.

That said, and while we do not want to rain on the parade, there are two important points that advertisers should remember despite the DOJ's decision to close its investigation into production practices:

  1. Advertisers must remain diligent in addressing production activities in contracts with agencies. While there is nothing wrong with an agency taking production in-house or having a preferred third-party vendor, it is critical that the advertiser be aware of such relationships and ensure that bidding and pricing are fair and open and there are no hidden rebates or incentives passing through the ecosystem. The ANA's 2017 report on production sheds some light on the concerns an advertiser should address. This is not a difficult goal to attain, provided both sides of an agreement embrace transparency. To provide some guidance in this regard, the ANA will also soon be releasing a template for creative/production contracts between advertisers and agencies. This new template will accompany the ANA's Media Buying Agency and Non-Disclosure Agreement templates and provide a full suite of contract forms.
  2. The closing of the production bid-rigging probe is unrelated to the FBI investigation of media buying agencies. As announced by the ANA on October 10, 2018, the FBI requested the cooperation of the ANA and its membership in a criminal investigation into media buying practices. The FBI and the United States Attorney General's Office for the Southern District of New York asked advertisers to investigate their dealings with media buying agencies and, should they believe they have been the victims of improper activities by their agencies, to come forward and cooperate with the FBI in its investigation. A white paper, released by the ANA on November 8, details what the investigation means to advertisers.

While there is comfort in knowing the DOJ has dropped its criminal investigation of alleged production improprieties by holding company subsidiaries, there is much more to be done to restore trust between advertisers and agencies. In a September Report, ID Comms reported that trust was at an all-time low, caused in large part by continuing concerns over the lack of transparency and repeated assertions — despite evidence to the contrary — that such behavior does not exist.

If you have questions, please feel free to contact me at dwood@reedsmith.com or Keri Bruce at kbruce@reedsmith.com.

 

Douglas J. Wood is a partner with Reed Smith LLP, a global law firm, and is general counsel to the Association of National Advertisers.


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