Ad Price-Fixing by Big Agencies Suspected by DOJ
Some big ad agencies are being investigated for price-fixing. Rebecca Meiklejohn, a government antitrust attorney based in New York, is looking into whether big ad agencies got smaller production firms to submit inflated bids to marketers so the agencies’ in-house departments would win the ads, the Wall Street Journal reports. Considering commercials are a $5 billion business in the United States, that’s no small problem for the U.S. Justice Department to investigate.
“Big ad companies have denied wrongdoing,” write Suzanne Vranica and Brent Kendall for the Journal. “The report [from the Association of National Advertisers about this concern] has caused marketers to launch a wave of audits of their media-buying contracts with agencies.”
Everyone in the marketing business, from ad agencies to data suppliers, have worked in recent years to become one-stop-shops for marketers. Full disclosure: NAPCO Media, the umbrella brand for Target Marketing, offers marketing services.
Some companies are even working so hard to keep everything in-house that they’re hurting their own images. Witness Facebook’s problem with proper reporting of video view metrics due to lack of ANA-trusted third-party oversight and the problems that that caused for advertiser trust in the social media giant.
That means that nearly the whole pie of commercials — directing, sound editing, special effects and color-correcting — may be under review, and more investigations may be coming.
“The [ANA’s] report,” says the WSJ article, “which didn’t point to specific ad agencies, detailed a range of suspect practices, such as agencies getting rebates from media sellers for reaching spending thresholds on behalf of their clients.”
What do you think, marketers?
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