2016 was an usually tough year for U.S. advertising agency executives. The list of things keeping them awake at night include shrinking margins, restless clients and a changing marketplace that seems to be moving away from historically reliable sources of revenue. Arguably, the biggest cause of those restless nights were the ripple effects of the bombshell 2016 Report published by the Association of National Advertisers (ANA). The Report included the results of an eight-month investigation that found certain agencies had exploited clients through nontransparent, and potentially fraudulent business practices.

The research was performed on behalf of ANA by K2 Intelligence, an experienced corporate investigation firm. Among the conclusions reached in the initial draft of the Report: Volume based “cash rebates” received by agencies from media entities and “other non-transparent practices” are common in the media buying process; Contracts for rebates and other non-transparent business practices were negotiated and signed by high-level ad agency executives; On certain transactions, paid rebates to ad agencies accounted for up to 20% of aggregate media spending; Certain agencies and media companies contrived pretextual research “services” with little or no value to be “performed” on behalf of media companies to compensate the agency for media buys on behalf of its clients; and Certain agencies steered commercial production and post-production work to their in-house production teams or their affiliated companies through the use of allegedly illegal price-fixing and bid-rigging strategies.

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