What did the report say about ad agency contracts?
The ANA retained independent firm K2 Intelligence to conduct the report after concerns arose about media companies’ use of rebates to reward the ad agencies for purchasing a certain amount of advertising on behalf of their clients. The report confirms the prevalence of the practice, as well as other “non-transparent” practices. It suggests that agencies have provided incentives to direct client spending to certain media regardless of what may be in the client’s best interest. The evidence cited by the ANA showed a range of instances in which media suppliers paid rebates to agencies, or entities affiliated with those agencies, in amounts ranging from 1.67 percent to approximately 20 percent of aggregate media spending, depending upon the deal.
“Whether acting as agency or principal, vast changes in technology, the complex digital supply chain, and the proliferation of media outlets provided agencies with additional opportunities to increase their profit margins beyond agency fees,” ANA CEO Bob Liodice said in a statement. “This has led to disconcerting conflicts of interest and a lack of transparency.”
ANA states that the findings of the report are based on “detailed source accounts from dozens of confidential, personal interviews as well as documentary evidence,” including contracts and email correspondence between between ad agency executives and media companies. The report does not identify any of the companies that allegedly paid or accepted rebates.
Bottom line
While the kickbacks may raise conflict-of-interest concerns, they may not necessarily violate the ad agencies’ contracts with their clients. According to the ANA, its study found that “in many cases, advertisers were unaware of details in their agency contracts that addressed the issue of transparency, particularly because some contracts had not been reviewed or updated in as long as 10 years.”
In defense of the industry, agency trade associations have questioned the veracity of the anonymous sources and maintained that a few bad apples may be giving ad agencies a bad name. Nonetheless, the evidence discussed in the report should be enough to prompt businesses to carefully review their contracts and raise any concerns with experienced counsel. In addition, of course, advertising agencies may also want to review the contracts and revise them so that they can fully disclose or otherwise address the issues raised.
Rule 26 Expert Discovery: When an Expert Witness Uses AI, Is It Discoverable?
Case law following the 2010 amendments to Federal Rule of Civil Procedure 26 offers guidance on how courts are likely to address whether an expert witness’s AI records are subject to discovery. Key Takeaways Rule 26 Expert Discovery After the 2010 Amendments This article addresses the question courts and lawyers have faced in recent cases: […]
“Show how 3M is 0% at fault.” The absurd tale of how a 350-page ChatGPT history for 3M’s expert witness was produced during a deposition is more likely than you think. It’s an inevitable trend, and an unsettled question for federal courts as experts make generative AI part of their workflow. Key Takeaways Expert Witness […]
The Screenshot Problem: Why Nothing Is Really Private Anymore
Screenshots have changed the risks of electronic communications. The screenshot problem is that messages intended for one person or a small group can be copied, forwarded, preserved, and ultimately presented to opposing counsel, regulators, journalists, customers, or a jury. Businesses should recognize that a truly private digital conversation is increasingly unreliable and ensure their policies, […]
BESS Project Agreements: Allocating Risk Among Developers, EPC Contractors, and Equipment Suppliers
Developers, engineering, procurement, and construction (EPC) contractors, and equipment suppliers each play a critical role in completing a BESS project. However, when equipment costs rise, deliveries are delayed, or regulations change, determining who bears the financial consequences can become contentious. Well-drafted project agreements are essential to sound risk allocation. Key Takeaways This article is Part […]
IP Infringement: What Steps Can You Take If You're Affected?
IP infringement occurs when someone uses your intellectual property without your permission or beyond the scope of the permission you granted. Common examples of IP infringement include copying a product’s patented features or using a trademarked logo in a way that is likely to confuse consumers about the source or affiliation of goods or services. […]
Public Allegations, Unfinished Investigation: What New Jersey Businesses Should Do Next
When facing public allegations of wrongdoing, companies should not let the speed of the public conversation dictate the speed of an investigation. An investigation designed to confirm a preferred narrative rather than establish the facts can create serious problems later, particularly if litigation, regulatory scrutiny, or employment claims follow. Key Takeaways When public allegations surface […]
No Aspect of the advertisement has been approved by the Supreme Court.
Results may vary depending on your particular facts and legal
circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
