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.
Before You Buy: Managing Real Estate and Permitting Risk for BESS Projects in New York and New Jersey
For developers pursuing battery energy storage system (BESS) projects, finding the right property is only the beginning. BESS site selection is as much a legal and transactional exercise as a real estate decision, with risk analysis central to the project’s ultimate success. Key Takeaways The core questions for BESS site selection in New York and […]
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
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!
