The staff of one of Australia’s biggest media agencies deliberately faked campaign reports for three of its biggest clients for at least two years, an audit has revealed.
And Mediacom also breached the policy of its own parent company GroupM by selling back to clients free or heavily discounted advertising time given to it by TV stations.
The audit confirms revelations reported nearly four months ago that Mediacom had uncovered reporting discrepancies, leading to the abrupt departure of about a dozen staff.
The investigation found that after some campaigns ended, employees went back and altered the original demographic audience targets to make it appear they had reached the official Oz TAM audience ratings numbers even if the campaigns had missed targets.
The misreporting went on in the post campaign reports on TV audiences submitted to three of Mediacom’s biggest clients – Foxtel, IAG and Yum! Brands, owners of KFC and Pizza Hut.
Once it learned of the problems, the agency employed auditors EY to investigate client accounts across all of its offices, which also spread to sister GroupM agencies Mindshare, Maxus and MEC.
Yum! Brands and IAG have said they are in talks with Mediacom about compensation for the effect this has had on their business. Foxtel has already moved its account to Mindshare.
The audit found Mediacom sold free and heavily discounted ad spots it had been given by media owners in exchange for an agreed level of ad spend – commonly known as value banks – onto four clients at discounted rates, against GroupM policy. It has since refunded them.
Mediacom disclosed findings from the audit in a series of press briefings on Friday, embargoed until this morning. The briefings were given by GroupM chairman John Steedman and Mediacom CEO Mark Pejic.
Steedman admitted: “This incident has had a devastating impact on our business, on me personally, on Pej personally and on a number of other people in the organisation.”
The key revelations include:
- TV misreporting went on for at least two years, but was contained to just one buying group within Mediacom’s Sydney office covering clients Foxtel, Yum and IAG.
- Confirmation 12 staff had left the agency “as a result of this misreporting”.
- Three other unnamed Mediacom clients received inaccurate reports, although the agency says these could be explained as “rational or accidental” rather than deliberate misreporting.
- A confirmation by GroupM it holds ‘value banks’ – bonus advertising inventory given to agencies by media owners based on them delivering a certain level of ad spend.
- Last year Mediacom breached GroupM policy by selling this free or heavily discounted TV inventory to four unnamed clients, which have since been reimbursed.
- Issues around a lack of formal process from GroupM agencies on recording clients signing off changes to their campaigns.
- Details of a tightening up of GroupM’s systems and processes, with a new group compliance team headed by chief investment officer Danny Bass to perform spot checks across its agencies, along with new software to prevent staff forging post analysis reports in the future.
