According to the Wall Street Journal, federal prosecutors in Manhattan have opened an investigation into media-buying practices in the advertising industry, and have begun to issue subpoenas. The investigation will reportedly look at, among other things, alleged non-transparent practices, including whether advertising agencies received rebates from media outlets. The investigation comes after the 2016 report on media transparency conducted by K2 Intelligence on behalf of the Association of National Advertisers (ANA). The report identified numerous non-transparent business practices alleged to be pervasive in the advertising industry. For example, the report claimed media agencies were receiving rebates and incentives from media outlets and not returning those funds to advertiser clients. The federal investigation could shed further light on such non-transparent practices and may help move the industry towards greater transparency and trust.
TAKEAWAY: The industry is closely monitoring the investigation. One tool to address transparency in contracts with media buying agencies is the ANA’s Media Agency Template Agreement, Version 2.0. It can be found here.