Audit Confirms Mediacom Misreporting

Staff at WPP agency Mediacom in Australia deliberately faked campaign reports for three major clients for at least two years, according to conclusions from an audit started in the autumn by consultants EY, and published today.

In reports for three clients - Foxtel, IAG and KFC / Pizza Hut owner Yum! Brands - at the end of specific ad campaigns, Mediacom execs went back to the original demographic audience targets set for the campaigns and reduced them so as to suggest the campaigns had succeeded in hitting them. The report also said that three other unnamed Mediacom clients received inaccurate reports, which however were not necessarily the result of deliberate misreporting but could be explained as 'rational or accidental'.

A dozen execs left the agency when the audits were begun, with at least one being fired and the rest resigning. Yum! And IAG are talking to Mediacom about compensation while Foxtel has already moved its account to sister company Mindshare, according to www.mumbrella.com.au .

The audit furthermore revealed that execs of Mediacom contravened the policy of parent company GroupM by selling on to four clients free and heavily discounted ad spots it had been allotted by media owners in exchange for an agreed level of ad spend - these are known as value banks. Refunds have since been given.

GroupM chairman John Steedman and Mediacom CEO Mark Pejic (pictured), briefing the press on the findings and actions taken, said the incident had had 'a devastating impact' on them personally and on the business, and gave details of new systems in place to prevent such events in future, along with the appointment of a new group compliance team headed by Chief Investment Officer Danny Bass, which will perform spot checks. The two said the motivation of the execs involved in the fraud appeared to be to get good reviews from clients, and stressed there was no direct financial benefit for anyone involved.

Although the audit results are big news in the Australian media press, there is clearly a limit to the alarm felt by clients: the country's largest newspaper publisher News Corp Australia, 50 percent owner of Foxtel, has this week moved its newspaper marketing budget, thought to total around $AUD 10m, away from incumbent media agency UM and given it to Mediacom.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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