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US advertisers call in Jules Kroll’s K2 to investigate undisclosed media rebates

The US Association of National Advertisers is calling in the heavies to investigate the vexed issue of undisclosed media rebates.

It’s hired auditor Ebiquity and sister company Firm decisions – fair enough, that’s what they do. But also K2 Intelligence which it describes as experts in “macro investigations, led by people who have experience in the law industry.”

K2 was founded by Jules Kroll and son Jeremy in 2009. Kroll (below) was the original founder of Kroll Inc, which more or less investigated the modern industry of corporate investigations. The appointment of Kroll suggest that the ANA thinks legal action may follow the outcome of the wide-ranging investigation.

In June K2 hired the FBI’s Cyber Division CTO Milan Pitel hard on the heels of one Austin P. Berglas, assistant special agent in charge of the FBI’s Cyber Branch in New York.

ANA President-CEO Bob Liodice says Ebiquity and K2 will be asked to “demystify the landscape to provide a clarifying perspective on the state of transparency.” In normal language, find out what the hell has been going on.

The ANA’s decision seems to have followed a bust-up with the American Association of Advertising Agencies (4A’s) which wanted to investigate media rebates – first outlined by former MediaCom boss Jon Mandel last year – in-house via a joint body with the ANA.

4A’s CEO Nancy Hill says: “While the 4A’s favored the continuity and effectiveness of our joint efforts, the ANA has decided to move forward with its solo sponsorship of a fact-finding initiative into agency media practices. We look forward to the ANA’s findings and the release of the transparency principles so that our industry can move forward with a framework designed to accommodate the individual requirements of today’s advertisers.”

Wonder if Jon Mandel now rather regrets his outspoken remarks. At the very least the investigation should force media agencies to come clean about how they make their money.

It may also force the big media agencies and their holding companies to admit that they are now media brokers/owners as much as they are agents. And not just in the US.

Which would be a relief all round.

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