Tom Denford and David Indo from ID Comms: is advertising funding organised crime?

On this week’s ID Comms Tom and David look at how US efforts to tackle ad fraud are moving up a gear. Two Democrat senators, Mark Warner and Chuck Schemer, have co-written a letter to the Federal Trade Commission (FTC) asking for clarification on what the FTC is doing to tackle the menace of ad fraudsecond largest income stream for organised crime, behind drug trafficking.

Secondly, they review news that WalMart has handed a bunch of marketing service duties to Publicis group, consolidating a lot of their roster into one group. This is bitter-sweet as Publicis US (MediaVest agency) recently lost $1bn of WalMart’s media account. The mystery seems to be that no one seems to know who is managing it now. It’s not easy to hide (or lose) a billion dollar media account so someone must know where it went.

Finally, Tom and David look at the issue of e-auctions (software which requires media agencies to input competitive media pricing guarantees). These have become a more common feature of new business pitches in recent years and this week a media agency leader MediaCom global CEO Steve Allan hit out. His complaint was was that VW ran a “blind” auction for media pricing which required agencies to bid ever-lower without knowing what target they were trying to hit. As the incumbent agency, MediaCom already knew the existing pricing levels so could bid more accurately but according to Allan, VW’s methodology encouraged agencies to undercut each other in a race to the bottom on media price.

Tom and David discuss the impact of this approach, how it damages clients (buying poor media inventory cheaply and by the ton is not a sensible marketing strategy, or a sensible procurement strategy for that matter) and look at what happens to quality, strategy and planning when a client indicates that a race to the bottom on pricing is how to win their media account.

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