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Media Transparency: What Brands Need to Know About Advertising Agencies
An update on the status of the FBI/DOJ investigation, recovery efforts and best practices going forward.
The number of issues and areas of inquiry resulting from the revelations set forth in the Association of National Advertisers/K2 Intelligence Report continue to mount. As originally detailed in the Fall of last year, the FBI is actively investigating certain media buying agencies for alleged non-transparent practices and looking to the advertisers potentially defrauded to assist with its investigation.
Just last week, AdAge published an article noting that the FBI has an “unredacted version” of the K2 report including names of all 41 previously unidentified sources. Moreover, certain agencies are affirmatively trying to cover their tracks and/or to revise their existing contracts to either permit the questionable conduct going forward or to limit the audit rights of their advertiser clients.
Benesch attorneys are working closely with the forensic investigators at K2 Intelligence and auditors at FirmDecisions to assist clients with investigating possible wrongdoing by their (current or former) media buying agencies. These efforts range from helping clients navigate the potential pitfalls involved in cooperating with the active FBI investigation and ensuring that they fulfill their duties to shareholders, to securing recoveries from the agencies where appropriate. Given that non-transparent conduct can often amount to a substantial percentage of a company’s overall media spend, these claims can easily stretch into the seven- and eight-figure range.
Given the complexity of the issues involved and the increasing number of moving parts, we thought it would be helpful to provide this comprehensive update regarding the ANA/K2 Report, the FBI investigation, investigative and recovery efforts, as well as the industry’s response and best practices to consider going forward. We hope that you find this information to be a valuable resource as you consider how best to investigate your company’s agency relationships and practices.
