GroupM To Staff: Keep It Zipped On Remuneration, Media-Buying Questions

GroupM told its staff Monday that it did not want any loose lips on the subject of remuneration agreements with clients and media buying practices generally.

The internal memo was issued by Kelly Clark, outgoing GroupM CEO North America, the media management arm of WPP.

Clark referenced the recently launched Association of National Advertisers’ investigation into media practices in the U.S. and elsewhere, noting the firms hired to conduct it — K2 and Ebiquity/Firm Decisions.

Clark said the company intended to cooperate with the investigation, “but protecting the confidentiality of our client agreements is our primary responsibility. We also need to ensure that our own reputation for being compliant with client contracts and law is consistently managed.”

Therefore, Clark wrote: “If you are approached by anyone from K2 or Ebiquity/Firm Decisions (or anyone else enquiring about remuneration agreements or media buying practices) please refer them to the CEO, CFO, or the Corporate Communications Department of your company and they will manage the communication.

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And for those in the company wondering about certain U.S. practices that the company might engage in, Clark posed six questions related to rebates, remuneration and buying practices:

1.      Does GroupM seek/accept rebates from media vendors in the US?
2.      Does GroupM receive rebates elsewhere in the world as a result of spending in the US?
3.      Does GroupM acquire discounted inventory for Xaxis in the US as a result of aggregated GroupM spend?
4.      Does any client of GroupM in the US purchase Xaxis media products/inventory without a specific contract to that effect?
5.      Are there any media transactions between GroupM in the US and companies in which WPP is a shareholder that are not disclosed?
6.      Does GroupM in the US receive any ‘services’ revenue from media owners excluding those clients for which GroupM acts as media agency?

“The questions related to agency remuneration inevitably fall into one of these six areas and the answers to each of these for GroupM businesses in the US is an unequivocal NO,” Clark wrote.

The memo did not address practices outside of the U.S. where in many markets rebates are an accepted part of doing business.

The memo opened by reminding staff that it was time review and acknowledge the details of company’s Policy & Procedure Manual.

Commenting on the missive, a GroupM rep said the specific comments about the ANA inquiry and related issues “were to reiterate our policies around requests for information…and to remind everyone of our position which we’ve communicated previously to the marketplace.”
5 comments about "GroupM To Staff: Keep It Zipped On Remuneration, Media-Buying Questions".
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  1. Ed Papazian from Media Dynamics Inc, November 17, 2015 at 2:53 p.m.

    Eric, doesn't the agency, in effect, pay the sellers only for 100% viewable impressions, hence they net nothing as the client isn't billed for anything more?

  2. Marcelo Salup from Iffective LLC, November 18, 2015 at 8:07 a.m.

    Brings to mind the old joke: Boss: "Young man, don't go around discussing what we're paying you". Young man: "don't worry sir, I won't, I'm as embarassed as you are". When an entire industry has to rely on secret kickbacks and financial shennanigans to get compensated, you know that the model is very very broken.

  3. Jim Meskauskas from Media Darwin, Inc., November 18, 2015 at 9:18 a.m.

    If anyone believes the answer to all 6 questions is "no," raise your hand.

  4. Tony Jarvis from Olympic Media Consultancy, November 18, 2015 at 2:05 p.m.

    A deafening silence!  And as part of a unique consortium that pitched this ANA initiative no surprise at the likely conspiracy of silence that will envelop this investigation.

  5. Tom Denford from ID Comms, December 1, 2015 at 10:12 a.m.

    We strongly advise advertisers in the U.S. to use different questions instead of simply asking whether rebates exist in the U.S. media market [this taken from a previous Mediapost article]:

    1. Do media vendors ever offer incentives to media buyers?
    2. Are these incentives ever accepted by the media buyer?
    3. Does the media buyer document these in a transparent way?
    4. Can the advertiser be reassured that his or her agency is passing back these incentives in full?
    5. Does the agency ever generate a benefit (cash or something of value) from a media vendor as a result of passing over some of their clients budgets?
    6. Do they return these benefits to clients in full?
    7. Does the agency make any financial gain (directly or indirectly) as a result of their transactions with media vendors?
    8. Does the agency holding company or trading group leverage agency billings to generate financial upsides for the parent company, trading group and or the agency?

    Full piece here: http://www.mediapost.com/publications/article/221340/wanted-dead-and-alive-schrodingers-rebate.html

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