Get a demo Do I subscribe? News sign-up
Print

Mediacom fallout rumbles on

News, 09 December 2014

SYDNEY: Australian advertisers are reported to be raising a number of issues, including billing practices, with their media agencies in the wake of "irregularities" that emerged recently at Mediacom.

As a result of those, one Mediacom client, Foxtel, has switched its $50m account to Mindshare, another Group M company. A statement from Group M chief executive John Steedman said this had been collectively agreed by all three parties.

He went on to reject speculation that Mediacom had overcharged clients – "Mediacom, denies this" – and said it was addressing proactively and openly the situation around bonus airtime. A report from independent consultants EY is expected in mid-January.

The issues of bonus airtime and media credits were highlighted by The Australian which claimed that the latter was one of the factors that had pushed Foxtel into switching its account.

Media owners will offer agency holding companies bonus ad spots as part of the annual deals the two negotiate, and advertisers are now wondering if they have been charged for these, rather than benefiting from the discounts their agency has arranged using their spending as collateral.

Credits arise as media agencies typically bill clients upfront for the costs of an advertising schedule, with media owners subsequently billing agencies for the campaigns that actually run. Occasionally the two do not tally and advertisers can be left with media credits in an agency holding account which the agency can claim after six years if the advertiser has not asked for them to be returned.

According to The Australian, "unbilled media has been a well-established revenue stream for media agencies".

Observers did not expect advertisers to benefit from the sudden interest in this niche part of the advertising world. "As a general principle, even a forensic audit won't necessarily identify kickbacks, rebates and credits going back to a media holding company," Darren Woolley, founder of strategic marketing management consultancy TrinityP3, told The Australian. "It's virtually impossible to detect, especially if it's a credit."

Australian advertising suffered another blow as researcher Nielsen admitted possible errors in TV viewing figures for the first five months of the year.

Ad News reported that a time stamp error in its spot monitoring data had affected the data given to media buyers and clients on how many people around 250,000 ads had reached.

Data sourced from The Australian, B&T, Ad News; additional content by Warc staff