More trouble for the Traditional Media Industry: Will it be able to bounce back?

Neil Hall-Reuters Advertiise Blog - Media Buying Industry has been under heavy scrutiny for several years

Federal prosecutors investigating shady media-buying practices in the ad industry have reportedly begun issuing subpoenas

Original Article on Business InsiderTanya Dua Sep 27, 2018, 4:46 PM ET Original Article link:

  • Federal prosecutors investigating media-buying practices in the ad industry have begun issuing subpoenas as part of the probe, according to the Wall Street Journal.
  • One ad agency under scrutiny in the investigation is media conglomerate Vivendi-owned Havas, reports WSJ.
  • The investigation involves the FBI looking at the ad industry’s media-buying practices including accusations of agencies receiving rebates from media outlets.

Federal prosecutors investigating media-buying practices in the ad industry have begun issuing subpoenas as part of the probe, the Wall Street Journal reported Thursday, citing people familiar with the matter.

The investigation, which was first reported by trade magazine Campaign in June, involves the FBI examining the ad industry’s media-buying practices including agencies receiving rebates from media outlets.

One ad agency under scrutiny in the investigation is media conglomerate Vivendi-owned Havas, according to the Journal. A spokeswoman for Omnicom told the Journal that the firm hasn’t received a subpoena from federal prosecutors.

The entire media buying industry has been under heavy scrutiny for several years

The issue of non-transparent media buying has been thrust into the spotlight since 2016, when a bombshell report by the Association of National Advertisers (ANA) revealed that rebates and other non-transparent practices were “pervasive” in the US.

The report didn’t name any specific media agencies, and most of them shrugged and broadly denied wrongdoing when it was released.

Rebates, bonuses and discounts are a common business practice in some parts of the world, including Europe, China and Brazil, but haven’t historically been a part of US deals.

Business Insider reached out to a Havas representative for comment but had not heard back at the time of publication.

Meanwhile, media agencies continue to face tremendous pressure as their business models come under threat with many clients including consumer packaged goods giant P&G pushing for greater transparency and cutting back on ad fees. Several brands have even started to take ad processes in-house.

Business Insider

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