DOJ issues subpoenas of mega agencies in price-fixing probe
December 19, 2016
Over the summer there was a huge flap when the Association of National Advertisers released a report alleging widespread kickbacks and other issues of media transparency.
Now, all these months later, the Department of Justice appears to have ferreted out another potential issue of agency transparency.
Interpublic revealed the investigation earlier this month.
Omnicom and Publicis now say their agencies have received subpoenas requesting information about their video ad production procedures.
Behind the investigation
The DOJ is looking for evidence that the agencies favored their internal production companies to produce commercials when bidding on the business, over external, often independent production companies, asking those outside to inflate their bids in order to justify awarding the business to their in-house units.
Production companies are hired after the creative teams come up with a concept for an ad. The payoff of going in-house is potentially huge for an agency – video ad production is a $5 billion business, according to The Wall Street Journal.
At a time of uncertainty for all media, these jobs represent a steady revenue stream.
Immediately speculation began that two other ad giants, Havas and WPP, were being investigated as well, but they have not commented on the situation.
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