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Why the FBI is investigating media buying practices

Y2kTheNewOldies

Y2kTheNewOldies

https://digiday.com/marketing/fbi-investigating-media-buying-practices/

Here the FBI is Looking into Business practices at the Media outlets.

The feds are getting ready to come knocking. On Oct. 10, the Association of National Advertising sent a letter to its members sharing that the Federal Bureau of Investigation had contacted the ANA’s outside counsel Reed Smith LLP about assisting with its investigation into U.S. media buying practices. The Wall Street Journal first reported the investigation on Sept. 27. The ANA’s letter, signed by ANA CEO Bob Liodice, suggested next steps its members can take such as consulting with Reed Smith.
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Sounds like a fishing expedition to me. They're entitled to do it, and they may come up with a bite or two.

They could just as easily revive payola investigations. Not to say they haven't already. We don't know.
 
Megatron said:
Much ado about nothing just like some lawyer suing broadcasters and ad buying.
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If they prove the "rebates" to agencies are real, then there are various issues... particularly if the rebates are not returned to the advertisers that employed the agencies.

They should look at Puerto Rico, USA. The media has been forced the give rebates (called, euphemistically, "volume discounts") to agencies for the last 40 years or more. Some agencies even ask for the rebates to be delivered in cash, rather than credits on agency billing.

The practice is real.
 
The advisory from the ANA is that all media organizations should be prepared that the DOJ will be sniffing around for anyone who might be stretching certain laws. You get one complaint, and you follow it up, and it becomes a time-consuming and expensive process. They may wait until the next AG takes office to actually begin filing charges. I don't expect it to be a problem for broadcast companies, because they aren't a threat.
 
I know there was an issue some time back involving newspapers that inflated their subscription
numbers by distributing large numbers of copies for free and then rolling them into their circulation stats.

Since ad rates are set based on those numbers it amounted to a de-facto defrauding of their advertisers.

I am guessing that the FBI suspects something like that may be going on.
 
FreddyE1977 said:
I know there was an issue some time back involving newspapers that inflated their subscription
numbers by distributing large numbers of copies for free and then rolling them into their circulation stats.
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This is not about ratings. It's about the way the ad agency business deals with the media, often extracting rebates that are not passed on to the agency clients who should benefit from such deals and, of course, know that media may be selected for the rebates they offer, not the effectiveness.
 
This reminds a bit of the FBI raid on Pilot Flying J in Knoxville, and though a different industry, it involved a rebate scheme. People are still being tried and given prison sentences over that.
 
DavidEduardo said:


This is not about ratings. It's about the way the ad agency business deals with the media, often extracting rebates that are not passed on to the agency clients who should benefit from such deals and, of course, know that media may be selected for the rebates they offer, not the effectiveness.
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ahhh….an old-fashioned kickback scheme then.
 
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