One of Australia’s biggest agencies faked campaign reports for clients an audit into the company’s business practises has revealed. Mediacom – part of the GroupM group – also sold back to clients free or discounted TV time it had been given by the three free-to-air stations.
Three of Mediacom’s biggest clients are said have been on the end of the practices, including Foxtel, Insurance Australia Group (IAG) and Yum Brands! (owners of KFC and Pizza Hut).
Revelations of untoward goings on at Mediacom first surfaced in late 2014, and, to its credit, GroupM launched an immediate investigation into the allegations using the independent auditor Ernst & Young.
The outcomes of Ernst & Young’s report were detailed to the media on Friday and made public this morning.
Of most concern was the revelation that Mediacom employees altered OzTam audience figures even though campaigns had clearly missed their targets.
The report also found that Mediacom sold television ad spots that it had been given for free or at heavily discounted rates. However, the company has admitted to the mistake and clients have reportedly been reimbursed prior to the release of this morning’s audit.
The report said that Medicom has taken appropriate “steps to deal with employees involved” and it has been reported that a dozen or more employees had left the Mediacom businesses since the allegations first surfaced.
The Ernst & Young report said it “traced reporting irregularities across a number of clients” and “confirmed that two Medicaom clients Yum! And IAG were both affected with the same campaign performance misreporting issues”.
It also “discovered three other clients that were outside GroupM’s accuracy threshold. These three clients have been identified as falling into a ‘rational or accidental’ versus the intentional category”.
The report recommended four key action plans:
- The establishment of an Australian compliance team – Three people have been appointed to the new created compliance team and are charged with a “specific focus on the delivery of on-going TV performance reporting, including campaign cost, TARP/audience and reach”.
- Contractual agreements and MBAs – Processess will be enhanced to ensure that agreements and the details of reports between GroupM and its clients are centrally stored in auditable form.
- Systems and process enhancement – A number of systems will be put in place to ensure that files “can only be accessed at the explicit approval of the Compliance team” and agency heads.
- Ernst & Young internal reviews – The independent auditor will review Mediacom’s and GroupM’s dealings every six months and has a “commitment to transparency”.