Rich Plansky, exec managing director of K2 Intelligence, led the ANA's investigation into agencies' alleged collection of media rebates in the U.S. He talks to Ad Age about the process, and what was unique compared to K2's other investigations.
Ad Age: In your experience, how often do findings with this degree of detail turn heads at the SEC or other regulatory bodies?
Mr. Plansky: I think it would be improper for me to speculate about that. Our job here was to shine light on this landscape and describe what we saw.
Ad Age: What surprised you in the findings?
Mr. Plansky: This is a very unique assignment; it's not often that an industry turns the microscope on itself. I'm not surprised by anything in my particular business, but what I will say is that we are pleased at the degree of cooperation that we got from our sources. Part of the skill set of doing this sort of work is not to be surprised by anything, and to be open to anything. We went into this without deep industry expertise. We had no preconceived notions about what we'd find one way or another. We were certainly aware of what's out there in public record and on what various constituencies are saying.
Ad Age: Do the holding companies have any legal grounds on which to respond?
Mr. Plansky: That's for minds greater than mine, and it's a question better directed at the agencies.
Ad Age: Which type of rebate method did you stumble upon most often in your investigation?
Mr. Plansky: There were three general methods affecting rebates. The first was cash, which is most straightforward. Second was free media instead of cash. Third was the most interesting, in our view -- the service agreement method in which agencies entered into contracts with media suppliers to provide general services like research and consulting. The interesting thing about it is fees are tied to volume of agency spend, usually as a sort of percentage. In our experience, that's unusual.
Ad Age: Did you find that holding companies or agencies were sending rebates to offshore entities?
Mr. Plansky: You won't find any of that in the report. We were solely focused on what was happening in the U.S. We have little visibility into what happened to the money. And because of the scope, we were careful not to identify companies or individuals involved. That's what our clients wanted.
Ad Age: Were there more contracts with certain media sellers than others?
Mr. Plansky: We believe these practices were pervasive within our sample. Was it all consolidated with one media supplier? The answer was no.
Ad Age: Did you actually see reports agencies offered to vendors in exchange for rebates?
Mr. Planksy: I didn't see those reports. We received descriptions of the report product from our sources. The majority of those sources described the services of minimal utility. They were useful to someone to an extent, but grossly overpriced.
Ad Age: Did you see some actual cash rebate contracts, and if so were they blank or completed by parties involved?
Mr. Plansky: We saw both executed contracts and contracts that were not executed.
Ad Age: Can you draw comparisons in your findings on the media agency behaviors to any other industry you've investigated?
Mr. Plansky: They're all different. I don't think it would be appropriate for me to compare it to any other industry.