This was Madison Road's venomous riposte to a suit filed a week earlier by Mark Burnett Affiliates (AA, March, 7) in which it was accused of duping advertisers into overpaying for brand-integration deals in "The Apprentice." By hitting back hard, claiming defamation damages of $20 million, Madison Road has turned this skirmish into a full-scale war that stands to leave marketers feeling scarred and scared.
Representatives for Mark Burnett Productions did not return calls at press time.
Marketers who were involved with Madison Road-Levi Strauss, Procter & Gamble Co. and M&M Mars were among those featured as "task" sponsors in the NBC hit-wouldn't comment. But they are likely left wondering whether they overpaid. Meanwhile, marketers already uncomfortable with the lack of clear pricing models for brand integration and the uncertainty over whom to deal with-producer, middleman or TV network-will likely feel this justifies their fears.
The countersuit filed in Los Angeles Superior Court March 9, charges Mark Burnett Productions with making false accusations in an attempt to "quash the competition" in the branded-entertainment business.
In the initial suit, Burnett affiliates alleged that Madison Road had fraudulently represented itself as the exclusive agent for brand-integration deals in "The Apprentice." It also alleges that Madison Road charged advertisers up to 250% more for those deals than Burnett was asking, and then skimmed off the difference. In its countersuit, Madison Road declares that "an outright lie. Not surprisingly, no sponsor has accused Madison Road of deceiving them or charging them an exorbitant fee."
The countersuit claims Burnett's company is the one being unreasonable, seeking to hike sponsorship fees "as high as $5 million for a task" and it was Madison Road that "began questioning the outlandish fees."
While Mark Burnett Productions was planning to charge sponsors $1.5 million to $2 million per task for the 14 tasks planned for "The Apprentice 3," the countersuit said, Burnett hoped to secure far more for its single "Madison Avenue Pitch" task, in which the show's participants create a 30-second TV spot and ad campaign around a sponsor's product. Roughly eight of the overall 14 tasks were to be backed by sponsors in deals expected to generate around $15 million in revenue for Mr. Burnett's company, the countersuit said.
In an e-mail Madison Road said it received from Kevin Harris, co-executive producer for Mark Burnett Productions, the Burnett executive wrote, "We are shooting for 3.5 to 4 million on this one. Reason being, we are creating a 43 [minute] commercial on the making of the free commercial for the company." The suit says that in another e-mail Mr. Harris wrote, "[A]s for the Madison Ave. pitch episode we are going to do something crazy and go with the highest bidder ... meaning the company to bring in the highest task fee for our contestants to make a commercial around their product wins the episode ... think about it, it's a commercial airing the entire length of the task ... so 4 million is cheap."
While no sponsor is named, in "The Apprentice 3," Unilever's Dove sponsored the Madison Avenue Pitch task. Unilever did not return calls for comment at press time, and Masterfoods USA and Levi Strauss, which have been featured in "The Apprentice," declined to comment.
what does it mean?
But advertisers have been flooding branded-entertainment producers and agencies with calls, asking what the suits mean for their businesses. "If Mark Burnett thought that Madison Road's actions were confusing the marketplace, he's not really helping matters [with this suit] either," one producer said, noting there's fear advertisers will become even more cautious and spend more time evaluating the integration fees they pay and the result they will get in return.
The TV networks, meanwhile, are only too happy the suits have become public, and are expected to use the suits as proof of why their in-house sales teams are the best representatives to broker integration deals.
"Our model is to have three people only involved in these deals-clients with their ad agencies, producers and the network," said Jon Nesvig, president-ad sales for Fox. "Having a fourth party in there generally leads to more confusion. It's better done with fewer people."