Walt Disney Co.’s recently concluded $2.2 billion global media review—the world’s biggest this year—also has become its most controversial, opening a new front in the ad industry’s transparency debate that paints the marketer/media hybrid client as the bad guy.
Three people familiar with the review say there was discussion about winners Publicis Media and Omnicom Media Group “share shifting,” essentially increasing buys from their other clients across Disney’s vast array of properties. Two say the mechanism for this was a “volume guarantee” that shops would buy Disney media at levels higher than what those agencies had previously purchased. The share shifting allegations were previously raised in stories published by Mediapost and Digiday.
One problem with this narrative: It’s unclear anyone promoting that story has actually seen the final contracts that emerged. And people directly involved in the deals handled by Ascential’s MediaLink, including representatives of Omnicom and Publicis, deny any such guarantees were made. Disney representatives didn’t respond to multiple requests for comment by deadline.
One of the people familiar with the review says there were no formal or informal requirements for the winning agencies to buy more Disney media. But that doesn’t mean, this person says, that Disney doesn’t expect buys from its new agencies to increase. That would be reasonable to anticipate only from new business partners, he says, much like someone who has AT&T as a key client might use the company as his mobile provider even if Verizon provides better service in his neighborhood. But this person says that doesn’t mean agencies would be expected to make bad deals for their other clients.
Either way, the Disney review has opened eyes to a new potential conflict of interest in the U.S. ad industry’s four-year-old transparency debate, which previously focused on such things as rebates, free and discounted media, service contracts of dubious value, secret ownership stakes and other things agencies allegedly get from media or marketing services companies without disclosing to clients.
A media company has every legal right to insert such a volume guarantee or “share shift” requirement into a deal with its own media agency, says an attorney familiar with industry practices. But most contracts also require such a conflict of interest to be disclosed to the agency’s client roster, he says.
Despite denials by agencies that any such arrangement exists, industry chatter alleging that shops share shift is likely to make clients of Publicis or Omnicom wary should their buys inexplicably start moving into, say, ESPNU or Freeform.
“If there is a risk of some share commitment having been agreed, we would encourage advertisers to keep a close eye on how Disney group inventory appears on their media plans in 2020 and apply the usual diligence to make sure it’s fully justified and planned wholly in the interest of the advertiser,” says Tom Denford, CEO North America of ID Comms.
In other words, this might be the most transparent non-transparent practice ever, were it to exist, which people involved say it doesn’t.
Even so, advertisers may not be able to ditch potentially dodgy Disney buys so easily, according to an agency executive who says he’s not authorized by his agency to speak to the media. Such buys could be wrapped with others inside a “client pool” as an all-or-nothing proposition. The clients might then have to opt out of the entire pool buy to cancel specific Disney deals, which could in turn void pricing guarantees in their own agency contracts.
A spokeswoman for Publicis Media says the agency doesn’t do business that way, and clients have the right to sign off on all of their buys.
Alleged share shifting isn’t the only question mark in the Disney review. Others familiar with it say that while Publicis Groupe CEO Arthur Sadoun in a memo attributed his side’s win to the power of data analytics, fueled by his recent Epsilon acquisition, that it really boiled down more to Publicis lowballing on fees.
Disney plans to handle its own data and analytics for such things as the Disney+ streaming service launch. One person familiar with the review said Publicis’ penchant for dealing on fees is obvious from the difference between its strong showing in industry consultancy R3 tallies of new business wins combined with its slowing and declining organic revenue growth in recent years.
A Publicis spokeswoman denies this and stands by Sadoun’s earlier characterization of the win. And yet another person familiar with the review backs the Publicis story about data, analytics and Epsilon playing a decisive role, describing the agency compensation as “generous.”