Dentsu Inc. said it will pay an estimated ¥230 million back to customers, including Toyota Motor Corp., that it overcharged for internet advertisements in a case likely to stoke concern that digital media transactions have lacked transparency.
The nation’s largest ad agency investigated transactions going back as far as November 2012 and uncovered 633 suspicious cases affecting 111 advertisers, including 14 examples where fees were charged and no placement had been made, Dentsu said in a statement Friday. The company apologized and said business results will probably not be materially affected.
“We will repay the ¥230 million, and we will talk with clients after all the facts are disclosed,” Toshihiro Yamamoto, Dentsu senior vice president, told reporters in Tokyo on Friday.
Toyota was the first to point out a discrepancy, Shoichi Nakamoto, Dentsu’s chief financial officer, said at the press briefing.
The Dentsu irregularities included discrepancies in advertising placement periods, failure of placement and false reporting regarding performance of the advertising, according to the company’s statement Friday. Also, some invoices did not reflect actual results, resulting in overcharges. The company intends to clarify the causes leading to the inappropriate handling of ads and to report on progress of measures taken by the end of the year.
“Immediately after finding out about the incidents, we organized an internal investigation team in the middle of August,” the company said. Advertising verification, placement, publication and billing was transferred to a separate section from the one involved in inappropriately handling ads, the company said, calling the step an “interim measure.”
Dentsu clients include LVMH Moet Hennessy Louis Vuitton SE, Diageo PLC, Nestle SA, SoftBank Group Corp. and Electronic Arts Inc., according to data compiled by Bloomberg.
A study released by a group representing U.S. advertisers earlier this year accused ad firms of essentially receiving kickbacks. Media buyers connected to ad agencies get rebates when they buy large blocks of ad space — many of which they neither disclose nor pass along to their clients, according to the report commissioned by the New York-based Association of National Advertisers.
The 58-page study, performed by investigative firm K2 Intelligence, does not identify ad agencies or clients or lay out the size of rebates the firms allegedly retained. But in general, it said, such rebates ranged from 1.67 percent to 20 percent of aggregate media spending
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.