Detention of Two Vivaki Executives Brings Unwelcome Attention to China’s Media Industry

Advertising Age recently reported a media buying scandal in China that involves kickbacks and money laundering.  As the article below indicates, media corruption has not been a particularly well-kept secret in China for years.  As noted in the article: “Media buyers, brokers and owners often make private arrangements that are seldom reported back to the advertiser. Individuals and agencies pocket the difference.”

With measured media spending in China expected to reach $45.1 billion in 2010, and likely to hit $49.9 billion in 2011, much risk exists for marketers for ensuring the media costs are true and correct, and overall cost transparency exist.  Further, on the international advertising media front, Advertising Age reported earlier this year on the poor contract terms, operating controls and financial risks that can take place between marketers and their agencies.  “A German judge is requiring Carat (Media) to open its books from 5 years ago as Danone Group, the 21st largest global marketer, claims that Carat did not share approximately $22 million in bulk media purchase discounts and rebates from 2003 – 2005.”

Link to Article:

http://adage.com/china/abstract.php?article_id=146154&achn=1

http://www.moreaboutadvertising.com/2010/09/media-groups-panic-china-kickbacks-scandal-chongqing-huayu-zhen-zhixiang-vivaki-publicis-carat-aegis/

http://www.getfoodnews.com/index/german-judge-rules-carat-to-open-books