McDonald’s will start auditing its media contracts

McDonald’s is hiring auditors to take a thorough look at its nearly $1 billion advertising business, probing into troubling media practices like rebates revealed in the Association of National Advertising’s transparency report.

“We are reviewing and auditing everything,” Deborah Wahl, CMO for McDonald’s, told Digiday at the ANA Masters of Marketing in Orlando. “There’s lots of waste and fraud in the supply chain. We need to clean up all the channels and make sure the supply chain is transparent.”

The ANA report shine light on sketchy ad tech practices like rebates and black-box deals where holding groups funnel the ads through ad tech properties they own or invest in. The report also identifies some holes in many media contracts and now marketers are trying to fix them. Aside from McDonald’s, big marketers like J.P. Morgan Chase, General Electric, Walgreens and AT&T have all reportedly launched an audit of their ad buyers.

“Even an audit cannot tell you everything,” said Wahl. “There are so many entities and platforms involved in your system that you cannot have viewability to every single piece. And I think it’s important to understand the supply chain all the way up not just through your media company but also through the holding company level.”

The ANA report reveals that rebates can be structured as consulting fees and are usually not paid directly to the agency for which the business is conducted, but through a subsidiary of the same holding company, which makes it hard for marketers to examine the nitty-gritty.

“I think you need to bring in an auditing firm like Ebiquity early on. If you go through a media pitch, they can help identify if the pricing is realistic and check transparency language specifics to hold your media agency accountable,” said Dustin Lyle, director of strategic sourcing and procurement for Sony Pictures Entertainment.

Aside from contract re-evaluation, the ANA also recommends that marketers create a new role of the “chief media officer” to oversee paid media. “I’ve already had one,” said Wahl. “When you spend on advertising as much as we do, you need someone internally to look at that.”

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