Dive Brief:

• The Association of National Advertisers (ANA) released an update to a letter sent to members last month that confirmed an investigation by the FBI and U.S. Attorney's Office into possible fraud in agencies' media-buying practices, according to MediaPost. The white paper, compiled by the trade group's outside counsel at the law firm Reed Smith, offers details about the crimes most probably being looked into, such as mail and wire fraud, conspiracy and racketeering. Mail and wire fraud are likely to be the "primary" offenses in the investigation, The Wall Street Journal reported.
• The white paper suggests that the investigation wouldn't be underway unless the FBI and DOJ believed that there was a possibility that criminal activity took place. The ANA also clarified that investigators are seeking "meaningful cooperation" from marketers, which means that marketers who believe themselves to be victims of fraud should conduct their own formal internal investigations before contacting the FBI. Those internal investigations, per the ANA, should be assisted by marketers' own outside counsels and cover contract analysis, communication histories with agencies, media audit reviews and financial analysis.
• The ANA encouraged those cooperating to insist on receiving a grand jury subpoena before providing evidence. Benefits of cooperating include financial restitution if fraud is proven. The ANA addressed the possibility of "retaliation" if marketers are outed for cooperating with investigators, which the trade body said some members had expressed concerns about. Retaliation would likely also be considered a crime, according to the report, which noted that a marketer's exposure wouldn't likely occur before the discovery phase of a trial and that only a few cases would go to trial in this instance. 

Dive Insight:

The FBI's investigation into the media-buying market will be something to watch closely heading into 2019 and could have a dramatic impact on the trust between brands and their agency partners, which has already degraded in recent years. Part of that has been due to reports such as one by K2 Intelligence commissioned by the ANA, which uncovered pervasive non-transparent agency practices, including cash rebates clients weren't privy to, back in 2016. The K2 Intelligence report has been seen as a major catalyst for the current FBI probe, and more recent analyses from firms like McKinsey and ID Comms have signaled that some of these agency practices have continued despite growing scrutiny into the agency space. 

Speaking at the ANA Masters event last month, Doug Wood, a partner at Reed Smith, reinforced the gravity of the investigation and said that its outcomes will likely start to be felt in "the next six months to a year," according to Ad Age. The new white paper addressing subjects like marketers' fear of retaliation for cooperating with investigators suggests that some in the industry are worried that the situation could get combative and ugly. The trade group has continued to push for "meaningful cooperation" from its members and attempts to allay those concerns in the white paper. 

Agencies have taken hits to their business amid transparency concerns and other headwinds in recent years, and there's been a trend of more brands putting their accounts up for review or taking marketing operations in-house as a result. Any potential criminal charges around fraud would obviously have far more dramatic repercussions on any individual agency, along with likely compounding on existing business pressures affecting the category more broadly. 

At the ANA Masters conference, Reed Smith's Wood said that some subpoenas had already been issued as part of the federal investigation and more were to come. The Wall Street Journal reported in late September that Vivendi's Havas was among the agencies being looked into by the FBI.