'Anyone would think it's ISIS mark two,' says Saatchi & Saatchi CEO on the investigation into ad agency kickbacks

Advertising agency executives have a lot on their plates at the moment. This summer, a record number of marketers put their media accounts up for review, a phenomenon dubbed "Mediapalooza," and last month the Association of National Advertisers announced an investigation into the media rebates and transparency issues plaguing the sector.

Business Insider recently caught up with Robert Senior, the worldwide CEO of Publicis Groupe-owned Saatchi & Saatchi, at the company's London headquarters and asked for his view on two of the big events that have shaken the ad industry this year.

Senior told us one of the unfortunate side-effects of Mediapalooza was that it has ignited discussions around some of the so-called "dark arts" of the industry. But he said he took a "dim view" of the ANA's investigation into rebates, which he doesn't have a problem with, so long as an agency is fully transparent and working in a client's best interests.

Mediapalooza

In what advertising trade title Adweek dubbed "Mediapalooza," about $30 billion of media money has been up for grabs as some of the world's biggest companies - Coca-Cola, Fox, Procter & Gamble, Visa, and more - have put their media agency accounts up for review.

These reviews let clients reassess their media spending, often by putting their accounts up to pitch to a number of agencies. The result is a lengthy and often expensive pitching process, where incumbent agencies are often forced to lower their prices in order to retain their accounts.

Saatchi - a creative agency involved with the creative process and strategic ideas behind producing ads rather than a media agency responsible for the buying media and the placement of ads - has been somewhat shielded from the domino effect of reviews. However, Senior says the agency is still called on by other businesses under the Publicis Groupe to help with the creative element pitching process.

Publicis Groupe claims it has fared the best compared to the other holding groups during Mediapalooza so far, but the fate of some huge accounts that could tip the balance - including Procter & Gamble North America - have yet to be decided.

There are many conflicting theories as to why Mediapalooza - the biggest wave of marketers putting their media accounts up for review ever seen in history - happened this year.

Here's Senior's take:

I think it's a knee-jerk reaction from the recovery rates of some countries and GDP being lower than people might expect and what that encourages is a cost-cutting mentality. Once one big company [calls a review,] then so does another. It's a bit like when one supermarket has a big promotion and they all follow. It's just the way of the marketplace and it's a shame. I don't think it has been particularly edifying, particularly with some of the press around some of the darker arts.

Senior on the ANA investigation into agency transparency: "I take a dim view on it"

We asked whether the "darker arts" Senior referred to is the same thing the US-based Association of National Advertisers hired a firm that employs former FBI agents to investigate: transparency.

The US marketer trade body wants to uncover and get industry perspective on "non-transparent behavior" such as agencies receiving rebates from media companies and not disclosing them to their clients and also the practice of media arbitrage.

The issues were thrust into the spotlight at the trade body's conference in March this year when former Mediacom CEO John Mandel alleged agency kickbacks - which many people thought were ancient history in the US and only still existed overseas - are still "widespread" and cited them as one of the reasons he left the agency world.

Business Insider has been told that many agency execs are worried about what the investigation might uncover, not least because the ANA appointed K2. Some in the industry are worried the ANA might be looking for a smoking gun - hauling up individuals for their apparent bad business practice.

Senior takes a "dim view" on the investigation.

"Anyone would think it's ISIS mark two. That's my problem with it. It's sort of ridiculous ... I personally think it's another example of trying to create some kind of utopian facade of equality and best practice in the world of business. When, from time immemorial, business has been conducted outside the business meeting. That's just different people responding in different ways to each other and making deals. Regulators can try to remove the human behavioral aspect of the business, but it's a bit like the Chinese government trying to control the internet: good luck," Senior said.

Senior says he doesn't have a problem with rebates so long as they are fully disclosed to the client and agencies continue to serve the client's best interest. If in that process they are able to reward their agency, reward their people, have fun, and be successful, they're more likely to do more good work for the client.

"If you have managed to build a scale business, there will be some advantages to that. Why is that bad? What you do with that advantage is surely up to you. If you wish, with full transparency and full disclosure, to give that back to the client that is essentially saying 'because I've been successful I'm going to give it back to you,'" Senior said.

"I'm not so sure about that. I think the surface headline [about the investigation] sounds like 'ill, dark practice, we must right this wrong,' but the Realpolitik in me says: 'Isn't this just Darwinian? Really? Is it really worth all this fuss?' Why don't you apply those same people and go to FIFA where the tax payers' money is being spunked on everything but the tax payers' best interests? A World Cup in Qatar where it is 40 degrees [Celsius,] and nobody plays football. What football watching public around the world is benefiting from that?" he added.

Senior looks ahead to 2016

Quarrels with Mediapalooza and the ANA investigation aside, the agency boss told Business Insider he is hoping to return his business back to an "accelerated momentum" in 2016.

Both Publicis Groupe and Saatchi have recently reported lackluster financial results, but Senior told us times are now "exciting" again. 

He cited work from Saatchi's P&G team, the announcement that client Toyota has been made the 2020 mobility sponsor for the Olympic Games, and the company winning the pitch for Visa Europe as just some of the reasons why he's "looking forward to waking up on January the first 2016."

He explained how Saatchi & Saatchi was getting its "swagger" back - something the brand with its "Nothing is impossible" slogan has always stood for and what Senior believes sets Saatchi apart from its peers.