Japan’s largest advertising agency Dentsu (4324.Japan), which controls about a quarter of Japan’s annual $61 billion advertising market, tumbled 4.4% in Tokyo today after media reports that it has been accused of overcharging clients.
Advertisement
After being notified by Toyota Motor Corp.in July of irregularities in its transactions, Dentsu launched an internal investigation and found that although it had charged customers the agreed amount for online banner advertising, the ads had not been displayed as promised.
Please Wait while comments are loading.
The firm began an internal investigation in August, which continues.
Most of the dubious dealings – which the company refers to as “inappropriate operations” – centered on Dentsu’s digital ads business.
Dentsu says the saga will not materially affect its business results and it would inform the market if this position changed. “All clients who may have been impacted have been communicated with already”, Dentsu said in a statement released Friday.
Dentsu said it has found 633 cases in Japan involving 111 clients and 230 million yen ($2.28 million) which may not have been handled properly.
We have been pursuing investigations through verifying and comparing various data and documents, conducting interviews of employees who were involved in the operations, verifying business flows related to the digital advertising services, and employing other feasible means.
The ANA’s report also highlighted the many conflicts of interests that have arisen as the global advertising industry has consolidated into just a handful of holding companies. “We are trying to determine the size of the inappropriate operations”.
“We sincerely apologize to our esteemed advertisers, the parties concerned and our shareholders from the bottom of our hearts for causing concern and trouble”, a Dentsu spokesperson wrote.
Advertisement
The controversy comes as transparency in digital media continues to be a controversial topic within the industry, particularly in the USA where the Association of National Advertisers recently released a report that found that “non-transparent business practices” – including rebates – are pervasive in the media landscape there.
