Of late, the crackdown on corrupt advertising agencies has intensified. The move to press charges on the institutions have piled pressure on them to adopt compliance programs. The sad truth is that most of the compliance programs tend to counter most of the practices custom to the institutions. Some loopholes and vulnerabilities lie in the ad market. The challenges lie in the modes of engagement with the ads owners, the media and agencies involved, and as well as the payment structure adopted by the advertising companies.
In Brazil, the mode of remuneration adopted by agencies comes in the form of bonuses. By the use of agency discount, the agencies provide services to the advertisers according to meioemensagem.com.br. However, the payment received reflects the medium in which the adverts are carried to the public. It is in this relationship where loopholes exist. As a result, the advertisers make use of the vulnerabilities and misuse them.
According to Bruno Fagali, a Brazilian lawyer with specialization in corporate compliance and integrity, there are five avenues where ad agencies may get involved in unethical conduct.
The intermediary between the advertiser and the media is the agencies. According to the stipulated rules, it’s the responsibility of the agencies to charge the advertisers. They also have to carry the value of the services to the media. The vulnerability lies in the fact that an agency may fail to pass on the payments made by the ad owners to the media. On the other hand, the media may bloat the agency discounts and therefore, ruin competition.
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Another section where vulnerabilities lie is in the media assignment criteria. As Bruno Fagali explains, suggesting an appropriate medium of disclosure for a campaign by an agency may lead to improper performance. While it’s paramount for an agency to come up with a media plan, the parameters should be such that they are flexible to allow for future changes.
The third red flag according to Bruno Fagali lies in the Incentive plans. The incentive plan is an optional payment made to an agency by the contracted medium. A concern in this section arises when an agency is directed on the choice of medium to adopt.
If there are relations between advertisers’ officers and employees, Mr. Bruno Fagali says that the relations, in most cases lead to unethical misconduct.
Bruno Fagali uses his expertise in law to bring a new dimension to the legal system in Brazil. He specializes in matters relating to corporate compliance. Additionally, Mr. Bruno Fagali is on the frontline in fighting corruption and misuse of public resources.