• by Tig Tillinghast , February 8, 2002

While everyone is collectively gasping in shock at the alleged self-dealing done at Enron, we should take a look at some of the conflicts of interest alive and well in the ad industry.

Shocked we are, just shocked, at the fact that the people hired to audit the large energy trading firm were also taking at least as much money in consulting fees on the side from the same company. Yet that pretty well describes how our own auditing and analyst community does it.

I've sat down to more analyst meetings than I can count to be interviewed by the large research and analysis firms. Almost every time, they also attempt to schedule a "consulting sales" meeting at the same time. Imagine an Internet startup firm hoping to be mentioned in an upcoming research report, getting the hard sales treatment from the research firm just prior to the analyst meeting.

Most of the auditing companies for online traffic have attempted or are attempting to develop consulting services. These create the very same conflict present in an Anderson-Enron situation.

The agency folks aren't immune to such conflicts. In fact, I think we may have invented them. We sell ourselves to clients as "agents" acting in their best interests, yet we make money as a percentage of the amount of money they spend or waste on advertising. The cozier the relationships between media people and agency people, the greater the danger that marketing clients get taken to the cleaners.

Perhaps the worst example of inherent conflicts in the industry is the agency consultant business. There are a lot of people out there selling themselves to marketers as the consultant that can help them choose an agency. And who makes their short list of agencies to consider for a client? You may not be surprised to find that it tends to be the list of agencies that retain the same consultant for special projects.

It's bad enough that, while running A&L's online operation out in San Francisco a few years back, I had the squeeze put on me by a dishonest consultant in Los Angeles. When trying to convince a prospective client to let my agency into the pitch, I was told to go through the consultant. When I called the consultant, he wanted to talk first about potential consulting he could do for my agency (I declined). It reminded me a lot of my recent dealings with Internet research companies.

Perhaps what our industry needs is the equivalent of a few shareholders lawsuits, marketing clients suing their agency or analyst for bad advice due to a conflict of interest. That wouldn't solve the problem completely, but it might at least make the lawyers at the various conflicted firms insist that they disclose their conflicts to their clients. It would be a start.