January 6, 2009
It takes a single moment.
A single incident.
A minuscule fraction of time to change a whole industry and turn it on its side.
The buzz has been rampant about the economy and the digital shift, the fact that agencies may or may not survive the transition.
All kinds of discussions about who is taking over the reigns of the ad world and so on and so fourth.
The chatter has finally come to a head and a major agency has been busted for over billing on digital work.
Leo Burnett in Chicago has just been ordered to repay the Army (of all clients) 15.5 million dollars.
Ad Age writes.
"Burnett was treating the work of its own internet unit as if it was performed by a third-party contractor, as well as inflating the costs of subcontractors it worked with, in order to increase its profits."
Tax payer money! In a failing economy and the client is the U.S. Army, can it get any worse?
Finally the veil has been lifted.
I can't even imagine how often this goes on all over the place. Clients are getting reamed for millions of dollars and subcontractors never see a quarter of that money.
For years traditional agencies have been paying digital shops fractions of what their clients expect them to spend on their projects.
Leo Burnett just took a really hard fall and the domino effect may ensue. We all kind of saw this coming but no one was sure when it would hit and how it would start but I think it has started.
It will be very interesting to see what kind of ripple effect this has on the industry and if clients will start to come directly to the digital shops for fairly priced work.