Advertising Agency Sued for Overcharging

How advertising agencies can deviate their clients' money for their own benefit.

Friday, February 25, 2011


IBM sued Ogilvy & Mather for overcharging its services for millions of dollars.

The recent lawsuit against Ogilvy & Mather by IBM for overbilling highlights the need to maintain a tight control over contracted advertising agencies. John Siefert, chairman of Ogilvy, acknowledged that the agency had overbilled IBM in the purchase of digital media. It is the third time that Ogilvy is sued by customers accused of overbilling.

How the scheme works:

When an advertising agency is hired for an ad, any discount for volume, discount or price advantage should benefit the customer, not the agency. In return for their services, the agency receives a flat fee or a percentage to place the ads.

But some agencies find ways for discounts or price advantages to stay within their wallets and not the customers. Generally, contracts signed with customers prohibit this practice but customers are historically bad at auditing agencies, allowing them to keep their money. That is basically the accusation Ogilvy is facing now, company owned by WPP (WPPGY).

More on this topic

Panama: Four Offers for Tourism Promotion

March 2016

The agencies BBDO, BB & M, and the consortia Team Tourism 16-17 and La Union Zaga submitted similar bids for $4.5 million to design and produce the country's tourism campaign.

From a statement issued by the Tourism Authority of Panama:

The Tourism Authority of Panama, held on Monday, March 28, tender act 2016-1-45-0-08-AV-008 805 to select an advertising agency to be in charge of the design and production of a national tourism advertising campaign.

Fined for monopolistic practices in Panama

January 2009

16 advertising companies were fined 1,021,000 dollars for using monopolistic practices.

According to "the agencies were sued for affecting the Panama Publicity Investment Control company and for giving services to Ibope Time of Brazil that were provided to them.

Advertising Festival in Antigua Guatemala

August 2013

On 6th and 7th of September 1200 representatives from advertising agencies and marketing companies in 15 countries will be attending "Festival Antigua".

During the event organized by the Guatemalan Union of Advertising Agencies (UGAP), the Jade Awards will be held, which reward creative ingenuity, plus there will be an industry fair for communication suppliers.

Guatemala: Site of Publicity Meeting

July 2011

On July 29th and 30th representatives from advertising agencies and marketing companies will be attending "Festival Antigua" in Guatemala.

Organized by the Union of Advertising Agencies, it will bring together twelve international exhibitors.

The executive director of the Guatemalan Union of Publicity Agencies (UGAP), Pauline Crespo, told that, "For us it is important to promote these activities because it is Advertising Month in Guatemala and it will encourage companies engaged in marketing and advertising to modernize and innovate."

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