PG Procter and Gamble Co

By Jack Marshall 

The Association of National Advertisers said this month that rebates and nontransparent practices are "pervasive" in the U.S., as evidenced by the outcome of an eight-month probe by corporate research investigations firm K2 Intelligence.

The ANA trade group, which represents big advertisers such as AT&T Inc. and Procter & Gamble Co., concluded that ad companies are being rewarded with rebates from media companies for spending money on behalf of their clients, without the clients' knowledge.

The report raised alarms for marketers about how their ad agencies conduct their business, but not everyone is convinced by its findings.

Speaking during an interview at the Cannes Lions advertising festival in France this week, WPP CEO Martin Sorrell questioned the report's integrity, given the fact it was paid for by a trade body made up of marketers.

"To call it an independent study when it was funded by one side is a misnomer," said Mr. Sorrell, adding that it may be considered independent had a third party had an opportunity to evaluate it.

"Everyone's worried about transparency. GroupM's position has been that if any client is concerned they should deal with us one-to-one," Mr. Sorrell said. GroupM is a unit of WPP.

Echoing the sentiments of many executives in Cannes this week, Mr. Sorrell also described a growing "duopoly" in the ad market between digital ad giants Facebook and Google.

This year WPP will spend a total of $73 billion on advertising, 5.5 billion of which will paid to Google and around $1.7 billion of which will be spent with Facebook.

"The duopoly is intensifying," Mr. Sorrell said, adding that Facebook will become WPP's second-largest media vendor by 2017, behind Google.

Despite worries from some in the industry about the so-called "walled garden" strategies those companies may be pursuing in relation to their data and their advertising platforms, Mr. Sorrell said WPP isn't overly concerned.

"Walled gardens are not an issue as long as you have more than one, but measuring outcomes from that media has to be done by a third party. They can't measure themselves," he said.

Mr. Sorrell also weighed in with his opinion on the U.K. referendum, through which the country will decide whether to leave the European Union after more than 40 years.

The outcome of Thursday's vote will affect Britain's economy and its trade agreements with Europe, so the decision has been fiercely debated by business leaders across Europe in recent months.

For Mr. Sorrell, whose company is based in London, the answer is clear: Britain should vote to remain.

"From a personal point of view, I think we should remain in the EU," Mr. Sorrell said.

"Everybody is focused on the short-term, but the key issue is whether the U.K. economy will grow faster on its own or as part of the EU. I think the latter is the case," he said.

Mr. Sorrell likened the EU to a merger between companies, through which those companies may be able to grow faster together than separately. He also stressed that a vote to leave the EU could have unintended and negative consequences for young people.

"This is so important for young people. If we vote to come out, it will affect my generation, but more importantly my kids and grandkids," he said. "I don't think isolation works in this era."

Write to Jack Marshall at Jack.Marshall@wsj.com

(END) Dow Jones Newswires

June 22, 2016 14:41 ET (18:41 GMT)

Procter and Gamble (NYSE:PG)
Historical Stock Chart
From Mar 2024 to Apr 2024

Procter and Gamble (NYSE:PG)
Historical Stock Chart
From Apr 2023 to Apr 2024