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Editorial: O&M case highlights the need for new fee system.(Ogilvy and Mather Worldwide Inc.)
The fraud perpetrated on the US government by two former executives of Ogilvy & Mather in New York is inexcusable but explainable. Indeed, given that the pressures on agency margins show no signs of lifting, it is a surprise, and a relief, that no other transgressions have come to light.
Of course, there can be no justification for the overbilling that happened at O&M. It was a criminal act that not only led to those who sanctioned it facing possible jail sentences but tarnishes the reputation of the industry as a whole. That said, it's equally true that the incident highlighted, in the most dramatic way, the desperation that drives an agency manager to resort to such measures and the need for clients and agencies to agree what constitutes a fair rate for the job.
The O&M affair, in which the executives dishonestly attempted to make up a projected dollars 3 million shortfall on the Office of National Drug Control Policy account, is an extreme example of what can happen when an agency is prepared to take business at any price. In the UK, ISBA is working with the IPA and the Chartered Institute of Purchasing & Supply to come up with a remuneration framework that rewards agencies properly while remaining compatible with advertisers' best interests.
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