Last weekend, the advertising circle exploded. Three executives of GroupM, the world's largest media buyer, were detained by the police after taking advantage of their positions to accept huge bribes. The unspoken rules of the advertising industry also surfaced due to this incident... On October 19, a report by the British "Financial Times" took the lead in stirring up the Chinese advertising industry.
The media quoted people familiar with the matter as saying that Shanghai police raided the Shanghai office of GroupM, a media agency owned by WPP, one of the world's largest advertising and communication groups. In addition to questioning employees, they also detained a senior executive.
According to the report, a financial executive of GroupM China has been detained for further questioning. The report also mentioned that the police also talked with other local executives during the raid, including Xu Jun, who has served as GroupM China CEO since 2017.
On October 21st, the boots dropped. The official Weibo account of the Economic Crime Investigation Corps of the Shanghai Public Security Bureau confirmed and reported the case on Weibo. After preliminary verification,
According to Modern Advertising Magazine, the above-mentioned three people are Di Fei, chief investment officer of China, Yao Lan, managing director of digital media buying of GroupM China, and Hong, the former head of OTV/OTT of GroupM Group.
Among the three, the one with the highest title and the most fame in the circle is Di Fei. Due to his special surname, he was also the first name to be "deciphered" by his peers after the announcement.
Di Fei is a veteran of the fast-moving consumer goods industry. Before joining GroupM, he led the sales business integration of Kraft and Danone, Kraft and Cadbury; led the rapid development of GlaxoSmithKline in China, and moved its core management team from Beijing to Shanghai. In 2015, he joined GroupM China as managing director of media buying, responsible for the group’s content marketing business.
Two years later, his title changed to chief media investment officer.
You must know that as a member of WPP Group and the world's largest media investment management institution, GroupM has always been the best spokesperson for 4A media agencies. The level and importance of Difei are self-evident.
Another executive involved in the case, Yao Lan, is a subordinate of Di Fei and a general media purchase negotiator at GroupM.
After the reorganization in October 2022, he will be responsible for half of GroupM China's (media) buying volume, including Display advertising and Feeds information flow advertising, as well as Performance performance marketing.
According to the advertising industry public account "Madison Bang", Yao Lan officially resigned as the managing director of GroupM China Digital Media Buying in June 2023.
Although the official details of the case have not been announced, it can be inferred from the titles of the three detained persons that this case may be related to bribery during media procurement. There are rumors that,
Article 163, Paragraph 1 of the Criminal Law stipulates that any staff member of a company, enterprise or other unit who takes advantage of his or her position to demand property from others or illegally accept property from others to seek benefits for others, and the amount is relatively large, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined; if the amount is huge or there are other serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than three years and not more than 10 years, and shall also be fined; if the amount is particularly huge or there are other particularly serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than 10 years or life imprisonment and shall also be fined.
In the eyes of outsiders, the advertising industry has been packaged by some film and television works and classic cases into a creative industry with "inspiration" everywhere. But in fact, a large proportion of jobs in the real advertising industry are media business agencies that do not require creativity. Even the world-renowned 4A companies cannot escape the profit model of earning the difference between the buying and selling prices of media—using the creative part of services at low prices to maintain customer relationships, and then using media agencies to earn the difference to maintain revenue.
In this context, "price difference" has a lot of room for manipulation. "Eating rebates", which is obviously derogatory in our usual sense, can also be called "rebates" in the advertising industry. The wording is neutral, and the attitude of industry insiders towards it is also unclear.
Xiao Zhou, who works in the media, believes that this is already a "business rule." Project manager Lisa said that this is an unspoken rule in the media and advertising industry. "For example, Party A gave us a project with a budget of 500,000 yuan. The contact person told me to find three companies to bid. In the end, we won the bid with 490,000 yuan and gave 10% of the points back to the contact person. The media is even simpler, and the blogger can directly give the points back to the individual."
The "grey" part of this operation process is that the rebates can be related to the company or not. "It depends on my ability," Lisa told the Blue Whale reporter. "If the rebate is a company rebate, it will be directly counted in the project profit, but if it is an individual, it depends on whether Party B turns a blind eye."
As an unspoken rule, the "rebate system" also has a set of "hinting words" in the industry. Lisa gave an example: "I have strived for a budget of 500,000 for this project, so your (profit) space should be very large (you understand, I will share some of the profit), or, how much profit do you calculate now? It doesn't matter, I will help you see if there is any room (any more space will be returned to me)."
However, direct requests for rebates have become very common in recent years. Xiao Zhou said that some Party A contacts will specify the rebate ratio in advance. "If you can accept it, then cooperate. If you can't accept it, then switch to another company."
Xiao Zhou said that Party C's rebate to Party B is usually around 5%-10%, but MCN is often higher than this value, "some offer 30% rebate." Pure media purchasing is "deeper", "Many offline advertisements are published at a discount of 10% or 20%, so you can imagine the space."
When working with large media companies that hold power, suppliers tend to be very passive. The process of rebates is always "exploitation at every level", the cost is reduced step by step, and the effect of the final project will be reduced accordingly. "Creativity requires money to pay for it. If you don't have money, you can only copy it over and over again," Lisa said helplessly.
According to the rankings and data of Chinese media agencies (including local and multinational groups) released by SiMediaSizhi in June this year, the six major international media agency groups accounted for about 31.5% of the Chinese brand advertising market, with a total value of US$20.8 billion. WPP's GroupM Media has led the way for many years with a market share of 15.3%, and its business volume is twice that of Publicis Media, which ranks second (7.9% market share).
(At the request of the interviewee, Xiao Zhou and Lisa are pseudonyms)