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  Requesting anonymity, a K2 executive was harsh, saying he thought the rebates could be classified as “civil or criminal fraud. In addition, publicly traded companies are required to disclose their finances, and they didn’t. There are a number of different angles a regulator or a prosecutor could use as a hook.”

  The report was vulnerable to criticism. Because no guilty agencies were identified by name, and because the charges were anonymous—“K2 found substantial evidence of non-transparent business practices in Agency Holding Companies, as well as in certain independent agencies”—all but the smallest agencies were tarred with this broad brush. The name-no-names approach was promulgated by the ANA, as the report says: “From the outset, the ANA made clear to K2 that the goal of the study was not to embarrass or accuse any individual or corporate entity of malfeasance.” Instead of singling out this or that agency for malfeasance, the report leaves the impression that all, or at least most, agencies are miscreants. Since the report fails to name client victims, all clients are left to wonder whether they might be victims.

  The agencies were livid. In a public statement, the 4A’s denounced the report, saying it is “anonymous and one-sided and paints the entire industry with the same negative brush.” They bridled that the ANA was treating their agency partners as targets of an investigation, even though the introduction to the report repeatedly claimed this was a “study,” not an investigation. Yet when asked whether his failure to name names slandered innocent agencies, former federal prosecutor and principal author of the report, Richard Plansky, described his work as an investigation: “I don’t think that’s a valid criticism. When you do an investigation and sources are ‘at risk,’ it is standard industry practice to grant them confidentiality.”

  Attorneys for WPP and Omnicom had their law firms dispatch letters to the ANA demanding proof that they extracted rebates. Each holding company denied they pocketed rebates in the United States. Martin Sorrell and Irwin Gotlieb publicly questioned the motives of K2 and Ebiquity, charging that both firms had an ax to grind because they were angling to become the go-to auditors for advertisers. Irwin Gotlieb went further, questioning the assumption animating the ANA report that agencies are agents for their clients. Gotlieb measures his words carefully and his answers to questions arrive as if in slow motion. In his office, he was asked, “Does GroupM receive rebates in North America?”

  He waited seconds to answer before stating flatly, “Zero rebates in North America.” There followed another long pause, before he continued: “We’ve been very clear. We are not an agency.”

  If they were not an agent of the client, he was asked, were they a partner?

  “I wish we were a partner. Ad agencies when they were formed acted like the seller’s agent, not the buyer’s agent. Look at who paid the commission. It was the seller. Somehow it evolved into a relationship where there was an assumed fiduciary responsibility to the client. However, contractual terms that have come into common practice, particularly over the last dozen years or so, are the kinds of terms that can’t be reconciled with an agent-type relationship. I will give you three examples: An agent can’t be held to deliver specific costs per thousands. Clients often ask us to provide guarantees and to put our fees at risk. It’s become common practice.” Second: “Agents don’t offer extended payment terms”—meaning they will not get paid for months—“which are now routinely demanded by clients. We’re not a bank.” Third: “Agents aren’t asked to indemnify clients for IP violations on technology. We’re not an insurance company.” Feeling pressured by clients to reduce their fees, and pressured by their holding companies to produce profit margins approaching 20 percent, and increasingly vexed by insecure relationships with clients, agencies don’t feel as if they have signed a marriage vow.

  This is one big takeaway from the ANA report: agency and client often don’t share a common definition of their role, and thus mistrust arises. When agencies aggressively seek new ways to generate income, like employing their own funds to gamble on buying ad time and later selling it at a higher rate, they think they are serving their fiduciary responsibility to shareholders; clients think of them as unfaithful. Clients say agencies are taking rebates that deprive them of money; holding companies say they are taking risks with their own money and being rewarded for it. The drive by holding companies to tap new revenue streams serves as evidence to clients that the agency has mistresses. When Dave Morgan of Simulmedia looks at how agencies, backed by the 4A’s, insist that in the new world they must be allowed “to trade on their own behalf” and maintain “undisclosable deals with media suppliers,” he concludes that this translates to rebates: “It’s pretty clear that the parsing of language became a big issue in the allegations and denials of rebate activities in North America. Not unlike, ‘I didn’t inhale.’”

  After reading the report, Rishad Tobaccowala of Publicis came away with two opposite conclusions. Agencies are at fault, he says: “There’s a lot of truth in that report. We’re trying to sell all the time. We don’t listen enough to our clients. We have to help our clients prosper. Yet the ANA report is the biggest mass suicide of CMOs. The ANA hired the hit man who in hitting the agencies also hit them by making them look like they did not understand the space or how to steward the money. The report helps give power to the CFOs and procurement officers, which spreads more distrust between client and agency.”

  By mid-2017, there was scant evidence that as a result of the report clients had reduced their ad spending with agencies, or whisked their business from the large holding companies to flee to smaller, independent agencies. Agency executives, in effect, boasted: Look, there have been no indictments or charges filed against any of us. However, what is clear is that the ANA report has had a poisonous impact on the trust client and agency require to partner. Clients are wary, often maintaining more of an arms-length relationship with their agencies. And many agency executives are dispirited. “We’ve been assaulted in the trade publications as crooks, with no letup,” says a senior agency official who does not want to be named. “By the way, your family reads this stuff too.”

  There was one other clear outcome: Once again, the report meant more business for Michael Kassan and MediaLink.

  15.

  CANNES TAKES CENTER STAGE

  “MediaLink is the embodiment of one zealous man’s unwillingness to say no. Michael built a giant dating service between circles that don’t know how to talk to one another. . . . He connected all these pieces. He has a rare ability to create a prom that everyone wants to be at.”

  —Digitas CEO Tony Weisman

  As his car inched along in clotted Cannes traffic, Michael Kassan’s four smartphones vibrated relentlessly, a flurry of calls and e-mails pleading for a few extra invites to his annual dinner at the world’s foremost advertising conference, the Cannes Lions Festival. Already he had approved four hundred media and marketing executive invitations to the exclusive June 2016 event he and MediaLink host at the Hotel du Cap, and some five hundred more people were clamoring to squeeze in. He had carefully added attendees to the $400,000 dinner from the cream of his media and platform client list, including NBCUniversal, Microsoft, the New York Times, the Walt Disney Company, 21st Century Fox, Facebook, Google, Twitter, Condé Nast, Hearst, Dow Jones, the New York Post, the Washington Post, Gannett, iHeartMedia, Viacom, Turner Broadcasting, Bloomberg, Flipboard, and Vox Media. He had included the holding company executives who often have a love/hate relationship with Kassan, wanting his favor yet fearing he might whisper to his brand clients they should move to a new agency. Brand clients like Unilever, AT&T, Verizon, L’Oréal, Bank of America, Colgate, and American Express were, of course, also invited.

  No other gathering during June’s weeklong festival—not those hosted by Facebook or Google with libations on the beach, or WPP’s afternoon buffet and Stream conference on the adjacent island of Ile Saint-Honorat, or even a luncheon invite from Rupert Murdoch—is more cov
eted.

  As usual, in Cannes MediaLink was performing a role that was a cross between curator and concierge. It dispatched a total of forty-five staffers to service ninety-one attending clients and participate in over seven hundred matchmaker meetings over the course of the week, not counting the onstage speeches and panels MediaLink arranged for clients. Each staffer organized about six meetings per client. Scott Goodman, the MediaLink vice president in charge of coordinating staff assignments, said most media clients first requested meetings with prospective advertisers, and then with agencies. “The event itself is the easy part,” Goodman said. “Even if you’re the best wedding planner, the wedding itself is easy.” What’s hard are the months of planning.

  Michael Kassan’s ready smile camouflaged the stress he felt in Cannes. “Just imagine,” he said as the chauffeured car headed to a dinner, “for five days at the end of June in a four-block radius on the Côte d’Azur, 100 percent of my revenue is there. Virtually every client is represented there. Here’s the Wall Street Journal. Am I going to turn down Dow Jones? I’m going to say, ‘You can have four dinner invites. You can’t have seven.’”

  An e-mail beeps from Revlon owner Ron Perelman asking to bring all the guests on his yacht. No, Kassan dictates to his chief of stuff, Martin Rothman, seated in the front seat.

  Beep: An e-mail from a CEO at one of the companies that reports to his friend Bob Pittman’s iHeartMedia, the powerful radio station owner who provides the dinner’s entertainment. Pittman induced Chris Martin of Coldplay to perform this year, as he induced Sting in 2015, Mariah Carey in 2014, and Elton John in 2013. The iHeart executive asks for an additional five dinner invites. Kassan has a sly solution: “This is like when my son got married to the daughter of our best friends and we were making the wedding list and someone was friends with both sides. I said, ‘This is on your fucking list!’ Am I going to be the guy who tells him no? I’m going to have Bob tell him no.” His chief of stuff makes a note.

  In Cannes, too, Kassan is a celebrity. He gets the choice Hollywood star–named suites—Sean Connery, Sophia Loren, Cary Grant (renamed the Liu Ye suite)—at the festival’s ground zero, the Carlton Hotel. He knows the names and embraces most folks who say hello or seek a private word. He slips from one meeting or panel to another, rarely staying long but always able to boast that he was there. Maître d’s bow as he calls out their first names, no doubt remembering the many times he has generously schmeared them. After hosting a cocktail party Tuesday night, Kassan turned to his chief of stuff and asked Martin Rothman to book a table at the Le Maschou restaurant. Athough a long line in front of the restaurant snaked a good distance down the cobblestone hill, Kassan was immediately escorted to Le Maschou’s exclusive outpost directly across the narrow street, where his party of three dined alone in a space that could accommodate maybe ten.

  Tony Weisman, then the CEO of Digitas, which retains MediaLink to arrange meetings, speeches, and panels at industry events like Cannes, marvels at a feat Kassan pulled off here. Viacom was a client, and its CEO, Philippe Dauman, was on the cusp of getting fired, his cable ratings plummeting, his pay climbing to $54 million in 2015 as his stock dropped like a rock. Dauman would host a dinner Thursday, and he tasked Kassan with producing an A-list of guests. “I would love to know what Philippe Dauman pays Michael to get the four holding company CEOs to attend his dinner,” Weisman said. One lure to attend was the reality-TV equivalent of watching how Dauman handled his pending corporate death.

  Weisman salutes Kassan and MediaLink: “They do not have a competitor. MediaLink is the embodiment of one zealous man’s unwillingness to say no. Michael built a giant dating service between circles that don’t know how to talk to one another.” Brand clients like Unilever and AT&T, which in the past did not have to think about new ad tech or digital companies like Facebook, and publishers like Condé Nast or Hearst, which “didn’t have to worry about knowing the brands” because the brands sought their platforms, were suddenly at sea. “He connected all these pieces. He has a rare ability to create a prom that everyone wants to be at.”

  * * *

  ■ ■ ■

  The Lions festival was launched in Venice in 1954, alternating between several cities, including Cannes, before making Cannes its official home in 1984. Initially, it was naturally dominated by the creative agencies. Philip Thomas, who was the CEO of the Cannes Lions before being promoted to CEO of Ascential Events by its corporate parent in 2017, remembers that in 2003 Jim Stengel, then CMO of Procter & Gamble, was the first client to make a point of attending, and this represented “a big, big shift. That attracted more of the media agencies.” Today, Thomas says, clients comprise one quarter of all attendees. Next came the digital companies, then the media and publishing platforms, and most recently, the consulting and software companies. A breakthrough in getting celebrities to attend and bulking the press contingent up to six hundred, he says, was the arrival in 2014 of Kim Kardashian. “The Mail Online were very, very clever. They took a yacht at our festival” and invited her. It was the same year that the festival invited her husband, Kanye West, to appear. The Mail “got blanket coverage,” providing an incentive for celebrities to flock to the festival. Hoping for buzz, more companies hired yachts or gave opulent beach parties and invited celebrities.

  Some old-timers, like Bob Greenberg of R/GA, are devoted to Cannes. R/GA brings thirty executives. “I go and I come back and I can see patterns,” he says, whether it is glimpsing the disruptive power of WeChat in China or digesting the creative work of competitors. Not all of his creative colleagues are as enamored. Jeff Goodby, who was anointed president of the festival in 2002 and head of the prestigious Titanium jury in 2006, is troubled by what he sees as a diminution of attention for creative advertising. “It’s about making money. It changes everything,” he says. It changes the festival, he has written, into “a plumbers’ or industrial roofing convention, after which I go home and begin to explain to a friend that there is an amazing new fiberglass insulation technology.”*

  The Cannes festival is owned by Ascential Holdings, a company based in the UK that organizes festivals and exhibitions, and provides economic information and analysis for clients around the world. The Lions festival is a lucrative business. Each of the fifteen thousand delegates who attended paid as much as 3,750 euros (approximately $4,400)* for the full eight days with “line-skipping privileges,” or a somewhat lesser amount for fewer days and perks, down to 895 euros “for students and professionals under thirty.” Each agency from the 110 countries that attends and submits creative entries in one of the twenty-four Lions awards categories pays an average of 500 euros for most entries, rising to 1,399 euros for the most prestigious prize, the Titanium Lions. In 2016, there were 43,101 submissions and 1,360 Lions awards presented. If only four awards were given in each of the twenty-four categories (Grand Prix, Gold, Silver, and Bronze), the total number of winners would only be ninety-six. Cannes inflated the number of winners by giving multiple prizes for each category.

  A third Lions source of revenue comes from its four hundred event sponsors, who Thomas says, pay from $20,000 to $700,000. This includes the cost to Samsung of its virtual reality exhibit, and the total of $300,000 for MediaLink’s sponsorship, and two large LED electronic screens on the lawn outside the Carlton Hotel, which clients like the New York Times and the Washington Post subsidize to carry their news flashes and promos. Other revenues sprout from its archive of speeches and talks and ad campaigns presented at the festival or at its three regional festivals. (For 18,000 euros, 20 employees in a company get digital access for one year to 270,000 ad campaigns and 450 hours of talks.) Yachts receive a parking spot in the harbor plus five festival passes for $22,715. In all, the 2016 festival hauled in $62.5 million for Ascential.

  Attendance is pricey, and not just because a Black Angus chateaubriand in the Hôtel Martinez costs $161 and Delta raised its round-trip first-class nonstop New York to Nice fl
ight from $5,332 to $12,069. In addition to the attendance fee, MediaLink pays for its forty-five staffers’ airfare, hotels, and food, plus the Hotel du Cap dinner they host, plus the separate Kassan-hosted Boys Night Out sponsored and mostly paid for this year by Hulu, and the Millard-hosted Girls Night Out party cohosted by Facebook and iHeartMedia. The cost to holding companies like WPP and Publicis works out to about $20,000 per employee. WPP had a thousand employees attend in 2016.

  The awards are especially prized. “Awards fulfill a function in our industry,” Philip Thomas says. Since choosing winners is subjective, “the only way to prove you’re creative is the external acknowledgment of an award.” Bob Greenberg’s loftlike R/GA offices at Tenth Avenue and West Thirty-third Street contains a shrine of six walls of trophies and plaques, including the thirty-three Lions R/GA won last year, when he was also awarded the coveted Lion of St. Mark lifetime achievement award. Greenberg extols the awards: “By winning awards you are proving to clients you are good. It’s not that different from the movie business. The attraction for me of the rewards is to attract and retain talent.”

  Amir Kassaei, the chief creative officer at DDB Worldwide, disagrees. Although Kassaei says his agency had won more Grand Prix Lions at Cannes than any agency, nevertheless he wrote in a 2016 newsletter that winning awards took too much time and money and did not prove the effectiveness of the advertising. He pledged that DDB would vie for fewer awards. Why? “Because we believe that winning awards only means that you are good at winning awards. Because we care more about selling our clients than ourselves. Because we care more about emptying our clients’ shelves than filling our own with trophies.”* (Kassaie’s words are not matched by his agency’s boasts. If one clicks on the DDB Web site, it touts the hundreds of creative awards won, including almost a hundred Cannes Lions.)