It has not been a good autumn for media research. Last month, The
Daily Telegraph’s decision to research readership behaviour on its
rival, The Times, reminded everyone of the history of the National
Readership Surveys’ inadequacies in the area of section research. Then
we had the BARB television audience measurement system delaying the
publication of digital TV viewing data, and then denying it had broken
promises because it hadn’t made any promises in the first place.
But now we seem to have hit the choppiest waters of all - the recent
revelations that the Audit Bureau of Circulations system has been
systematically defrauded over the course of a number of years by three
Birmingham titles, now part of the newly merged Trinity Mirror group.
Figures for the Evening Mail and Sunday Mercury have consistently been
pumped up by about 17 per cent while those of the Birmingham Post have
been inflated by 10 per cent.
When fraud occurs these days, the smartest move is usually to announce
that the wrongdoing is the work of a rogue trader and that the system or
institutions involved are not compromised. Would that work in the ABC’s
case? And how worried should we be about the possibility that there has
been widespread and long-term abuse of the system?
In particular, what reassurances can Simon Devitt, the chief executive
of the ABC, give? None, at present, is the simple answer - the ABC will
begin an inquiry as soon as it can but the possibility of legal action
may well complicate or delay matters. Devitt says: ’We are certainly not
jumping to any conclusions at this stage and it may not be wise for
anyone in the advertising industry to do so either. The ABC audits
around 3,500 media entities - some we do ourselves but in some sectors
auditing is done by the publisher’s financial auditors, and that is the
case in this instance. Our relationship with the auditors is similar to
the one that they have with shareholders - they have a duty of
care.’
Which, of course, reminds everyone that the ABC is only an auditor at
one remove. It has to trust that a publisher’s financial auditor - in
Trinity Mirror’s case, PricewaterhouseCoopers - is doing a thorough job.
Does that system need re-examining? Devitt is keeping an open mind but
he suspects not. ’I can understand why some people might now want us to
check for fraud at every company in the UK but we are confident that
this is an isolated incident and any circulation manager will tell you
how rigorous the process already is,’ he says. ’On the other hand, there
is always room for improvement and if we need to improve the rules we
will end up with a much strengthened ABC.’
But, as Devitt has indicated, it could be a long while before the ad
industry gets at the truth because it could all be sub judice. And
although Trinity Mirror has indicated that compensation to advertisers
and agencies is an issue, the entire business could be messy and drawn
out.
That would be a worry for a lot of buyers. Although readership, as
measured by the NRS, is regarded by many as a more important trading
benchmark, ABC figures are used to derive ratecards and, especially in
sectors that are traded on a commodity basis, are increasingly used as a
trading currency, with the NRS and TGI surveys used mainly for
planning.
Tim Kirkman, the press director of Carat, is worried about the long-term
implications of this scandal. He says: ’There is a widening credibility
gap with the ABC figures. Previous arguments surrounding the ABC were
all about what we were counting and how we were to go about it - never
about whether they were fundamentally incorrect. Now we have to face the
question about whether fraud isn’t widespread. We need a full statement
as to how this problem was able to occur and how the ABC will go about
stopping it happening in the future.’
It all depends on how easily the wool was pulled over
PricewaterhouseCoopers’ eyes in the Birmingham case. But Steve Goodman,
the head of press at MediaCom TMB, says the ABC must now take the
opportunity to look at a complete overhaul of the system. He says: ’If
the ABC were to be positive and try to turn this to its advantage, it
might argue that this could be healthy.
It might help it persuade publishers that they do need to address these
issues. I have some sympathy with the ABC in that respect because some
publishers can be very obstructive. And with regard to this particular
case, my view is that the ABC is not entirely to blame because it is
impossible to stop someone who is determined to deceive an auditor.’
But Goodman, like many in the industry, remains worried about how
Trinity Mirror will address the issue of compensation - for instance, he
doesn’t believe that the pounds 20 million total figure being talked
about will be enough. He’d like to see it handled on an industry
basis.
Marc Mendoza, managing director of Mediapolis, says that, where
compensation is concerned, it will be a matter for individual agencies
and clients.
He says: ’There are so many permutations of individual circumstances
that there is no way you can issue guidelines to cover them all. It
would not be acceptable if the only concession offered by Trinity Mirror
is merely to hold off on planned ratecard increases. We need to look at
a number of factors including free space, discounts and cash
compensation.’
As for the future of the ABC system, Mendoza thinks certain media
specialists have been too quick to ’grab headlines’ by encouraging
panic. He adds: ’It’s an irresponsible thing to do before we’ve even
begun to find out what went wrong and who is responsible. It is rare
when a number of people get together and work in collusion to hide
things. We have to reserve judgment until more is known.’
