Digital Transformation

Dentsu closes investigation into overcharging scandal, finding greater volume than predicted

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By Charlotte McEleny | Asia Editor

January 18, 2017 | 3 min read

Dentsu has released the details of the investigation it carried out, after it was revealed that it may have been overcharging some of its clients for digital advertising, including measures that it is taking to ensure it doesn’t occur again.

Dentsu President and CEO Tadashi Ishi, launched the results of the detailed report this week, which had been compiled by a committee, led by Shoichi Nakamoto, senior executive vice president and CFO, first announced in September last year.

Dentsu headquarters

Dentsu gives details on its investigation into overcharging for digital advertising

The data it surfaced presents the scale of the issues around the overcharging of digital services. It said there were four different types of issues; some leading to inaccuracies in reporting and some directly causing overcharging due to incorrect totals of posting volumes.

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It found that there were more instances than it had anticipated, with 997 instances of errors, compared to the 633 previously predicted. Yet the number of advertisers impacted were lower in the final report with 96 actually being impacted, versus 111.

The total number of instances of actual overcharging within those was 40, impacting 10 of Dentsu’s clients, to a total of 3.38m yen.

In addition the agency says the issues were limited only to the Japan business, and said: “Dentsu believes that this issue will not materially affect the company's financial results for previous fiscal years.”

The company has also investigated the reasons as to why the errors occurred, citing problems with business process, a lack of training for the HR management around some of the newer digital processes and a lack of coordination between other domestic agencies that were aligned to the work. A set of measures have been put in place to reflect these issues and prevent recurrence.

Dentsu’s domestic agency has been plagued by scandal this year, including the death of an employee that was reportedly due to overwork. Ishi announced last year that he was to step down from the agency, though a successor won't be named until after a board meeting this month.

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