A payment dispute that led to a public confrontation outside GroupM's offices in Shanghai last October has now progressed to an official civil complaint filed in Shanghai Xuhui District People's Court.
OTT programmatic buying agent Tansuo Media (探索传媒) filed the complaint against a legal entity of GroupM called QunShi (群势广告) on Tuesday, and said it plans to file another one against GroupM (群邑集团) itself. Overall, Tansuo is claiming it is owed RMB8.5 million (US$1.2 million) already a year in arrears.
The document, seen by Campaign Asia-Pacific, includes a 365-page dossier submitted to the court. It asserts that Tansuo is a victim of QunShi's breach of contract, citing articles 107 and 113 under China's Contract Law.
According to a data platform of local enterprise information called TianYanCha (天眼查, literally SkyEye Search), QunShi is wholly owned by WPP, with Patrick Xu (徐俊), who holds a dual role of CEO of both WPP and GroupM China, listed as its main legal representative. Two internal sources at GroupM's agencies also confirmed that QunShi is a GroupM entity.
Spokepeople from GroupM China and its PR agency, Paradigm Communications, have declined to comment on the matter and said they have not yet received official notice of the complaint.
Campaign China conducted an interview in Mandarin with Tina Shao (邵娅媛), marketing director of Tansuo Media. What follows is a translated and condensed version of that conversation.
Shao: The QunShi case is tied to a British household appliance brand operating under a distributorship model in China. This client's global headquarters have made payment in pounds to WPP in the UK according to our informants, but we are still unpaid for our advertising work until today.
Besides the QunShi lawsuit, we are already in legal proceedings with a broker designated by GroupM called JiXinTang (集信堂) for RMB9 million (US$1.3 million). We have been in dispute for more than one year and decided to take legal measures to protect ourselves after consulting our attorneys. A Changning court has agreed to hear our earlier suit and we have agreed to undergo mediation.
Campaign: Can you give us more background and context of the past events?
Shao: Tansuo Media became one of the programmatic buying sales agents of GroupM in 2016. From 2016 to the first half of 2017, our work with them is relatively smooth, including payments.
However, towards the end of 2017, GroupM's internal procurement process was changed, leading to a hierarchy of programmatic buying brokers designated by GroupM. This started from Q2 2017, and the payment process became very complicated.
In March 2018, we refused to accept sales orders from their designated brokers, but reached a compromise after that.
This may be the spark of a series of subsequent unhappy events.
Campaign: Why did you resist the designated brokers?
Shao: Regarding the logic of having designated brokers, what we know is that brokers may give GroupM a different credit period or rebate amount.
When our account team communicated with these brokers, we found that these brokers are actually very ignorant about OTT.
So even if GroupM gives us business through these brokers, we can only communicate directly with some media planners inside GroupM, as the brokers do not understand the advertising industry enough.
Our legal department says going through this kind of under-qualified broker is risky from both the financial and legal perspectives.
Campaign: What happened during the whole of 2018 leading up to the altercation?
Shao: During January to September 2018, we never faced any objections from GroupM made known to us through either written or verbal channels after every campaign execution in every post-campaign report.
Only when we ask them to pay up after they exceeded our 90-day credit terms, they then suddenly told us that we did not fulfil their ad-delivery KPIs, and then refused to pay on those grounds.
On 3 September, we had a face-to-face meeting with them in the 20th floor office of GroupM. At that time, our chairman and general manager Dong Dawei (董大伟) personally participated in the meeting. Other participants are our current CEO Xu Huaxin (徐华欣) and GroupM China chief media investment officer Rycan Di (底飞). At that time, they owed us more than RMB30 million [US$4.3 million] in total. [Editor's note: GroupM later paid much of this, according to Shao, leading to the current disputed total of RMB8.5 million, as stated above.]
According to our CEO Xu, the meeting atmosphere was quite unpleasant at that time. After our chairman and general manager Dong came out of the meeting, he began to feel very unwell and spent about five days in bed and visits to the hospital.
Due to the default in payment and the long-term pressure on our company funds, Dong passed away on 25 September. We can only say that the mental stress from this incident is one source of his illness.
On 8 October, we issued an obituary saying Dong died of exhaustion and a sudden cerebral infarction.
On 16 October, his widow Ding Xia (丁霞) had no choice but to go to GroupM office to look for Rycan Di to resolve the issue. She waited for half an hour in the conference room. When she learned that he was not available, she went back quietly.
On 23 October, she again went to look for Di to talk, waited for two hours and left.
On 24 October, Ding, together with a female assistant, went to GroupM again. When they arrived at the WPP Campus building, they were blocked by security guards and not allowed to enter. They were still very calm at the time, and they stood in the lobby waiting for Di. As you can see from the video, Di's attitude was very bad, and we ended up in more conflict.
Hope everyone can understand that no supplier wants to communicate with their clients in this way. Ding has been repeatedly rejected, and with so many people driving her away after her losing her husband, I don’t think anyone can stand it.
Campaign: Did you try to verify the accusations of GroupM separately?
Shao: Because GroupM has not provided us with evidence about which specific campaigns having anomalies, so we can only conduct checks ourselves, which is very time consuming. On our side, we have no access to ad monitoring reports from third-party tracking companies because they were appointed by GroupM instead of us, so we can't verify the reports of these third-party firms. If their metrics are fraudulent, this becomes a problem with the third-party company, not us.
Jingjing Ma contributed reporting to this article.