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- A fired WPP exec claims in a lawsuit that the ad agency group retaliated against him.
- Richard Foster says he was fired after he raised concerns about alleged kickbacks.
- WPP said it would defend itself "vigorously" against the claims made in the suit.
A fired executive at WPP is suing the advertising agency giant, accusing the company of retaliating against him and firing him after he raised concerns that the group's media investment division was allegedly running an improper kickback operation.
Richard Foster spent 17 years working for GroupM, WPP's media arm, which controls more than $60 billion in advertising spending for clients such as Google, Unilever, and Ford. GroupM rebranded to become WPP Media this year.
Foster was formerly the global chief executive of Motion Content Group, a division of GroupM/WPP Media that produces and co-finances TV series such as "Love Island" and brokers other entertainment partnerships.
The lawsuit says that Foster grew increasingly concerned about a practice within GroupM's trading division known as "volume-based discounts." GroupM would leverage the power of its billions of dollars in client ad budgets to secure incentives from media owners — such as cash rebates or free or discounted inventory — but not always disclose or pass these back to clients, the lawsuit alleges.
In short, Foster alleges in the suit that WPP had created a hidden way of generating profit and wasn't acting in the interest of its advertiser clients. He claims that when he brought this to top management, the agency group reacted by firing him rather than investigating his concerns.
Receiving media rebates isn't illegal in the US. That said, the ad industry has previously been warned by legal experts that rebates could amount to a breach of contract or even fraud if not disclosed to the client or if advertisers were deceived about the practice. Public companies are required to accurately record all income, including rebates, in their financial statements.
"The scale of this purchasing power enabled GroupM to leverage their client spend to force many ad-supported television and media platforms to give GroupM discounts, which, rather than being passed back to clients, GroupM turned into a non-disclosed profit center," Foster's lawsuit says.
The lawsuit says Foster estimated that over the past five years, GroupM generated between $3 billion and $4 billion by striking rebate-driven deals, of which the agency improperly retained approximately $1.5 to $2 billion. The suit doesn't provide further documentation to support this claim.
"The Company is aware of a lawsuit in the New York State Court filed by a former employee who was let go in a recent organizational restructuring," said a WPP spokesperson in a statement. "The court has not yet made any findings in relation to the allegations and we will defend them vigorously."
The topic of agency kickbacks set a dark cloud over the ad industry a decade ago. In 2015, Jon Mandel, a former WPP media agency exec, gave a presentation at a marketing conference that alleged agency rebates and kickbacks were a widespread practice in the US. The following year, the Association of National Advertisers, a US trade body, published a bombshell report by the corporate investigations firm K2 Intelligence, which alleged rebates and other non-transparent business practices were "pervasive" among US media agencies. Big agency groups at the time slammed the report as inflammatory, criticized its methodology, and broadly denied wrongdoing.
In reaction to the report, some advertisers renegotiated their contracts or audited their media agencies to push for more transparency. In 2018, federal prosecutors in Manhattan initiated an investigation into media-buying practices in the US, The Wall Street Journal reported, though no criminal charges have been brought.
Foster's lawsuit catapults the controversial rebates issue into the present day. It comes at a rocky time for WPP, which has said it expects to report a second consecutive annual revenue decline this year. The company's share price has more than halved in the year to date, with the group having lost key media accounts, including many in the US, to rivals such as Publicis Groupe and Omnicom.
Foster claims he raised concerns with multiple senior WPP executives
Foster said he repeatedly raised concerns over the years with senior WPP and GroupM executives, including former CEO Mark Read and Nicola McCormick, WPP's general counsel for media, that rebate deals were unethical and posed a significant legal risk to the company, the lawsuit alleges.
In October 2024, Brian Lesser, the newly appointed global CEO of GroupM, requested a meeting with Foster and asked him for a "candid assessment" of the division's operations, including any potential issues, the lawsuit says. Foster says he also detailed his recommendations to develop a new WPP Entertainment division, to build on what he had achieved with Motion Content Group.
Upon Lesser's request, Foster submitted a 35-page report after the meeting that included a section outlining his concerns about GroupM's rebate practices, the lawsuit says.
Foster estimated in the report that GroupM derived nearly $1 billion in global net sales from "non-product-related income," such as rebates and "purchase risk" media deals. In "purchase risk deals," the agency would use its collective client spending power to buy large blocks of advertising inventory upfront to obtain pricing discounts, and then sell it back to clients through opt-in agreements.
Foster claims many large advertisers were opposed to such deals because they were designed to benefit an agency's bottom line rather than the client's.
The suit appears to describe a form of what's known in the industry as principal media buying, so-called because by buying inventory and reselling it to clients, agencies act as a "principal," or vendor. A report published last year by the ANA found that principal media buying was on the rise at holding companies due to downward pressure on agency margins and a push from marketers to bring down media prices. The report found that principal media can save advertisers between 10% and 15% in media costs, but some marketers had concerns about potential conflicts of interest and the quality of the media they were purchasing.
Foster claims that he was squeezed out of WPP after raising rebate concerns
The lawsuit says that in a phone call with Foster in January of this year, Lesser initially expressed concerns about potential risks tied to such deals, but later asked him via text to reproduce a "sanitized" version of his report to exclude any overt criticism of GroupM's trading operations. Unbeknownst to Foster, Lesser had already sent a copy of the original report to Mark Patterson, the executive responsible for GroupM's trading activities. Patterson is currently WPP Media's global president of markets and business operations.
Hours after that text, the suit says, Foster was "blindsided" by a restructure announcement that saw the sports and entertainment divisions report directly to Patterson. The following day, Foster's role was changed from CEO to global president, with responsibility for the APAC and LATAM regions and the entertainment and sport divisions.
Foster alleges in the lawsuit that he was then immediately excluded from key meetings, cut out of deals, and isolated from decision-making. In July, GroupM terminated Foster without cause, the lawsuit says.
"At no point did WPP or WPP Media conduct a formal review or investigation into Foster's reports, as required under their compliance policies and applicable whistleblower protection laws, nor was corrective action ever taken," the lawsuit says.
The lawsuit, filed in the New York State Supreme Court, is seeking more than $100 million in damages for charges of retaliation, wrongful termination, and violations of whistleblower protection laws.
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