Fired WPP executive sues advertising agency giantaccusing the company of retaliating against him and firing him after he raised concerns that the group's media investment arm was allegedly conducting an improper kickback operation.
Richard Foster spent 17 years at GroupM, WPP's media division, which oversees more than $60 billion in advertising spend for clients such as Google, Unilever and Ford. This year, GroupM was renamed WPP Media.
Foster was previously CEO of Motion Content Group, a division of GroupM/WPP Media that produces and co-finances series such as “Love Island“and brokers other entertainment partnerships.
The lawsuit says Foster became increasingly concerned about a practice by GroupM's trading unit known as “volume discounting.” GroupM will use the power of its billions of dollars in clients' advertising budgets to secure incentives from media owners – such as cash rebates or free or discounted inventory – but does not always disclose or pass them back on to clients, the suit alleges.
In short, Foster alleges in the lawsuit that WPP created a hidden way to make profits and did not act in the best interests of its advertiser clients. He claims that when he reported this to senior management, the agency team responded by firing him rather than investigating his concerns.
Receiving media discounts is not illegal in the US. However, legal experts have previously warned the advertising industry that the discounts could amount to breach of contract or even fraud if it was not disclosed to the client, or if advertisers were deceived about the practice. Public companies are required to accurately report all income, including discounts, in their financial statements.
“The scale of this purchasing power allowed GroupM to leverage its customers' spending to force many advertising-supported television and media platforms to provide GroupM discounts which, rather than being passed back to customers, GroupM turned into an undisclosed profit center,” Foster's lawsuit states.
The lawsuit says Foster estimates that over the past five years, GroupM earned between $3 billion and $4 billion from rebate-based deals, of which the agency improperly withheld about $1.5 billion to $2 billion. The lawsuit does not provide additional documentation to support this allegation.
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“The Company is aware of a claim in New York State court brought by a former employee who was terminated as a result of a recent organizational restructuring,” a WPP spokesperson said in a statement. “The court has not yet made any findings on the charges and we will vigorously defend them.”
Subject agent kickbacks Ten years ago, a dark cloud hung over the advertising industry. In 2015 John Mandel A former executive at media agency WPP gave a talk at a marketing conference saying that alleged agency rebates and kickbacks are a widespread practice in the US. The following year, the Association of National Advertisers, a US trade organization, published bomb report by corporate investigations firm K2 Intelligence, which claims discounting and other opaque business practices were “common” among US media agencies. Major agency groups at the time criticized the report as inflammatory, criticized its methodology and generally denied wrongdoing.
In response to the report, some advertisers renegotiated their contracts or audited their media agencies to seek greater transparency. In 2018, federal prosecutors in Manhattan initiated an investigation into U.S. media buying practices, The Wall Street Journal reported, but no criminal charges were filed.
Foster's lawsuit brings the controversial rebate issue into the present day. It's a challenging time for WPP, which said it expects to report a second consecutive annual decline in revenue this year. The company's share price has more than halved since the start of the year as the group has lost key media accounts, including many in the US, to rivals such as Publicis Groupe and Omnicom.
Foster claims to have raised concerns with several senior WPP executives
Foster said he had repeatedly raised concerns with senior executives at WPP and GroupM over the years, including former CEO Mark Read and Nicola McCormick, WPP's general counsel for media, said the rebate deals were unethical and posed a significant legal risk to the company, the suit alleges.
In October 2024, Brian Lesser, GroupM's newly appointed global CEO, asked for a meeting with Foster and asked him to provide a “candid assessment” of the division's performance, including any potential problems, the suit says. Foster says he also detailed his recommendations for developing a new WPP Entertainment division to build on what he achieved with Motion Content Group.
At 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 suit says.
Foster estimated in the report that GroupM generated nearly $1 billion in global net sales from “non-product revenue” such as discounts and media deals associated with purchase risk. In “buy risk deals,” the agency will use its clients' collective purchasing power to pre-purchase large blocks of ad inventory to obtain price discounts, then sell them back to clients through consent agreements.
Foster argues that many major advertisers were against such deals because they were designed to benefit the agency rather than the client.
The lawsuit appears to describe a form of what is known in the industry as principal media buying, so called because by buying inventory and reselling it to clients, agencies act as the “principal,” or seller. A report published last year by ANA said core media buying at holding companies was rising due to downward pressure on agency profits and pressure from marketers to lower media prices. The report found that mainstream media could save advertisers 10% to 15% in advertising costs, but some marketers were concerned about potential conflicts of interest and the quality of the media they purchased.
Foster claims he was kicked out of WPP after raising concerns about discounts
The lawsuit says that in a telephone conversation with Foster in January of this year, Lesser initially expressed concerns about the potential risks associated with such trades, but later asked him in a text message to reproduce a “refined” version of his report to eliminate 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 in charge of GroupM's trading activities. Patterson is currently WPP Media's global president of markets and business operations.
Within hours of that announcement, the suit says, Foster was “stunned” by the announcement of a restructuring that would bring the sports and entertainment divisions under Patterson directly. The next day, Foster's role was changed from CEO to global president, with responsibility for the APAC and LATAM regions, as well as the entertainment and sports divisions.
In the lawsuit, Foster claims he was then immediately removed from key meetings, barred from deals and isolated from decision-making. In July, GroupM fired Foster without cause, the suit says.
“At no stage did WPP or WPP Media conduct a formal review or investigation of Foster’s reports as required by their compliance policies and applicable whistleblower protection laws, or take corrective action,” the lawsuit states.
The lawsuit, filed in New York State Supreme Court, seeks more than $100 million in damages over allegations of harassment, wrongful termination and violation of whistleblower protection laws.
