Uber gets caught in another legal scuffle, this time with an agency partner
- Uber has filed a lawsuit against Fetch, which is owned by the Japanese ad giant Dentsu, alleging the agency improperly billed it for "fake" online ads and nonexistent app downloads, Ad Age reported. The ride-hailing app is asking for at least $40 million in damages, sources told Ad Age.
- Fetch responded stating that Uber had stopped honoring payment terms and didn't accept advice on reducing fraud, which lead the agency to drop Uber as a client months ago, per The Drum. Uber stopped paying invoices from more than 50 small business vendors under Fetch, and The Drum said some of those vendors are planning on filing suits against Uber to recoup their losses.
- Uber spent more than $82.5 million for Fetch ad campaigns from 2015 to early this year, according to Ad Age, and has now refused to pay more than $7 million that Fetch says it's still owed. Dentsu wasn't named in Uber's lawsuit. While Uber is facing a number of legal issues at the moment, Ad Age cited Bloomberg data that noted it's incredibly rare for the company to go on the attack in court: it's a plaintiff in just two federal cases.
The merits of each party's case will come down to the courts, but Uber's complaints snapshot an increasingly familiar concern in the ad industry pertaining to fraud and a lack of transparency as to how online ad campaigns are served and measured as successful. Uber reportedly noticed discrepancies when it had Fetch pull its ads from networks associated with Breitbart News, a far-right news site, with little impact on the number of downloads, running contrary to Fetch's claims. From there, Uber alleges Fetch had a widespread practice of over-billing and taking credit for app downloads it didn't generate, Ad Age said.
Uber's experience, if true, mirrors other cases from this year where the results of online ad campaigns are confounding and suggest cracks in the advertising pipeline. JPMorgan Chase in March said it had cut back the number of websites serving its ads programmatically from 400,000 to 5,000 and saw little change in the cost of impressions and visibility of those ads.
The overarching issue muddying these waters is a lack of transparency stemming from a messy, overly-complex digital media supply chain. A report from the Association of National Advertisers and K2 Intelligence published last summer found there is a fundamental disconnect between agencies and their clients, with agencies using vaguely-worded contracts to retain incentives rather than offer brands clarity. A more recent survey from the ANA found that 60% of its agencies are working to improve transparency, but 25% still aren't sure if they're addressing the issue.
Uber, for its part, has also been undergoing a rough 2017. Early in the year, the company lost thousands of customers as a #DeleteUber grassroots social movement took hold as a response to the service continuing to pick up riders during cab strikes against the Trump Administration's travel ban. Allegations of sexism and harassment at the company, a number of high-profile legal battles, including one with Google's Waymo self-driving car division, and the ousting of CEO Travis Kalanick have continued to keep Uber under an especially harsh spotlight since.