U.S. Army Will Restrict Its Marketing Efforts After an Audit Finds Millions in Wasteful Spending

And internal emails accuse McCann of overcharging

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The U.S. Army wasted tens of millions of dollars on marketing programs that failed to demonstrate significant returns in fiscal year 2016, according to an internal review conducted over nearly two years and acquired by Adweek through a Freedom of Information Act request.

These findings follow an earlier version of the audit, first published in January, that labeled dozens of taxpayer-funded projects “ineffective” and concluded that the Army spent $930.7 million “on marketing efforts that potentially didn’t provide best value to support Army recruiting” between 2013 and 2016. The final document concerned only 2016 and did not include that number.

The audit’s results will lead to “more stringent oversight” of the military’s own advertising, according to a spokesperson for the Army Marketing and Research Group (AMRG), which was established in 2013 to oversee that work. You can read the full report at the end of this story.

One source in the U.S. Department of Defense, who asked to remain anonymous, said the marketing group’s budget has been significantly reduced now. The AMRG declined to directly address that claim, writing, “Improved business practices will enhance our ability to measure the return on investment from the Army’s marketing programs.”

The full report was completed and shared with Army leaders in mid-April; Adweek received a copy after filing a FOIA request with the U.S. Army Audit Agency (AAA) the following month.

Its release follows a series of leadership changes at AMRG, and it also arrives during the last stage of a lengthy, contentious review in which the world’s two largest holding companies, WPP and Omnicom, attempt to unseat the 13-year incumbent, McCann.

According to Department of Defense estimates, the winner of the review could oversee up to $4 billion in spending over 10 years.

While the final audit does not mention McCann, Adweek also acquired a series of emails, written between 2014 and 2017, that indicate budgetary concerns were a point of debate between agency and client. AMRG executives alleged in their emails that McCann had overcharged the U.S. government for its services on several projects.

“As a matter of practice, AAA usually does not cite contractor names, or any other individual names, in its audit reports,” wrote U.S. Army spokesperson Lt. Col. Nina Hill.

A McCann representative declined to comment for this story and deferred to the Army.

No returns on big events or data

The audit started after AMRG asked now-former Under Secretary of the Army Patrick J. Murphy for additional funding in early 2016. In its opening summary, AAA explains that Murphy then ordered the review because he “wanted to know whether the Army realized any noticeable return on its incremental and total marketing and advertising investment.”

The audit cites several shortcomings in the Army’s approach to promoting itself, including:

  • an absence of specific goals.
  • a lack of concrete processes to evaluate AMRG’s performance.
  • a failure to ensure that relevant data is “recorded completely and accurately.”
  • an inability to identify and discontinue projects that “aren’t cost-effective compared to other options.”

The final document confirms that 20 of 23 programs costing $36.8 million in 2016 had not “generated a positive impact.”

Most were part of a series of national events designed to connect Army recruiters with the public. The AAA projected that these campaigns, if they continued unchecked, would cost up to $220 million from 2018 to 2023 with minimal returns. 

The cost-per-lead results of the programs ranged from $362 to $6,470, with a lead defined as a potential recruit. Less than 1 percent of leads signed Army contracts. The least effective event was the National Hot Rod Association Tour, which cost nearly $9 million and led to only 51 contracts.

@PatrickCoffee patrick.coffee@adweek.com Patrick Coffee is a senior editor for Adweek.
Publish date: July 11, 2018 https://dev.adweek.com/agencies/u-s-army-will-restrict-its-marketing-efforts-after-an-audit-finds-millions-in-wasteful-spending/ © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT