While all the focus on the spiraling federal sponsorship scandal has so far been directed at the Liberal Party and the now defunct government branch Communication Canada, the partner that the government brought to the multi-million dollar dance – the advertising industry – may also be facing hard questions about ethics when the dust settles.

Some ad industry representatives believe it’s not too soon to begin repairing an image they say has been damaged by the scandal.

Alain Richard, president of Montreal-based agency Rebelles.com, says action has to be taken now. And he’s not mincing words. ‘The chairman of the ICA [Institute of Communications and Advertising], Jacques Duval, should stick his neck out right now and comment. The ICA and the AAPQ [Quebec Association of Advertising Agencies] should make a stand that not all advertising agencies are like [the accused agencies].’

He suggests a PR campaign that highlights this fact and draws a distinction between sponsorships and commission-paid advertising in the public mind would be a good start. He says the two organizations are dragging their feet because they don’t want to jeopardize the future ability of large member agencies to secure lucrative government contracts.

‘They want a piece of the business. Right now there’s a big request for proposal in Ottawa for Public Works & Government Services. It’s between $60 million and $100 million. And this is why the big boys are not shaking the tree – because they want that account to be signed before they say anything.’

Coming from Richard, a former executive at Montreal’s Groupaction Marketing, one of the agencies named in the scandal, the comments are contentious. He was fired from Groupaction seven years ago and says that he has been co-operating with an investigation of the sponsorship program for the last six years.

Nineteen advertising and communications firms, most based in Quebec, have been named in a federal audit for having received as much as $104 million in fees and commissions between 1997 and 2003. The payments were for work done under the sponsorship program, which was initiated under the Chrétien Liberals to boost the federal profile in Quebec. Whether or not any work was actually done, or if the government was grossly overcharged, continues to be the subject of a federal investigation.

The AAPQ is taking a wait-and-see approach. The association counts 26 agencies in its membership, representing 75% of all agency business in Quebec, and has been in operation for over 15 years. GM Yves. St-Amand says that while he is concerned about the issue, there does not appear to have been any negative fallout among client marketers as yet.

‘We’re not seeing any difference in their attitude because what we have found is that the large clients have their own way of attributing contracts. They have their own rules. It won’t change anything because if they need professional expertise they know where to go and how to ask for new bids. Our only concern is the future attitude of the federal government itself. We don’t want to be impacted by an over-reaction where they say, ‘We won’t go into Quebec because we may be criticized.”

To that end, St-Amand says the AAPQ is working through the ICA so that the industry can speak with one voice.

Jacques Duval, chair of the ICA and president and CEO of Montreal-based Marketel, says the association has met with senior government officials to give its input on reforms that were begun under former Minister of Public Works Ralph Goodale.

‘The ICA is certainly not going to try and defend the indefensible,’ he says. ‘The ICA will stand for a fair, equitable and transparent process when dealing with any client, including the government.’

He says he’s more worried about the ad industry’s image in the general business community than among marketing executives. ‘More and more decisions on selecting an agency do not rest solely on the VP of marketing. That person will usually involve a committee of people – the CEO will be there and more and more people like CFOs show up on these committees.

‘It’s a strategic decision to choose an agency and when you do that, compensation becomes an issue. And so it will have an effect, mostly on people who don’t deal with agencies on a daily basis.’

However, many say it would be prudent to wait until the inquiries have been completed before undertaking anything like a public relations campaign.

‘I’m not willing right now, as chair of the ICA, to go out there with a big PR thing because there are still inquiries and we have to meet with the new minister,’ explains Duval. ‘We have to know what they’re going to do about replacing Communication Canada.’

They can probably afford to wait: Randy Scotland, VP communications at the Association of Canadian Advertisers, says there has been no outpouring of concern among its membership about the scandal. ‘Certainly I can’t tell you that we’ve received a lot of calls from members regarding this. I think what’s happening in Ottawa is related specifically to that case, as opposed to seeing it branch out to the marketing world overall.’

Meanwhile, the ICA is participating in an international ethics survey conducted by the U.K.-based Institute of Communications Ethics. It was initiated last fall, before the scandal broke and is designed to benchmark the ethical issues facing the advertising industry in Canada as compared to other countries. Results are due in April.

Strategy, enterprising as always, has results now. We assembled two agency folk and a client marketer to comment on what should be done about people who like to judge a book by its cover.

David Strickland, SVP marketing, Zellers, Toronto

There aren’t any ‘corrupt’ agencies, but certain individuals can be corrupt. I’m personally not impacted and I’m certainly not shadowing the whole industry with anything in relation to what’s gone on. I don’t see this as a major issue for the business.

I don’t know what value there is for the industry to make more of it because the story seems to have a life of its own and that’s not necessarily good for anybody. I’m going to make sure that I know the people I do business with. And if I don’t trust an individual, then chances are that I’m going to say, ‘I don’t want that person on my business’ or ‘I’m not going to do business with that agency.’

We have multiple viewpoints from people who’ve been involved in the business for a long time. There’s an element from the ’70s and early ’80s [who have seen such scandal before]. I’m not sure whether or not some of the elements that are hanging around are really this generation’s current problem or whether they’re just hangovers from an older generation.

[Ad costs are something] we’ve been way more focused on in the last five years. It requires a more open book discussion around, ‘How do you build up to charge me this amount?’ Those discussions have become very serious and a more frequent and fundamental part of negotiating either medium- or short-term contracts. It’s just part of the way we do business now, which I do not believe was the case, say, 10 years ago.

Ania Russocki, president, Gee Jeffery & Partners, Toronto

Without a shadow of a doubt the scandal has destroyed a certain level of trust and credibility. To brush the whole industry with one brush and say it’s all bad isn’t fair. But at the same time, when something as big as that happens, it really casts a shadow on the rest of us.

If I were in the shoes of the ICA I would probably want to collect the facts [before responding publicly]. A move to all of a sudden communicate in some way in defence of the agencies might be seen as defensive and self-serving.

One of the ways the industry can [repair its image] with clients is to recognize the value of building trusting relationships. I think that’s underestimated.

Trust has huge currency. Being transparent [means] there’s an opportunity to do better projects and better work. Clients will take increased risks with you and there’s greater revenue potential.

One of the easiest and probably quickest ways to impact consumers’ perception would be to have client advocates step up and say, ‘Our agency is fantastic.’ Because those are credible sources.

If that’s done a little more openly in the market, agencies are seen as more valued partners, and then you might have a more balanced perspective.

Noel O’Dea, president, Target Marketing, St. John’s, Nfld.

I think this scandal may put us a little bit below used car salesmen on the trust factor.

The important solution for the future is a much more transparent and arms-length relationship between the political masters and agencies and professional services firms of all kinds, as well as much more independent appraisal and evaluation.

It’s not a good use of time and money to respond with an advertising campaign.

The entire industry, like most industries, needs to tell its story. [It can be] expressed in public speaking and support documents that make their way through organizations, including educational institutions, so that there is a better understanding about advertising and its role in society and business.

But the ICA and other organizations and individual agencies have a role to play.

At Target we contribute by working with and speaking to students at universities and colleges so that we can bring a face and a little bit of real-world experience to people. The larger collective bodies like the ICA should react, but not in a reactionary way.

There should be an ongoing program that will go on long after the scandal has passed.