Report: Chicago startup valued at $5.5B misled clients on ads
A Chicago-based startup valued at $5.5 billion misled advertisers with manipulated information about effectives and targeting of ads, the WSJ reports on A1. The company, Outcome Health, installs screens in doctors' offices and charges pharmaceutical companies to run ads on them. It boasts $500 million in backing from heavyweight investors including Goldman Sachs, Google's parent, Alphabet, Pritzker Group Venture Capital, and a few others.
The result: The altered reports and data could have increased business for Outcome, which doesn't publicly disclose results but estimated sales for 2016 at around $130 million.
- Outcome misled advertisers that the company was verifying that certain ads played on certain doctors' screens, according to former employees of the company, several advertisers, and internal documents, per the WSJ.
- One of the issues an independent counsel will review is that sometimes the startup was offering up doctors' offices where there were no screens, per Lanny Davis, Outcome's newly hired spokesperson. According to some documents, Johnson & Johnson alleged they were charged for ads in offices without screens.
- The company allegedly manipulated third-party analyses showing the effectiveness of the ads, and WSJ reports Ashik Desai, Chief Growth Officer at Outcome, responded to the patient response to the ads by saying "Yea I'd inflate it a bit more :)"
- When advertisers asked for verification of where their ads were running, people who prepared the documents said they took screenshots of ads from their own computers and edited them to make it look like they were the real deal. Davis said the independent counsel will review this issue but said "We do not know of any instance in which this happened."
Action now: Outcome is providing free advertising to customers, which it does when contract terms aren't met. Outcome hired a lawyer, Lanny Davis, as a spokesperson after the WSJ inquiries, who said the startup is reviewing allegations about some employees' conduct that's been raised internally and that Outcome "has always upheld the highest ethical standards."
The WSJ reports there doesn't appear to be evidence suggesting top executives' involvement in the misleading advertisers.