Oct 13, 2017

Report: Chicago startup valued at $5.5B misled clients on ads

The downtown Chicago skyline. Photo: Kiichiro Sato / AP

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.

The allegations:

  • 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.

Go deeper

American carnage

Protesters race up a hill to avoid tear gas in Philadelphia, June 1. Photo: Mark Makela/Getty Images

The list of victims has swiftly grown since George Floyd died in police custody just eight days ago.

The big picture: Protests against police brutality have turned into a showcase of police brutality, with tear gas and rubber bullets deployed against crowds. The police have the arsenals at their disposal, but we're also seeing law enforcement officers becoming targets.

McConnell blocks resolution condemning Trump's actions against peaceful protesters

Senate Majority Leader Mitch McConnell (R-Ky.) blocked a resolution introduced by Minority Leader Chuck Schumer (D-N.Y.) on Tuesday that would have condemned the use of tear gas and rubber bullets against peaceful protesters outside the White House on Monday in order to allow President Trump to walk to St. John's Church.

What they're saying: "Justice for black Americans in the face of unjust violence, and peace for our country in the face of looting, riots, and domestic terror. Those are the two issues Americans want addressed," McConnell said on the Senate floor.

George W. Bush breaks silence on George Floyd

Goerge Bush in Michigan in 2009. Photo: Bill Pugliano/Getty Images

Former President George W. Bush (R) wrote in a statement Tuesday that he and his wife, Laura, are "anguished" by the death of George Floyd, and said that "it is time for America to examine our tragic failures."

Why it matters: It's a stark juxtaposition when compared to fellow Republican President Trump's response to current civil unrest. While Trump has called for justice in Floyd's death, he's also condemned protestors and threatened to deploy military personnel if demonstrations continue.