An internal audit of marketing practices at the U.S. unit of Korean electronics giant Samsung may have found some unsavory business practices.
According to a report in the Wall Street Journal, Samsung abruptly laid off several marketing employees shortly after an internal audit report was released inside the company that may have detailed behavior by marketing staffers that violated Samsung policies. Potential wrongdoing, according to the report, may have included such practices as excepting gifts or invitations for pricey junkets from outside reps.
“Samsung Electronics Co. audited its U.S. marketing operation to investigate whether employees violated company policies in their dealings with business partners, resulting in layoffs of several staffers, according to people familiar with the situation,” the WSJ reported last week. The report further states that the audit likely looked into potential kickbacks and bribery related to social media influencers, particularly on YouTube.
The WSJ notes that marketing employees often accompany partners to sponsored entertainment events like the Super Bowl or Oscars, and that such behavior can pose a conflict of interest. This behavior might call into question “whether marketers are steering resources to the best-performing marketing channels,” said the publication.
Samsung did not respond to a request by Internal Audit 360° for a statement on the layoffs or questions about the nature of the marketing internal audit.
Marketing Chief Out
In addition to the layoffs, Marc Mathieu, Samsung USA chief marketing officer, abruptly announced on March 14 that he was leaving the company. Based on the proximity to the news about the internal probe, it’s likely that Mathieu’s departure was also related to the marketing internal audit findings.
Samsung also said very little about his departure. “Marc has left Samsung Electronics America to pursue opportunities outside of the company,” a Samsung spokesman told Ad Age in an emailed statement. “Marc was a valued leader who made significant contributions during his tenure at Samsung. We thank him for his time and efforts, and wish him the best in his future endeavors.”
Samsung is among the world’s largest advertisers. The company spent $11.2 billion on advertising and sales promotion in 2017, according to Ad Age.
More companies and organizations are conducting audits of the marketing spend or marketing practices as internal audit teams seek to provide more value by moving beyond traditional audits based mostly on finance to audit what matters most to the company. 