Simon Marketing Gets Fried In McScandal

In the McScandal, Simon Marketing gets fried

Simon marketing : The golden arches of McDonald’s may have been tarnished by this week’s sweepstakes fiasco, but the reputation of Simon Worldwide, the parent company of the agency hired to conduct the contests, has been deep-fried.

The Federal Bureau of Investigation detained eight persons on Aug. 21 for fixing the “Monopoly” and “Who Wants to be a Millionaire” McDonald’s sweepstakes.

After all, the cynics who claim that no one ever wins these things may be correct.

Jerome Jacobson is accused of orchestrating a plot to steal game pieces worth up to $1 million.

Ex-cop Jerome Jacobson works as a security guard for Simon Marketing, a division of Simon Worldwide.

Jacobson had the winning game pieces in his possession, as well as an auditor from a major five accounting company who followed him when they were distributed, as well as hidden newspaper inserts in french fries boxes.

Despite this, he is said to have been able to sell the embezzled items in exchange for a share of the awards.

A total of $13 million in awards were falsely awarded.

According to the FBI, the super-sized plan has been going on since 1996, and it could spell the end for tiny marketing firms.

Simon’s stock had dropped 78 percent to 66 cents by yesterday, and McDonald’s had terminated all of its contracts with the company.

Until then, practically all of McDonald’s promotional work had been outsourced to Simon, which had even been hired to create its Happy Meal toys.

Following that, another big Simon customer, Philip Morris, terminated ties with the marketing business.

McDonald’s and Morris accounted for more than 70% of Simon Marketing’s sales in 2000, which totaled $768 million.

Simon ran contests for its Kraft brand and procured promotional products supplied by Marlboro cigarettes, according to a Morris spokesperson.

As a result of the controversy, both Simon and McDonald’s have been implicated in at least one lawsuit.

The mysterious small cap is in what may be a lucrative business, handling cash and luxury rewards like automobiles and holidays for firms who don’t want to deal with the trouble of doing it themselves. To succeed, you must have credibility.

“The only way a company can expand in this field is to build trust,” says Brett Hendrickson of B. Riley & Co.

“You start off creating toys for a company until they trust you enough to let you manage larger marketing campaigns, and then you earn enough trust to get their sweepstakes business.”

Simon is now portraying itself as a legitimate corporation that was victimised by a single rogue employee, and no other Simon workers appear to have been engaged.

Simon, on the other hand, is likely to have a hard time acquiring work.

Carl Pergola of the fraud investigation firm BDO Seidman wonders, “Where were the controls at Simon that would have prevented this?”

Pergola claims that Jacobson was the only Simon employee that handled the winning McDonald’s game pieces, which was a mistake.

Leaving Jacobson there for years was also a bad idea. “Every year, that kind of position should be cycled,” he argues, adding that McDonald’s should have ensured it. “Jacobson had access to the company’s millions of dollars.”

Now that Jacobson has been apprehended, Simon Worldwide’s fate is in jeopardy.

“At this point,” Hendrickson continues, “someone might just come in and eat whatever’s left of them.”