Ad Aged: More on the dismal science and the dismal state of Holding Company advertising.

As much as I generally have respect for the craft of journalism, I hold the advertising trade press in very low regard. I feel this way because the advertising trade press covers the gossip of the industry, the trivia, the trendy instead of the real news.

Just yesterday, I had to get internet and television service for the house my wife has decided I want to buy. In the little town we will be sheltering in, Comcast is essentially the only provider in town. Across the country, Comcast connects nearly two our of three homes and businesses. The company enjoys a market-cap of just under $200 billion thanks to, not its excellent service, but its near monopolistic-control of the market thanks to its lobbying efforts. It pays $30 million on lobbying. A cynic or an Orwellian might say that lobbying is merely Newspeak for bribery.

There are many right-wing, Hayek-influenced economists of the Koch/Norquist/Ayn Rand camp who believe in the almost Divine mechanics of the Invisible Hand of laissez-faire economics. We are told repeatedly of the intelligence of the market--its ability to regulate gigantic economic forces—prices, supply, demand, wages—even the adherence to the greater good, things like environmental protection and consumer safety. Yes, there are those who believe, or ratiocinate, that the Holy Genius of economics will regulate these things for the greater good of mankind.

Those who abide by such beliefs decry any government intervention or regulation as practically apostasy, that is human intervention into the economy assaults the divine mechanisms of such sacrosanct laws as supply and demand. No matter that laissez-faire has led to poverty, pollution, starvation and serfdom. Theory trumps reality.

None of this is really very complicated. I learned it all—essentially, in Professor Beck’s Economics 101: Introduction to Macroeconomics and Economics 210: Introduction to Microeconomics. Most poring over what back in the 1970s was the definitive economics textbook, by Paul Samuelson.

Of late I am reading the new biography of John Maynard Keynes. I’ve always been a Keynsian. Believing more in the enlightened human management of the economy than the neo-Calvinist Hayek, Friedman, Rand, Koch, Libertarian, Reagan, Norquist, Stockman-belief that the rich deserve their riches and their god manipulate markets in such a way that benefits them because they, after all, are chosen.

This might be a little Red, or at least Pink, for some. But that’s fine and most data about GDP growth rate, debt, deficit and unemployment statistics bear out that the economy does better under Keynsian/Democratic control than it does under Reverse-Robin-Hood Republicanism, when forces steal from the poor and give to the rich. See George W. Bush who collapsed the economy and Donald Trump who’s doing an even more effective job destroying the world.

But back to advertising.

I have a friend in the business who is very much in demand as a freelancer. For whatever reason, fear most likely, he’s hewn to the agency path and has chosen to rack up his freelance hours at holding company megaliths.

While I have struck out on my own with all the vagaries of that choice, he steadily works for this agency or that.

Just yesterday morning he called me. “I’m booked with ___________ through October,” he said. “And yesterday, ___________ called me about a job. And last night, I talked to the CCO of ____________ about another job.”

“That’s nice,” I answered. “In a non-monopsony system, a system guided by the free-hand of supply-and-demand, such demand would tell you to raise your rates. Or more accurately, that you’ve priced yourself too low.”

“I can’t ask for more money. I am already at the top of the pay scale. They’d never pay it. They put a cap on salaries.”

And that my friends, brings me back to where I started.

The Monopsony (the five holding companies controlling roughly 80% of the jobs) have colluded to create a market situation in which there is only in effect one buyer. An example of pure monopsony is a firm that is the only buyer of labor in an isolated town. Like a company town with a coal mine. Such a firm is able to pay lower wages than it would under competition. Although cases of pure monopsony are rare, monopsonistic elements are found wherever there are many sellers and few purchasers.

That is what those of us remaining in the industry should be fighting about. While the chieftains make 200-300 times the median wage of an average employee, wages for workers are artificially capped or stagnant or rolled back through illegal practices.

Not long ago when the industry was rocked by a free-falling economy and something like 36,000 jobs were lost or furloughed, someone began a spreadsheet of job openings at different agencies. I remember (I can’t find the spreadsheet) that one agency listed a couple hundred openings. Below I found 20 or so jobs—just for Account people—listed at a single Holding Company shop. A New York health care agency has 91 open jobs in creative, 112 in account and 99 in strategic planning.

But wages don’t go up.

I can only think illegal monopsony collusion is why.

If we had a free and independent advertising trade press, they might investigate.

But nah.

Friday, July 17, 2020

More on the dismal science and the dismal state of Holding Company advertising.

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