Monday, January 8, 2024

Advertising Accounting.

It's not alarmist to say something is rotten in the state of advertising.

Something is mean.



Impecunious, even.

Two "name brands" of the not-so-distant past were just sold by IPG to a New Zealand group of "marketing services agencies," called the Attivo Group. Attivo sounds like a pharmaceutical that treats psoriasis in tropical fish.

If memory serves, and for me, it usually does, in selling Hill Holliday and Deutsch to Attivo, IPG got less than a dime on a dollar. [There's no trade-press that reports on these things--so some of my numbers are conjecture. But I welcome all responses from any bona-fide Interpublic Group representative, if there are any who are not bots.]

The point today though isn't about the crumbling of any particular holding company, or the disintegration of IPG in particular. It's the Atilla-like ravaging of the industry by holding companies who buy high, remove value, pay themselves huge fees and leave nothing behind but a carcass or a shell for in this case, the Kiwis to eat at.

If Deutsch cost IPG $265 million 24 years ago I'd doubt Attivo paid more than $20 million for Hill and the half of Deutsch they acquired. 

In short, millions and millions of dollars of "value" were destroyed. Though dozens of holding company executives, while destroying that value, are still able to live on the water in the Hamptons and fly privately. Become knighted. And earn literally millions in compensation and many more millions in "deferred compensation," which they will receive for the rest of their lives. 

[By my calculation, WPP, which for now owns Ogilvy has five or six Ogilvy ex-CEOs still being paid, and Martin Sorrell, who was fired for allegedly expensing call-girls on his WPP expense allowance, is still being paid by WPP $500,000/year. More, I'd imagine, than nearly anyone reading this. Again, I welcome rebuttal from any bona-fide WPP representative, if there are any who are not bots.]

The rotten-ness comes from the Private Equity system that now owns the ad industry. The Private Equity system, which is predicated on strengthening companies by finding efficiencies, seldom finds efficiencies outside of firing people.

This is what PE has done to numerous companies in a panoply of industries--from publishing, to retail, to health-care, to veterinary services and more.

To read a real writer on this stuff, check out this book review from The New York Times. Or, this one, specifically on McKinsey.

Assuming you're too busy to read those reviews, since that involves actual work, read this passage. If you'd like, substitute Deutsch or Hill/Holliday or IPG, or whomever for Toys "R" Us.

Though I've studied a fair bit of economics in my day--both in college and since college--I'm not economist. But I do read books like the ones I pictured above. What's more, I'm a little "red." I believe in out-moded ideas like "regulation," "anti-trust," and even, "progressive-taxation." While my charts below might be reductio ad absurdum, that doesn't mean they're wrong.


Oh, and BTW, two things on Mark Read, WPP, CEO, who libeled me by saying I "harken back to the eighties." And then fired me for being old. I welcome a response, Mark, if you're not a bot.



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