Trust me, I am an ad agency... or should you?

ANA probe may have been a joke but not US Justice’s

THE US Department of Justice (DOJ) is investigating whether agencies are guilty of bid rigging on production and post-production jobs. Commercial production and post-production is a $5 billion ( R68bn) business in the US.

There is no announcement yet of which agencies may be under investigation but you don’t have to be a rocket scientist to take a good guess. WPP, Omnicom, IPG, and Publicis all have in-house production and post-production capabilities. IPG has said that it has been contacted by the DOJ about this investigation.

According to The Wall Street Jour nal, agencies have been accused of manipulating the bidding process and coercing production houses into submitting phoney, overpriced bids called “check bids”. These phoney bids create a paper trail that agencies use as cover when clients want a rationale for why agencies award jobs to them.

This new scandal comes on the heels of the Association of National Advertisers ( ANA) investigation recently which found that unethical media buying practices were “prevalent” in the agency business, particularly in online advertising.

There is a big difference, however, between an ANA investigation and a DOJ one. The ANA probe was a toothless joke. It was all thunder and no lightning.

The DOJ is a whole different ball game. You do not want to mess with these people. Price fixing and bid rigging are crimes. The same person who is apparently investigating the bid rigging for the DOJ was also involved in investigating criminal charges that sent several agency print production execs to jail not long ago.

It may turn out that this probe goes nowhere but don’t bet on it.

As each new scandal comes to light, it becomes harder and harder to overstate the damage that consolidation has done to the advertising industry.

There is little doubt that there have been crooks in the ad business – just as in every business – since the beginning of time. But the culture of the publicly-traded, consolidated agencies, steeped in financial sleight-of-hand and Wall Street monkeyshines, have created an environment in which ethics are malleable.

The agency business is a mess. You have to ask yourself how much of this clients are going to put up with? Is it any wonder that they are taking advertising in-house or hiring consulting firms to do their advertising? We are losing the confidence of sensible business people everywhere.

We jump from one fad to another, we are a cesspool of “isms”, we have traded our knowledge-base for trendy clichés, we have eroded anything resembling a moral code, we have fired our experienced, talented people and replaced them with cheap, amateurish nobodies who have degraded our product, and we have brutalised our language into a liturgy of dreadful jargon and insufferable bull****.

Other than that, we’re doing great.

Hofmann is an outspoken critic and analyst in the ad industry and is well known for his straight talking through his blog, The Ad Contrarian. ht t p : / / a d c o nt ra r i a n. bl o g s p o t . co.za/