April 01, 2015

7 Things I've Learned Since Leaving Agencyland

Today marks two years since I ran screaming from the agency business. Here are some things I think I've learned about myself and about agency life since I left:
1. The greatest source of misery was status anxiety: The medium you swim in in agency life is anxiety about where you stand -- both as an individual and as an agency. You may not perceive it because it's all around you, but once you are out of it you recognize how pervasive it was.

2. The greatest freedom is not having to give a shit: Agency people are always bullshitting. Clients demand it. Colleagues expect it. We do it so much we don't even realize we're doing it. We think of it as professional discourse. When you leave, there is a wonderful sense of liberation in being able to say exactly what you think, without a calculation of the consequences.

3. I seem to be better at writing about advertising than I was at writing advertising: I was an OK copywriter, but I think I'm better at writing the stuff I'm writing now.

4. My second career is more gratifying: I was reasonably successful and happy in the ad business, but my second career -- doing whatever the hell it is I am doing now -- has been personally more satisfying. I certainly am not earning anywhere near the levels I was, but I am enjoying it more.

5. When you retire you become Chinese: To a great many people who kissed my ass and pretended to be my friends when I was a ceo, I am now Bob Hu? It is not surprising, but it is indicative of the levels of insincerity in the ad business.
6. I left the agency business too late: I had thought about leaving a few years before I did. I should have. Watching what has become of the business from a distance is amusing. But watching the unpleasant changes going on while I was still in it was painful.
7. The things I am ashamed of still haunt me: On those nights when I can't sleep, the things I did in the agency that I knew were wrong still trouble me. I don't replay the successes, I replay the dishonor.

March 30, 2015

Part 2: Will Advertising Corruption Scandal Explode?

On March 5, Jon Mandel, former CEO of Mediacom (owned by WPP) told an audience at the Association of National Advertisers Media Leadership Conference about widespread U.S. agency kickbacks.

He presented a document which purported to show how some of the kickbacks work...
"...a media agency agreeing with an unnamed media vendor to an industry-standard 2% commission, but as much as 9% in volume-based incentives." (Ad Age)
Since then, reports of kickbacks have appeared in The Wall Street Journal, and several other venues including a front page story in Ad Age, that reported...
" 'It's really ugly and crooked,' said one ad-tech executive who described receiving such requests."
" 'It's the reason I left,' said a former U.S. media-agency executive."
Ad Age reports,
"U.S.-based marketers are being kept out of the loop about billions of dollars that agencies make back from deals on clients' behalf, according to industry executives, whether in the form of opaque markups, kickbacks or undisclosed rebates."
Mandel said,  
"Have you ever wondered why fees to agencies have gone down and yet the declared profits to these agencies are up?"
According to The Wall Street Journal...
"Marketers say they’re increasingly worried agencies are allocating ad dollars in ways that best suit their own businesses, as opposed to those of their clients."
Brian Wieser, Senior Research Analyst at Pivotal Research Group says...
"...most of the activity involving undisclosed activities is likely concentrated in digital." 
But kickbacks are only the tip of the iceberg of fraud and corruption in the digital ad business.

As we have said on several occasions, ad agencies have become the web's lapdog -- irresponsibly exaggerating the effectiveness of social media marketing; ignoring the abominable results of display advertising; and glossing over the fraud and corruption that has contaminated the web. Why? Follow the money.

Online advertising is a gold mine for agencies. WPP, the world's largest agency holding company, gets 30% of its revenue, over $5 billion, from digital. It is aiming for 45% over the next few years.

Perhaps the most astounding part of this incipient scandal is that the victims seem determined to hush it up.

While Ad Age reports that "hundreds of millions" of dollars are being siphoned from advertisers, a few days after Mandel's talk, the Association of National Advertisers issued this pathetic statement,
"...we regret any impression that agencies in general are engaged in questionable activities and apologize to those who were offended."
Gag me with a volume-based incentive. Mandel never claimed these practices were universal.

Apparently the victims are afraid that a thorough investigation will expose them for the clueless buffoons they are. After all, if their corporations lose a few hundred million here and there, big deal. Just as long as they don't lose their jobs.

The big question is whether this will erupt into a full-fledged scandal or just fade away behind a curtain of double-talk and indecipherable accounting? The answer lies in discovering whose interest would be served by exposing the corruption of the current system:
-The agencies? Hell no.
-The online media industry? Hell no.
-The marketing doofuses who have been asleep at the wheel? Hell no.
None of the principles have much of an incentive to make trouble. The only hope lies with the press.

If the mainstream press gets on it, and governmental agencies take notice, something useful might happen. Otherwise, corruption as usual.

By the end of this decade online advertising will be as big as TV advertising. The advertising and marketing industries are too deeply invested to make much of a fuss about its unsavory, criminal underbelly.

Will the advertising corruption scandal explode? Count me as officially skeptical.

March 26, 2015

Will Advertising Corruption Scandal Explode? (Part 1)

Two years ago we wrote, "Not only are online advertisers getting screwed by crooks, some of them are also getting screwed by their agencies."

This is suddenly a hot topic.

For over two years, the Crack Investigative Team here at The Ad Contrarian Worldwide Headquarters has been reporting on corruption and fraud in advertising -- particularly in the online ad industry.

In June of 2013, we said,  
"This is the biggest advertising story of the decade, and it's being buried."
(A bibliography of some TAC writing on this story appears below today's post.)

Billions of advertisers' dollars have been stolen, wasted, and misappropriated while everyone who should have been acting responsibly turned a blind eye. There was just too much money at stake.

Meanwhile, pathetically naive and impressionable marketers continue to throw good money after bad down the online advertising toilet.
- They don't know what they're buying
- They don't know who they're buying it from
- They don't know what they're getting
- They don't know how much they're paying
If the victims weren't so fucking dumb, it would be sad. But, honestly, I can't help but be amused.

There are several types of fraud being perpetrated on online advertisers, here are a few of the major ones:
1. Phony traffic - Bot-nets generate billions of phony visits to websites daily, which advertisers pay for.
2. Phony clicks - Likewise
3. Phony websites - Sometimes called "spoofing," phony websites pretend they're real websites and sell imaginary ad space to knuckleheads
4. Invisible ads - Euphemistically called "unviewable," these are ads that "technically" appear but are invisible.
5. Agency kickbacks - Suddenly, the most topical corruption issue. 
The wonderful thing about all these scams is that everybody thinks it's the other guy who's the idiot. Everyone assures their clients and their management that it's the other guy being screwed and "we have processes in place to protect ourselves."

Yeah, right.

Meanwhile the crooks and sleazebags are laughing all the way to the bank.

In the past ten days, the trade press has finally come out of its inexplicable torpor and has started to report on the some of the issues, particularly the agency kickback issue. Will this explode into a full-fledged scandal?

Some thoughts on that will appear here on Monday.

Some pieces on this subject -
Online Advertisers Getting Hosed 4/29/13
Time To Clean Out The Stables 5/2/13
Online Ad Criminals 9/16/13
Alarming Online Sleaze Factor 10/16/13
The Scam What Am 11/14/13
Epic Screwing Of Online Advertisers 2/27/14
NYTimes: 57% Of Online Video Ads Unviewable 5/6/14
Ad Industry Is The Web's Lapdog 5/19/14
Woeful Weenies Of Traditional Media 6/2/14
Amazing Tale Of Online Fraud 10/15/14
Digital Clown Act In Big Trouble 10/30/14
What Every CEO Needs To Know 12/8/14
Agencies Cheating Clients, Says Former Mediacom CEO. No Shit,Says Me. 3/9/15
The Difference Between Waste And Fraud 1/14/15