Madvertising avenue redux

Not being one to miss an opportunity to invoke the hackneyed Mad Men meme, today's missive is draped around an allusion to everybody's favorite Mad Man, D.D. The real catalyst for this piece was the revelation that The Guardian pays rebates to advertising agencies, which is evidently a fairly commonplace practice in the U.K., but dwells sub rosa for the most part here in the good old US of A. 

It occurred to me that a brief history of the ad agency business is in order to put this contretemps in the proper perspective. Regrettably, I'm old enough to remember way back in the mid 20th century when ad agencies were paid what we used to call "commissions" by media. Essentially, they were media salespeople who comped creative to facilitate deals, which is the same as it ever was from the inception of the business.

Clients became troubled by the fact that agencies didn't really work for them (in spite of AOR arrangements) and switched to hourly rates in an attempt to eliminate the potential conflicts of interest (as in selling the more expensive media to boost commissions). They then negotiated said rates ever downward, and wondered why there's so much turnover at agencies.

Evidently, in order to maintain profitability, commissions have been repackaged as "rebates" and other euphemisms. Clients can tell their CFOs they've ratcheted down agency comp even further while agencies can do business and tell their CFOs they've yet again increased profits. The whole thing strikes one as a cynical shell game so everybody gets to win a zero sum game. One suspects that's why transparency is lacking.

Net-net, as D.D. would say, I imagine this works out  about the same as the commission structure used to, although the sums mentioned in the article seem like fairly small change relative to the media spends involved.  

Pro tip: In the end, you get what you pay for, no matter how much time and effort you spend trying to make it appear as if you've gotten something for nothing.