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 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 Journal, agencies have been accused of manipulating the bidding process and coercing production houses into submitting phony, overpriced bids — called “check bids.” These phony bids create a paper trail that agencies use as cover when clients want a rationale for why agencies award jobs to themselves.
This new scandal comes on the heels of the ANA investigation this summer which found that unethical media buying practices were “pervasive" in the agency business — particularly in online advertising.
There is a big difference, however, between an ANA investigation and a DOJ investigation. The ANA investigation was a toothless joke. It was all thunder and no lightning.
The DOJ is a whole different ballgame. You do not want to fuck with these people. Price-fixing and bid-rigging are criminal activities. 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 investigation 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 crap 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 brutalized our language into a liturgy of dreadful jargon and insufferable bullshit.
Other than that, we’re doing great.
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