Friday, March 8, 2002. Today adweekmail@ reported, and I quote, "Omnicom Media Group is incorporating its estimated $1.6 billion-plus PentaCom media buying and planning unit for Daimler Chrysler into its second media network, PHD, as part of a restructuring of PHD in the U.S. The restructured network also includes Omnicom Media Group units Creative Media, New York, and Advanswers, St. Louis. All three of the agencies will now be known as PHD. Omnicom said its new entity will command an estimated $4.5 billion-plus in U.S. billings, putting it in the top ten among U.S. media shops."
Don’t you just love the size of those numbers? I can only hope they have more upfront consultants than Enron appears to have "employed." Recently I was privy to a conversation with the head of a national agency, and we were discussing the payment for current and past projects and how the agency now had a policy: that they would not pay invoices to suppliers until their clients paid them, not even the first 50 percent, which, as we all know, is due before production commences or at the very least within a few days. We all know that, right?
The conversation also imparted the information that the media arm of the agency had, recently, been split off so that the cash flow of the agency had changed dramatically enough to require a new policy toward suppliers. Also in the conversation was the hint that larger edit houses were able/willing to carry this and that us, we—as in me, I guess—boutique types … well, we would have to take that into account. Mmmm! Now what could that mean? Was that a kiss goodbye? Or encouragement to charge a higher markup. Does anyone else remember the markup wars of a few short years back.
Am I financing agencies to service the debt of their media buyouts, or am I getting paranoid in my middle-aged years. Truth be known, a bit of both. Does anybody else remember the cost consultants and the various financial contortions agencies have applied in order to cover acquisitions. I am not a great believer in a global economy for these very reasons. I am not at all interested in the powerful becoming more powerful at the cost of those who actually do the groundwork. I also don’t shop at malls because of this scale of business banality. I don’t wonder, anymore, why large retailers fail. To me, it is obvious: They have lost touch with their original customers and original roots. For those reasons I try to support the independent post houses, where I know the owners, artists and production staff personally. If I have a problem, be it creative or financial, I can talk directly to the person with whom I have the issue and not be fobbed off to some faceless name.
There is a place for the Starbucks style of post house, I guess; but there is also a place for the café-size boutiques such as mine, and I see no good reason why I should have to become a money lender to international advertising groups to simply survive. Who are these people? Is this part of our shadow government? Is there truth in the "Evil Axis"? Does this apply to my industry, to which I have given many, many good years and ideas. I bet David Ogilvy is smiling in his sleep.
The price of doing business suddenly appears to have become an issue in my life.
Are we back to 35 percent markup, or to hidden, mysterious, new category, hi-tech, Internet line items? Maybe it is time for me to become a cost consultant to clients?
I am reminded of a rumor that turned out to be a joke—at least I believe it was a joke—that Enron was being rescued by Mobil and was going to be renamed Moron. Have a nice day.
