Render unto Caesar



There hasn't been much buzz about the significant downsizings announced this week by many of the major holding companies.

Most of the big guys are slicing and dicing their staffs despite year-long announcements about quarterly growth and major wins. The article cites a continuing desire by the aircraft carrier-sized behemoths to 'be nimble' as the reason for the bloodletting. But, I don't buy it. Not for one minute.

As a recovering holding companyaholic, I can tell you the downsizing is occurring for two reasons:

– Despite news to the contrary, many big ad agencies are having one heckuva hard time abandoning their old, antiquated 15 percent commission model. As a result, they simply haven't been able to provide the same amount of jet fuel needed by the hungry engines propelling their Boeing 777-sized parents.

– Because, like Mitt Romney and all Mormons, firms owned by a holding company MUST tithe a percentage of annual profits to their respective Sir Martin's. This fact of life squeezes every last penny out of the advertising, PR, interactive, research and design shops within the holding company. As a result, they're left with no other recourse than downsizing.

I'm surprised there hasn't been more analysis of the holding company dichotomy. Trade journals gleefully proclaim Ogilvy's third quarter gains, Interpublic's positive half-year results and Omnicom's ever-expanding war chest.

But, there's been no speculation as to why, after a seemingly solid year, the pink slips are being handed out faster than speeding tickets near the Montclair exit on the Garden State Parkway. (Note: that's an inside joke. My business partner is the Richard Petty, Jr., of PR and is routinely nailed with scores of tickets.)

One final note: how come clients don't rail at being forced to pay a holding company's fee when they receive their monthly invoices? I remember when I 'ran' Brouillard Communications (link to BC blog), we routinely added a two or three percent surcharge ON TOP of each and every invoice and labeled it a 'management fee.' That money went directly to Sir Martin who, unless I missed something, not only never spent time counseling our clients, but didn't even know our firm existed within his vast empire.

Our CFOs logic was also a tad warped. I remember her saying, “Clients don't mind paying premium prices for premium services. And, we're a premium brand within a premium holding company.” Right. And, the Florida housing market is white hot at the moment.

I guess what I see as a troubling trend is either being overlooked by journalists and clients, or they see it as a 'don't ask, don't tell.' Either way, I don't get it.

In the meantime, though, people's careers are coming to a screeching halt at holding companies everywhere because, as the vassal states did in ancient Rome, the Ketchums, Bursons and MSLs must render unto Caesar what is his.

All of which makes the independent firms' value proposition even more attractive in a weak economy. Hail free enterprise!


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