What’s going on with Irwin Gotlieb these days? The man, or should we say, “The King Of Advertising”, is all over the press lately. Just two week after his splashy CNN Money piece, The King has made it big in Business Week with an article titled, “An Ad Man Tests His Limits.” However, these inches are not so flattering. Drop the King moniker. Gotlieb is described as a “media buyer,” which he hates. The piece goes on to talk about Irwin’s new money making scheme, the practice known in the industry as a rebate or “volume override.” It’s a money making model that has been banned in France since 1993 and is now under scrutiny in Germany. Here’s how it works:
“A media-buying agency approaches a TV network or magazine publisher and offers to buy a large number of ads. In exchange, the network or publisher pays the media buyer a percentage of the total advertising tab. The media company may write a check, give away free ad spots, or agree to buy something from the agency—a research study, say. Sometimes media buyers share the proceeds with clients. Sometimes they don’t.
The rebates are controversial because they present a potential conflict of interest: Media buyers could be tempted to place ads not where they make sense for a client but where the rebates are the fattest.”
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Irwin shrugs this all off and is planning to move forward beginning with Kinetic, GroupM’s outdoor ad buying unit. Gotlieb and Kinetic CEO Steve Ridley have already starting offering their clients this new business model. In exchange for a large purchase, Kinetic will sell the outdoor companies “tools and services” designed to help them prove their marketing efficacy to advertisers.
He told Business Week that once he enough deals under his belt, he’ll then tell clients how the rebates work (balls!) and refers to the payments as an “intelligent application of scale” and says “they represent a minor part of a plan to derive new sources of income in an increasingly competitive world.”
Everyone better mob up, like right now. Irwin is a Don of Madison Avenue. GroupM earned just over $400 million in revenues. He is not a man who takes the word “no” lightly. And catch his end piece to this article:
“In five to seven years, he predicts, he may not represent advertisers at all. He will be an arbitrageur, buying ads in bulk, slicing them up for niche audiences, and reselling them at a premium. “Then,” says Gotlieb, “we don’t have to be transparent.”
We’re speechless. The man has some big fricking nuts. He’s out, in major media, talking about his new scam with full confidence that everyone is going to fall in line. Dammnit! They probably will.
What do you guys think about this?