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That makes sense, says Silk, since a range of factors favor a highly diverse and geographically dispersed industry, especially low-entry costs and limited economies of scale.The advertising business continues to attract creative talent who form and staff small, nimble firms, all the while perpetuating a diverse and highly competitive industry structure.After complaints from advertisers and a series of antitrust investigations, the recognition system was essentially dismantled in 1956 with a consent decree signed by the trade associations involved in administering the system. In part, the report suggests that while the change dismantled the institutional structure used to administer the recognition system industry-wide, it did not prevent agencies and media suppliers from continuing the same practices individually.That practice finally started to change in the 1980s.For decades, advertising agencies have thrived on, and in some ways fostered, the idea of advertising as a creative black box."How you get a breakthrough campaign rather than a run-of-the-mill one has long been the burning question for clients and their agencies," says Alvin J.

This figure is roughly half the estimates often reported in the trade press.The essential idea was to operate two or more agencies (or "networks" of specialized service agencies) under common ownership as quasi-independent entities.But since the mid-1980s, waves of mergers and acquisitions have created potential conflicts of interest as independent agencies that were separately serving competing clients suddenly came under common ownership.Exclusivity is still the norm, but the consensus around it is slowly shrinking." Choices made in conflict policies can influence the size and distribution of agencies that the industry can support. In measuring degrees of industry concentration, the trade press has counted only billings of the largest 500 firms or so.This has led Silk to investigate how the structure of the industry in the United States has changed over the past few decades following several M&A waves. By contrast, Silk and King analyzed data from the US Census Bureau that includes revenue from some 10,000 agencies of all sizes, over half of which are small and serve local rather than national clients.Silk, the Lincoln Filene Professor of Business Administration, Emeritus, at Harvard Business School.