Evening star., 1929-11-29
NEWS ADVERTISING
FEE IS ARGUED
Hearing of Restraint Charge
Before Federal Trade
Commission.

Whether the IS per cent commission
almost universally paid by newspapers
to newspaper advertising agencies for
solicitation and preparation of national
newspaper advertising is in restraint OF
trade through an alleged agreement Of
advertising agencies, or whether it is a
legitimate fee paid by the publishers
for value received was being argued be-
fore the Federal Trade Commission
today.
The case, which is several years old.
came before the commission for final
argument today. Attorneys for the
commission are appearing against five
organization, as follows:
Thc American Association of Adver-
tisinG Agencies. the American News
paCer Publishers Association. the
Southern Newspaper Publishers Asso-
citation, the Six Point League of New
York and the American Press ASSocia-
ton.
Practice Is Charged.
Eugene w. Burr, attorney for the
commission. was the first to appear be-
fore the commission in argument. He
charged that it is the practice of ad-
Vertising agencies to charge a commits
sion of Is per cent on advertising Sc
cured for publishers, and that this COM
mission is charged as the result of an
agreement between the agencies He
charged that the agencies were forced
by reason of this agreement to adhere
TO this rate without competition among
them or price cutting.
Mr.. Burr explained that the attor-
neyS for the commission are not pro-
Ceeding against the advertising agen-
cies for their agreement not to rebate
any of the commission paid by the pub
fishers. The agencies he declared, were
perfectly within their rights to forbid
rebating. However, he alleged, the uni
fern commission adhered to by the ad-
vertising agencies constitutes restraint
or interference with the easy flow of
business in interstate trade.
Agency Lists Cited.
He citsd black and white lists"
which, he said, were issued by the
American Association of Advertising
Agencies which gave full data as to the
attitude of newspapers throughout the
country toward the uniform commission
and to the acceptance of direct adver-
tising: that is. advertising from the
manufacturer or seller direct to the
newspaper and advertising which is OBJ
tanned through an agency
Clark McKercher. attorney for the
Association of Advertising Agencies. re-
plying to Mr.. Burr's argument, said that
the association had not been formed un-
III 1917, but that the practices COM
planned of by the commissions attorney
had been in use in the advertising
agency and publishing business for from
20 to 40 years before, and had simply
been evolved as the best means of do
ing business with justice and fairness
to all.
Direct Agreement Denied
He denied that there is any direct
agreement between advertising agencies
and publishers. The practice of COL
lectlng a IS per cent commission on
advertising solicited. created. and pre-
pared, by the agencies was followed for
at least 20 years before the Association
OF Advertising Agencies was formed,
and had been recognized by the pub
fishers as simply proportionate pay
ment for the services rendered by the
agencies, he said
The Association of Advertising
Agencies, he said. was formed to insure
a more substantial growth of the ad-
vertislng agency business. The fight
that the organized agencies have been
waging is principally against those
agencies known as rebaters, which. he
claims, pay back a certain portion of
the commission they receive for placing
advertising.
He pointed out that all advertisers.
regardless of whether they submit their
advertising through an agency. or
whether they go direct to the news
paper with it, pay the same rate, known
as card" rate.
Publishers Action Told.
He said that the publishers in 1899
voted that the agencies should, for
their own protection, keep the full
amount of the commission paid them
for securing business for the publishers.
The publishers held, he claimed, that
the commission was paid for services
He claimed that there is no evidence
before the commission of an agreement
between any organization of newspaper
advertising agencies and publishers. The
advertisers, he says, are served by the
agencies according to the advertisers
choice. On questioning, from the COM
mission, however. McKercher stated
that scme actions, such as public
speeches, have been taken by the
agencies to discourage direct ad-
Vertising.
j. F. Finnaly, representing the South
ern Newspaper Publishers Association,
appearing before the commission, de-
clared that the organization represented
by him had never voted on the matter
of commission to agencies. He main
tanned. however, that some publishers
pay less than Is per cent to agencies
for soliciting advertisements. He de-
clared that the only unethical situation
with respect to advertising agency COM
missions arises out of the practice of
rebating. He declared that he saw no
reason. however, why the direct adver-
tiser-that is, the manufacturer or
Hil deal thr0l1Ob