Vol. 4, Issue 5: Rent Seeking Missile

Why rent-seeking is quietly taxing advertisers, publishers, and everyone in between

I love live music.

I’m not in love with crowds or traffic, which is why I rarely go to see anything live in Los Angeles. But if I can take public transit there or get there with relative ease, I’m pretty much in.*

*This is mildly related and not at all relevant, but back in June of 2001, I went to see Dave Matthews Band at the old Giants Stadium and for his final encore, he came out and did “Two Step” and when he hit the words “let it rain”, the skies opened up. We all got drenched and we all started bouncing up and down to the beat and when he hit the next chorus a bolt of lightning and clap of thunder cracked behind him. It was stunning and amazing and spiritual and whatever other adjective you want. And then the song ended, the lights came up and the rain stopped. We all looked at each other. No one knew what to do or how to describe what we witnessed. So we all got in our cars and went home. Sometimes I sit and wonder if that actually happened. I’ll text someone, “I didn’t dream that, right?” And they’ll reply with a depth of patience I truly admire: “No, Geoff. It’s real. We were there. Go back to sleep.”

Most of you are probably like me: you love to see live music and you do it when you get the chance. So you pick up your phone and check out who is playing in the area (Billy Joel and Stevie Nicks, August 2025, MetLife Stadium as an example) and hop into your texts, slide into a bunch of DMs, get a handful of people interested in going with you and then you hop into a ticketing app to see what’s available. “OK, cool friends interested in doing cool things,” you might say*, “I found some tickets on SeatGeek—only $125 each… or $168 with the ‘convenience’ fee.”

*There’s no way you say this

You see what happened there?

That’s called rent seeking.

SeatGeek adds some value here. I’m not going to necessarily dispute that. But the fees they charge aren’t for a value add to the transaction. You’re not getting anything extra for those charges. It’s not an upsell—it’s a toll for access. They’re extracting economic value not by creating something new (at least not anymore - the new part has been done for a while - now the fees just go up), but by leveraging access.

Rent seeking.

And like just about anything else, once you see rent seeking in one place, you see it everywhere:

Like LinkedIn’s InMail, where they charge you money to reach out to someone on the platform - they’re gatekeeping basic communication on a professional network.

Like HOAs, who lobby against new construction to maintain the “character” of a neighborhood - but really are just artificially constraining supply to inflate the value of their home.*

*George Carlin used to tell a great joke (insight?) about the difference between an environmentalist and a developer, which is that one has a house in the woods and one wants a house in the woods

Like UberEats or DoorDash, who provide a network of delivery people, sure, but who charge small businesses and restaurants a massive cut for the use of their service

I talked a bit about shareholder value in the last newsletter. Rent seeking is one of those things that corporations use to continue to try to drive margins higher to push their stock value higher because investors value only one thing: profit uber alles.

What about rent seeking in advertising? I’m glad you asked!

Let’s say you work at a brand that sells a consumer product good of some kind and you’ve got $10MM to spend in your advertising budget in support of your new product launch, so you call up your HoldCo, your friendly neighborhood advertising megalith. “Hello, lovely media planning team,” you might say*, “I’m like Monty Brewster** and I’ve got to spend all of this money in a very short period of time. Can you help me?”

*There’s no way you say this, either

**Brewster’s Millions is part of a group of movies that have plots that are so ridiculous that you can’t even question them, because the minute you ask one single question, the whole thing unravels. Weird Science is another example

They pull together a media plan for you to reach your target audience in the best possible way in their estimation. You nod approvingly - surely this plan will be implemented across meaningful media with engaged audiences and move lots of product, making you and your brand marketing team the belles of the ball at your organization and bringing plaudits and accolades galore - perhaps even an AdExchanger Award.*

*Your boy was a judge last year. Hold your applause until the end.

The campaign goes live. Your creative is killer. Views on the YouTube version of the commercial are rising meteorically. Google Analytics tells you that people are actively searching for the name of the lead actress. Things are really looking up.

Then the reporting comes in.

You open the media plan, the ad server reporting, the programmatic reporting, the match rate reporting. The eCPM. And somewhere between the DSP fee, the exchange fee, and the “value-added” audience layer, the ad serving fee, the agency commission, you stop and wonder:

Wait—what exactly is “working media”?*

*Working media is my all-time favorite phrase in the history of advertising, because a) it implies there’s non-working media and b) I picture a newspaper splitting logs with an axe or something, like *really* working for it

Over time, we’ve normalized layers of complexity in advertising—especially in programmatic—under the banner of “efficiency” or “optimization”. But what if — and bear with me here — what if it’s not efficient or optimized?

What if it’s more like friction?

What if it’s rent-seeking?

Now, practically, I’m not arguing against automation. I’m not even necessarily arguing against specialization — point solutions sometimes work better than the larger workflow solution and putting all of your eggs in the same basket can sometimes backfire big time (see: large technology company that just had a pretty telling verdict come back against them). But just for shits and giggles, let’s take a stroll through the stack:

- 3rd party ad server - >10 cents per thousand

- DSPs (demand-side platforms) - 10%

- SSPs (supply-side platforms) - 10%

- Verification vendors - CPM of 10-20 cents

- Audience providers - CPM of 50 cents

- Measurement tools - CPM of 10-20 cents

- “Optimization” partners - some percentage of what they optimize toward

Every one of them says they’re making the system smarter. But many of them? They’re just there to collect a fee. They’re charging for access—not outcomes. And who pays the price: in order, the advertiser, the consumer, the publisher. Not to mention the ecosystem, which jumping through this many layers loses the transparency it needs to survive.

I’m not great at math, but that’s a lot of money out of working media and into pockets. And at the risk of biting the hand that feeds me, I’m not sure all of these entities provide meaningful utility—or even meaningful differentiation. Some do. No question about it. And an open, thriving ecosystem depends on access. Walled gardens and exclusivities by platform are not the answer here either.

So, what do we do about it? Well for starters, let’s stop confusing “presence” for “performance”.

Second, let’s start asking the hard questions and let’s get some proof points:

- Is the partner showing *how* they make us better?

- Can we tie their fee to *incremental* value?

- Are we prioritizing vendors or solving actual problems?

Real innovation should simplify, not obfuscate. Real innovation should create outcomes, not extra steps. Real innovation should amplify performance, not just extract fees.

Real innovation is additive.

Rent-seeking is subtractive.

We’ve all got to get better at telling the difference.

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The last few newsletters have been more serious in tone, even if I do still intersperse them with my nonsensical asides. Sitting outside of a corporate perspective has allowed me some latitude to write in ways that I haven’t or wouldn’t in the past.

I’ve got a few in the hopper (one about skills vs. competencies, one about heartbreak, one about ways to be wise), but I’m curious and always interested in feedback on this thing. If you’re interested in giving some, please feel free to drop it in the comments or email me at gwolinetz (at) gmail (dot) com.

That’s all for this week. Until next time, friends.