Production transparency is everyone’s business
by Bobby Amm. Transparency has been a contentious topic in commercial production for years, with the US Department of Justice even opening an investigation into bid-rigging in December 2016. But it isn’t just an American issue; transparency in commercial production is a concern worldwide.
Implicated agencies have been accused of submitting proposals for their own projects through their in-house production departments, using information collected from competitor bids. But this conflict of interest has just been considered a problem for independent production houses… Until now.
A report recently released by the Association of National Advertisers (ANA), titled Production Transparency in the U.S. Advertising Industry, affirms that not only are these uncompetitive and non-transparent practices very real but they affect advertisers and related service providers, too.
About the report
The findings of this 30-page report were compiled by a task force of 30 executive subject-matter experts and 12 ANA member organisations, including a law firm, an independent investigative firm, three industry trade associations, five production consultants, and two auditors. Of the 12 organisations, 11 agree that transparency concerns exist at multiple agencies and holding companies. The 12th only had second-hand knowledge of them.
The report also reveals that some agencies ask suppliers (such as independent post-production companies) to submit check bids for their projects — a bid price that’s higher than they’d normally quote. This creates a paper trail that justifies an agency’s decision to award the project to an in-house facility because of its ‘lower bid’.
Among the findings, some of the ANA’s most interesting discoveries include:
Advertisers don’t know
Marketers don’t always know that in-house units are bidding. This is because in-house production departments often have their own names, and most advertisers don’t require agencies to disclose conflicts of interest.
Production is affected
The report states: “Production business processes marked by agency control of the bidding system… is sometimes dysfunctional and conflicted because the buyer can also be the seller of the services.”
The report also states that competition in the production and editing space is “potentially compromised and unreliable”, jeopardising the success and integrity of the industry.
Clients are deceived
The report states: “Non-transparent agency-controlled bidding can lead to costly, inefficient, and sub-optimal advertiser business decisions.” In other words: the free and open market is distorted and the advertiser pays a higher price because of it.
To address these concerns, the report offers several recommendations for advertisers that mirror many of the Commercial Producers Association’s Universal Principles of Engagement. These include:
- Being familiar with the names of agencies’ in-house production affiliates
- Requesting full disclosure when agencies’ in-house teams are bidding for a project
- Establishing procedures that prevent conflicts of interest
- Adjusting client/agency contracts to ensure transparency
- Assigning third parties to manage the bidding processes
With advertisers involved in the controversy, it’s more important than ever to be aware of the realities and demand transparency in future business. We hope that resources such as the ANA’s report, and the International Production Communities Principles of Engagement will help to ensure ethical and fair practices for all of us, for many years to come.
Bobby Amm is chief executive of the Commercial Producers Association of South Africa (CPA), the trade association of production companies that produce television, cinema and internet commercials for the local and international market. After a brief stint in journalism, she began her career in the industry at the Consultative Committee for the Entertainment Industry in the early 1990s. She first joined the CPA in 1997 but left three years later to join a production company. After finding that she missed the big-picture perspective of the CPA and the interesting issues which continuously perplex the production industry, Bobby returned to the CPA in 2003.
“Motive” is a by-invitation-only column on MarkLives.com. Contributors are picked by the editors but generally don’t form part of our regular columnist lineup, unless the topic is off-column.