The big trend in production over the past year has been the creation/expansion of agency in-house production companies (IHPCs).
The agencies’ motivations are interesting: meet clients’ demand for instant content, such as discount price offers for the internet, Vines etc; and keep as much of their clients’ adspend as possible.
There are plenty of production companies that could create such content quickly and cost-effectively (most of those that have sprung up and joined the Advertising Producers Association since the recession in 2008 focus almost exclusively on this type of content).
But agencies are, of course, entitled to decided to do the work themselves.
However, this does give rise to important issues for production companies and advertisers. So what are those issues and what should be done about them?
First, IHPCs sometimes seek to borrow directors from a production company. Lending your key business asset, in which you have invested and around which you have built your business, is not just bizarre but business suicide.
Can you imagine an advertiser telling an agency in a pitch that they didn’t want them but would like to borrow their executive creative director for a couple of months?
Second, there are agencies that have invited production companies to provide a treatment setting out their director’s vision of how he would bring the script to life, without disclosing that their IHPC is also bidding for the job.
In those instances, production companies have devoted significant resources on the understanding that they were competing against two other independent production companies. They would not have done so if they knew that there was another bidder that was both the hometown favourite and had an inside track.
An agency is putting its own interests and those of its client in direct conflict
Probably the worst example of this occurred when a production company took part in a conference call with the agency on their treatment.
Having explained exactly how they would realise the script, effectively providing a blueprint for the production, they learnt that the agency personnel on the call had included IHPC staff. The IHPC was awarded the production.
The agency will have the production company’s budget too, which provides important information and means that they know what number they have to beat.
Good practice is when agencies don’t borrow directors, always disclose if an IHPC is in the mix (something the IPA heads of TV group has put forward as best practice) and don’t bid IHPCs against independent production companies at all.
All this matters to advertisers too. First, there is such an array of expertise in independent production companies and such intense competition that the market guarantees the best value. It simply isn’t in the interests of advertisers for that market to be distorted.
Second, if an agency is putting forward independent production companies and its IHPC, how can it offer an impartial view? It is putting its own interests and those of its client in direct conflict.
If an advertiser receives a recommendation from its agency that its IHPC undertake the production of a commercial or content, the agency should explain why it is better than the market. The advertiser should also doubt its objectivity.
That is why some agencies have already committed to never bidding their IHPC against an independent production company and why we hope other agencies will make that commitment too.
After all, it is only a commitment to putting clients’ interests first and ensuring they get the best work at the best value. This must be in the interests of the agency too, given the imperative of retaining clients and winning new ones.
Above all, advertisers should trust the market for production and be sceptical of anyone who tries to persuade them to do otherwise.
by Steve Davies, Chief Executive Advertising Producers Association