Beating bid rigging in advertising and film industry
The advertising and film industry is in the grips a global struggle against bid rigging. In December 2016, the global advertising and film production community watched with keen interest as the US department of justice stepped into the midst of a long-brewing conflict between advertising agencies and independent production houses. This came after the department’s antitrust division was tasked with investigating whether ad agencies were intentionally rigging pitches for production work to favour their in-house divisions.
The US scenario is reflective of the state of affairs in other major advertising markets, most notably those of the UK, Europe and SA. To date, only the US has made the foray into legal waters, but the situation around the world is rapidly becoming more contentious as ad agencies appear to be scooping up production work and taking it in-house to bolster diminishing profit margins.
In the UK and France, independent production companies have responded by presenting a unified front, calling for stricter guidelines to protect the integrity of production houses and the infrastructure that surrounds them.
In a strongly-worded open letter addressed to advertising professionals in February, French producers reaffirmed their opposition to “a system wherein agencies become both judge and jury about certain competitions and, as such, lose the impartiality required for our sector to function effectively”.
The letter went to on say: “We wholeheartedly call upon all advertising sector players to reach an agreement whereby agencies undertake not to propose, either directly or indirectly, their in-house production when the advertiser initiates a call for tender.”
As a body that represents the interests of SA’s independent production houses and film professionals, the Commercial Producers Association of SA is deeply concerned by the impact of bid rigging locally. It has created an atmosphere of uncertainty and widespread insecurity, as production houses seek to remain in business in a sector where the new rules of engagement seem both unclear and unjust.
An alarming number of suppliers and independent companies are facing potential closure as local ad agencies take an ever-increasing slice of post-production work in-house, while also establishing their own recording studios and facilities.
If the sector continues on its current trajectory, we can expect to see more agencies starting in-house production departments. This could lead to the closure of production companies that are already feeling the pressure of economic slow-down and the negative effects of globalisation. It could also severely inhibit the industry’s ability to bring in new talent, nurture up-and-coming directors, and generally provide clients with the original and compelling filmmaking that they have benefited from in previous years.
In our view – one that is echoed by our UK and European peers – the only answer to this worsening state of affairs is transparency and clear communication. Critically, given that bidding for work is an expensive and time-consuming task, independent production companies should know if they are competing against in-house entities so that they are able to make an informed choice.
It is clearly time for every stakeholder to take responsibility and assist in setting clear and fair guidelines that pave the way forward. Without this, the integrity and credibility of advertising and production in SA will quickly be eroded.
The big take-out: The Commercial Producers Association of SA says the local advertising and film industry is in a struggle against bid rigging, which favours ad agencies’ in-house production facilities.