In a well couched but nonetheless blistering policy statement, the AICE claims that agencies steering post work to their own in-house facilities and other subterfuge is an “overt conflict of interest.”
The purpose of the policy statement sent to AICE members and posted on its website, “is to raise awareness on the part of the advertiser community” to get agencies to play fair, be transparent and ethical in the way they handle post bids, said Rachelle Madden, AICE executive director in New York.
“Agencies with in-house facilities have essentially been transformed from being AICE company clients to being their competitors … who get to look through our bids and treatments, which no outside vendor should tolerate,” Madden said in the policy statement,
AICE mainly takes issue with the agency’s unethical use of “check bids,” a process in which agencies ask post houses for “ostensibly competitive bids” which they can submit to clients.
Calling it “corrupt and a potentially illegal practice,” the AICE feels agencies usually have no plans to award the work to the outside post house.
Agencies also have a particularly unfair advantage with “check bids” because they can see what the post houses are bidding and then can potentially undercut the bids.
“It would never be considered appropriate for a company to share external ‘vendors’ bids with each other, so why should the in-house ‘vendor’ be allowed to craft its bids knowing what its competitors are doing?” the statement asks.
AICE further charges that agencies steering post work to their own in-house facilities create “a conflict of interest with their suppliers in relation to bringing in business for their own post divisions,” which are installed as agency profit centers.
Consequently, AICE contends, the agency often intends to keep the edit/post work in-house and has no plans to award the project to the participating independent company. The “check bid” is merely as a way to meet the client’s prerequisite for multiple bids.
The independent vendor “often feels coerced into cooperating for fear of alienating an agency and thereby risks being blacklisted for future jobs,” the statement asserts.
“While we certainly don’t expect agencies to eliminate their in-house facilities,” Madden states, “we simply want more transparency to the process. We want to help level the playing field in terms of competing fairly and honestly for their clients’ work.”
ANA calls lack of transparency at an all-time high
The Assn. of National Advertisers posted a note on its website written by Bill Duggan, the ANA’s group EVP. The ANA previously made known “concerns about the level of transparency of media agencies islikely at an all-time high,” he noted.
“The ANA applauds the fact that AICE has voiced concerns about transparency issues in post production,” Duggan wrote. “We will help educate ANA members on this issue and suggest that they have conversations to fully understand the in-house editorial and post services offered by their ad agencies.”
The AICE statement concluded: “AICE is determined to educate the client community on the ramifications of using agency in-house post production facilities, the inherent conflicts they present and the impact they have on their ability to get the best possible product at the best price.
“Our goal is for clients to be able to make informed decisions about where their commercial content should be finished, and by whom,” Duggan said.
It also gives the agency an unfair advantage, AICE claims Vendor access to AICE vendor bids, creative srategies for handling the client work. This is an unfair advantage, AICE claims, that alters the relationship between companies that served as the agents for their clients and those that functioned as vendors.
Agencies policy statements noted that agencies have co-opted services that were previously provided by independent vendor companies
Madden stated that raising awareness on the client side could help to level the competitive playing field as clients will hopefully “insist on a greater level of transparency when it comes to how the postproduction of their marketing communications materials is handled.”
Towards that end, AICE sent its policy statement to the ANA, which invited the AICE to meet with the ANA Production Management Committee at its Nov. 19 meeting in New York.
Bill Duggan, ANA’s group executive VP, wrote about the AICE policy statement in the Marketing Maestros blog this week on the ANA website.
AICE executive director Rachelle Madden points out that agencies with in-house facilities have essentially changed from being AICE-company clients to their competitors.
What troubles the AICE, she says, is that “the agencies are competitors, who get to look through our bids and treatments, which no outside vendor should tolerate. Agencies are practicing essentially deceptive business practices in their request for ‘check bids.’
There is a serious lack of transparency throughout this process and we felt that unless we brought this to the attention of the client community, nothing would change. We’re not expecting agencies to shutter in-house facilities; we understand why they exist and we are prepared to compete with them for the work. But we want to compete fairly.”
As such, AICE contends that the agency often intends to keep the edit/post work in-house and has no plans to award the project to the participating independent company, merely using the “check bid” as a way to meet the client prerequisite for multiple bids.