PREPARING FOR A NEW PARADIGM

By - CTL
June 25, 2017
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By Marcus Honesta.

With the current brouhaha and debate that is raging within client/ agency circles today regarding transparency, commissions and reporting; consideration must be given to improving productively. It is much more important to focus on fixing the way we go about our business rather than wasting time trying to figure out how it got broken in the first place.

I believe that circumstances demand a new paradigm be developed. I doubt that promises to right old wrongs, or platitudes such as “It’ll never happen again, it was a simple and honest mistake, and the cheques in the mail,” will ever be satisfactory. Sometimes things have simply gone so far of the rails they’re impossible to get back on track. When you have the CBO of Proctor and Gamble Marc Prichard saying in an open forum “Too many players are grading their own homework, too many hidden touches and too many holes to allow criminals to rip us off. We have a media supply chain that’s murky at best, and fraudulent at worst. We need to clean it up, then invest the money and time we save into better advertising to drive growth.” You know things are crook in Tallarook.

Add to this, the US Department Of Justice’s probe into the “Bid Rigging Scandal” that is set to engulf the entire industry; things just can’t stay the way they are.

SO WHY HAS IT COME TO THIS?

An ongoing joke in the industry is: You give away your ideas for free, so you make you make your money on production. As brand procurement departments have squeezed the prices down on services such as strategy, planning, and account handling, agencies have looked for new revenue streams as they attempt to keep their businesses afloat.

Here’s the kind of hypothetical situation the DoJ is looking for: An agency asks two of their independent production company pals to submit a quote — usually something fairly high so the client is never likely to consider it. The production pals comply because the agency offers them the promise of work in the future, threatens them with no work in the future, or maybe even offers them some sort of payout in return for playing along with the game.

The agency secures two “competing” bids of say, $310,000 each which can then be used to justify the agency’s in-house production company quote of $250,000, (even though the work could probably be completed far cheaper than that).

That’s how bid rigging / price-fixing works.

SO HERE’S HOW TO FIX IT.

An independent, experienced production consultancy recommends three suitable production houses and asks them for quotes.

▪ The agency is invited to have its in-house production facility prepare a quote, along with their choice of post houses.

▪ All bids and treatments are received by the independent consultant who evaluates them for quality, conflicts, and budget compliance then presents them to the agency for consideration.

▪ All bids are presented to the client, with the agency’s recommendation and supporting reasons why.

▪ Client, in consultation with the agency makes their decision and the independent production consultancy then awards the job.

▪ Client pays agency 50% of the agreed fee.

▪ All invoices go to the independent production consultancy for approval and sign off.

Naturally, agencies won’t be too happy with this arrangement, and will claim their creativity has been compromised. But what do they expect given the way they have been behaving?

Assuming the client selects an experienced and independent production consultancy the process can only be enhanced. And by the way, a top consultant has most likely produced many more commercials than any middle weight creative team. How could this way of doing things be anything but an improvement? It might even keep a few people out of goal.

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