Independent Production Has a Lot to Say About the Industry's Future
Photo by Natalie Parham on Unsplash.
We’re an industry in flux. As creative and production services converge, voices from both independent production houses and in-house teams are debating whether consolidations spell innovation or signal threats to quality and fair competition.
This discussion brings together those who know all too well the importance of transparency in bidding processes, the nurturing of emerging talent, and the preservation of creative diversity.
The drive for efficiency and cost-effectiveness is undeniable. Agencies and clients alike are tempted by the promise of faster turnaround and reduced expenses through in-house production models. Yet, at the same time, there are risks of eroding the competitive playing field that has historically fuelled wonderful things.
Critically, our contributors explain that the process appears to concentrate power within a few dominant entities, potentially sidelining independent production companies that have long been a crucible for fostering new talent. Here, we discuss how practices such as mandating internal bids, can undermine genuine market competition, raising concerns over conflicts of interest and the possibility of a “race to the bottom” in creative quality.
It’s a knotty topic. Here is an attempt to unravel it:
LBB> How do you see the consolidation of creative and production services, impacting the industry as a whole, especially for advertisers in the long term? Are there any dangers?
Arleta Robinson, CEO of Lucky Luciano
The market is changing at a pace we’ve never experienced before. All sides of the advertising business are trying to optimise their processes. Establishing in-house productions within agencies or even client structures might seem like a prudent business decision.
It is, however, a process that poses certain dangers.
We have learned over and over in various industries how consolidation creates huge entities that forever change their segment of the economy – not necessarily for the better. They tempt with ‘faster, better, cheaper’ but end up jeopardising fair competition. These practices eventually harm the clients’ interests. They end up buying what’s left, which often is a sub-par product for a higher rate.
Steve Davies, CEO of APA
There are! – both for clients and the quality of work. Agencies seeking to do the production themselves have identified it as a key opportunity for them – see for example, WPP and Hogarth bosses, Mark Read and Richard Glasson announcing in LBB this year that production is their engine for network growth and the independent production sector is their prey
To achieve that, some agencies issue edicts requiring a specified amount of work to be created in house. The critical question is for clients: “Is that in your interests, or only the agencies’?”
Marta Bobic, managing director and partner at CANADA
This is not a new thing, though the holding companies are doubling down on it and some agencies are taking bigger jobs in house now to (perceptibly) offer better value. It obviously has an impact, but I feel it will settle down.
Most production companies don't loan out directors, as we are invested in supporting them and developing their careers. This means creatives have limited options for who will pitch, and clients are wising-up to the fact that this attractive cost-cutting measure of agencies doing it all is effectively a single bid. Which means they may not be getting good value after all. Our relationship with our talent means we are more likely to "make it work" and pull in favours to make tough budgets and schedules possible than an in-house production company when they are working with freelancers.
Volker Steinmetz, executive producer and partner at TPF
We think the market will get less vivid and creativity and professionalism in film craft will shrink. An independent producer always has to achieve the best possible results in order to survive. As a result, that competition – and therefore grasp for excellence – do not exist in in-house production models.
In the end, there are two narratives.
1. Independent productions are the best way for clients to evaluate creativity and production costs in a free and fair competition.
An independent production always will try and achieve the best result, as they are depending on repeating business on a project-by-project basis. This and the hard competition ensures the best creative and economical results for clients by far.
2. In-house productions offer the same thing but faster and more cost-effectively.
It is surprising that basic market principles (like free competition) are often getting ignored in this discussion and that the question of intention is not asked.
Clients should take this into account when asking themselves the question of which model the best will be for developing their brands further in the future. Just look at the margins and ask yourself where those differences are coming from in comparison.
Without a healthy market for independent productions, in-house productions cannot produce films.
They largely use the resources created by the independent production market over decades without having built them up in the past.
LBB> What steps can be taken to ensure a fair and transparent bidding process between in-house and independent production in a way that guarantees the best outcome for the client?
Arleta Robinson, CEO of Lucky Luciano
I’m a firm proponent of business as a force for good. Given this, I also believe that good business requires good business practices to keep the competition that ensures diversity, independence, and fairness. Pan-market regulations need to be set and popularised by different advertising associations, like EPA/CFPE, of which Poland is a member.
Some of the markets look to ensure fairness and transparency in the bidding process by using secure online platforms; others hire independent auditors to oversee it. I believe that the most important influence we can have is raising awareness on the clients’ side on how this kind of consolidation will affect their interests. What they can benefit and what they can lose – both in the short and long term.
To sum up, my best idea for safety buffers would be creating and promoting a set of fair competition standards. And secondly, making sure that the clients are informed about potential long-term dangers resulting from merging creation and production under the same roof.
Steve Davies, CEO of APA
Our report, ‘What Clients Want From Production Today… And How They Can Get It’ interviewed clients to understand their perception of these issues.
What they told us was that they favoured competitive bids – why would you prefer a monopoly supplier over buying in the open market for any purchase decision? However, these bids need to be genuinely competitive. There is evidence of some in-house units finding three freelance directors and creating a bid for each of them themselves – that isn’t a competitive bid. So clients can safeguard themselves by asking the agency to use the open market with three bids from independent production companies while also looking out for processes that are designed to look like open market competition, but aren’t.
Marta Bobic, managing director and partner at CANADA
Production companies should not bid against in-house production, simply put, nor loan out our directors. We are always happy to ballpark scripts if agencies want to understand what a job may cost taking it out of the building if they are transparent about it. But pitching against an in-house production unit is a conflict of interest and will always favour the agency – who is working for the client – not the production company. Of course, talent and creative approach count, but when money is tight, it's only going to go one way.
Volker Steinmetz, executive producer and partner at TPF
It's hard to believe that there is a fair and transparent way. Only if the in-house production will not get any creative and budget insights from the competing independent productions is a fair and transparent bidding process realistic. But they are in-house (and not independent). The reality is probably that everybody will use a given advantage for its own favour.
LBB> As in-house production expands, how might independent studios be supported in overcoming challenges to sustain and develop emerging talent?
Arleta Robinson, CEO of Lucky Luciano
The Polish market is constructed a bit differently than the UK, France, or Germany. Our directors are mostly freelancers, not represented exclusively by production houses.
This makes talent curation a mutual responsibility of production houses, advertising agencies, and clients alike.
Understandably, clients usually prefer to go for the established and ‘safe’ directors. But often the combination of a young talent and an experienced producer can do wonders, and that convinces some advertisers to veer off the beaten path and take a chance on someone new. That benefits both sides: clients get a chance for a fresh look at their product and young directors get a path to recognition.
Apart from that, the new directors bring along younger, hungrier, fresh crew members that offset the status quo, allowing for both new creative performance as well as healthy competition. That, again, encourages clients and agencies to open up to new talents.
Naturally, it all requires mutual trust and partnership between clients, agencies, and producers.
And fair business practices. This will give us a shot at keeping our industry fresh and flourishing while also ensuring our companies’ development.
Steve Davies, CEO of APA
Independent production companies identify and nurture directing talent. That is their lifeblood. They are particularly dedicated to finding new people and new perspectives, with an emphasis on doing that by finding people from groups that have been under-represented in the creative industries in the past. Production companies are constantly on the lookout for directing talent – essentially brilliant creative people with unique viewpoints who are capable of expressing them on screen – from any place or background.
This talent spotting and nurturing expertise has been a great benefit to advertisers in creating commercials that best achieve their goals. They can be supported by agencies engaging them to create their scripts.
Marta Bobic, managing director and partner at CANADA
A lot of talent is being promised endless work if they stay freelance, and while this may be true from a volume perspective, the process or quality of the end product is not always a good move for them. There are some great producers involved whose hearts are in the right place in in-house departments, but the talent soon tire of not having ongoing support across jobs and someone fighting their corner when things get tough, control over their teams and oversight of budgets, or even advice on which jobs to take on.
We are specialists in talent development, and we can promise them support and investment of time, money, and resources, often investing in their personal projects and music videos. Smart creative talent sees the value of being exclusive with a production company to build their careers. We often manage to produce jobs that were intended as loan outs and the talent, agency, and client are often glad for it in the end, so I'd like to think everyone benefits from this model.
Volker Steinmetz, executive producer and partner at TPF
Independent productions and studios need to rethink their business models and start to collaborate on an international level among themselves in order to develop emerging talent in the future in different markets together. The power of single companies has shrunk in that regard, unfortunately.
