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BizTrends 2018

SA advertising and film industry in the grips of 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 right into the middle of a long-brewing conflict between advertising agencies and independent production houses. The DOJ's Antitrust Division has been tasked with uncovering whether ad agencies are intentionally rigging pitches for production work to favour their in-house divisions.
Sadly, the US scenario is reflective of the current state of affairs in other major advertising markets, most notably the UK, Europe and South Africa. As it stands, only the US has forayed into legal waters, but the situation is becoming more contentious in each of the markets mentioned above. Around the world, ad agencies appear to be scooping up production work and taking it in-house to bolster diminishing profit margins.

In both the UK and France, independent production companies have responded by presenting a unified front – and are 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 and dated 16 February 2017, 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.

"...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 South Africa’s independent production houses and film professionals, the CPA is deeply concerned by the impact that is being felt locally. There is 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.

Indeed, a worrying number of suppliers and independent firms are facing potential shutdowns, as local ad agencies take on an ever-increasing slice of post-production work in-house, as well as establish their own recording studios and facilities.

If the sector continues its current trajectory, we can expect to see more agencies starting up in-house production departments which could lead to the closure of production companies that are already feeling the pressure of economic slow-down and the negative effects of globalisation.

This could severely inhibit the entire 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 (and 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 to assist in setting clear and fair guidelines that pave the way forward. Without this, the integrity and credibility of advertising and production in South Africa will quickly be eroded.

About Bobby Amm

Executive Officer at Commercial Producers Association of South Africa (CPA)

    CPA's press office

    The CPA is the South African trade association of production companies that produce television, cinema and internet commercials for the local and international market.