Close-up: Will procurement-led roster lead to blander production?

Unilever's decision to create its own roster of production companies hasn't been welcomed, Jeremy Lee writes.

If Unilever was expecting its decision to tear up its existing arrangements with ad agencies and create its own roster of TV production companies to be greeted with universal joy, it will be rather disappointed.

While the Advertising Producers Association has strongly come out against the plan (see box), agencies too are deeply sceptical. They see it as a procurement-led initiative that will limit their creative choice and influence. They also claim that this classic focus on "price over value" could ultimately lead to a lack of consistency in the look and feel of a brand's output.

One head of TV says: "A set production company roster may look good on the end of an audit spreadsheet, where costs can be managed, evaluated and assimilated. But, in reality, creativity is blunted, given limitation of director choice."

It's a view shared by Bash Robertson, the managing director of 15 Badgers, who says: "It can't be in the client's best interests. Procurement is becoming akin to the quest for the Holy Grail and yet, in reality, there has never been a better time for agencies and clients to contract cost-efficient production."

Agencies also acknowledge that it will damage the "preferred partner" deals that they have in place with production companies. "Naturally, if you are continually working with a company that has a number of directors who are relevant to the look and feel of the work that you are wanting to produce, it is only common sense to establish an affiliation with said company, where a volume discount deal is an added incentive to continue the arrangement," the head of TV says.

But greater financial transparency is a good thing, especially given the suspicion that production companies can be less than thrifty with clients' money. Indeed, in a world dominated by diminished margins, it was surely inevitable that the microscope would linger over the production industry. This is particularly the case with advertisers that produce a large number of commercials such as Unilever.

For its part, Unilever is keen to stress that the creation of the roster is designed to ensure that it gets the best from the market and that its agencies will be wholeheartedly involved in the process.

Jorgen Bartsch, its vice-president, global marketing services, says: "We are doing this to ensure the highest levels of creativity, quality, consistency and best practice across our brands globally.

"This is about raising the bar and making sure that all brands in all markets are using the best production companies in the most efficient ways."

However, there is concern that if rosters become a trend, then directors who are most suited to a particular script may miss out because they are not part of the allocated roster. More worryingly, smaller production companies may be forced to close since only those companies with larger pools of directors may be asked to get involved. It is up to Unilever to show that this won't be the case.

HOW UNILEVER'S ROSTER WILL WORK

- Jorgen Bartsch, vice-president, global marketing services, Unilever

Q: Will production companies on the roster get guarantees of work?

"For any job we commission, we will request three quotes - at least two out of three quotes must be from companies in the roster. So although they will not get a guarantee of work, they will have better chances of being awarded the project, provided they maintain their quality of output and are cost-competitive."

Q: How are you planning to remunerate them?

"As a matter of policy, we don't discuss suppliers' remuneration, but we can say that they will get very competitive terms which we are confident they will be happy with."

Q: Will they also be able to produce work for companies that Unilever considers competitors?

"We currently don't expect the production companies we work with to not work with our competitors, nor do we have an ambition to change this going forward for companies on our roster."

APA RESPONSE

- Steve Davies chief executive, Advertising Producers Association

"This is a great time to be buying advertising and production in particular. There is an oversupply of directing talent and production expertise, creating a buyers' market and thus great value.

"An advertiser can rely upon the expertise of its advertising agency to identify the best director and production company for any production and then use competition to get the best price.

"So how will moving to a roster system that restricts choice and competition help an advertiser?

"Unilever believes that production companies are achieving discounts on costs and not passing those on, and that by global deals for production inputs, it can achieve savings.

"In the reality of commercials production in 2011, production companies are backing into budgets specified by the agency, on behalf of the client, and then using all their expertise, leverage and relationships with suppliers to achieve that budget.

"In that way, Unilever is already enjoying the benefit of the best prices achievable without having to learn and manage any of that process itself.

"Instead, a procurement process is imposed, asking questions that betray a lack of understanding of production value.

"Production companies understand their job: to fulfil the potential of the script and deliver the commercial on time and on budget. They don't understand this type of procurement mumbo jumbo and, even if they did, how would their answer help the advertiser evaluate value?"

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