Close-Up: Live Issue - Money is not the only issue in APA's row with BBC Broadcast

Producers believe the BBC arm can offer unfair extra value.

What do the following brands have in common: Woolworths, Birds Eye, the Lotto and McDonald's? Stuck? All have had advertisements made for them by BBC Broadcast, the corporation's commercial production arm.

Last week, Stephen Davies, the chief executive of the Advertising Producers' Association (the trade body for independent commercials production companies), wrote to the BBC director-general, Mark Thompson, regarding BBC Broadcast's increased activity in ad production. The move is welcomed by APA members such as Robert Campbell, the managing director of Outsider Films.

Campbell is unequivocal in his view on BBC Broadcast competing with companies such as his. "The idea that I should pay my licence fee - not only for my home address, but that my business has to pay it as well - to support a company that's my competitor is very odd," he says. "BBC Broadcast has a clear competitive advantage - we're small, we're forced to watch our overheads and we go out on a limb; BBC Broadcast has hundreds of people working for it."

The APA's letter follows one sent to Tessa Jowell, the secretary of state for culture, media and sport. In it, Davies asks Thompson to ensure BBC Broadcast's activities in ad production are examined as part of the review into the BBC's commercial activities ahead of the review of its Charter.

The letter also raises concerns over the commercial policy guidelines that the company works under which, Davies says, are impracticable.

But is BBC Broadcast doing anything wrong in making ads? Andy Bryant, the 20-year veteran of the UK and Australian ad industries who now runs the BBC division, doesn't think so. He points to the commercial policy guidelines, which he has to ensure every project adheres to. At the heart of the policy is BBC Broadcast's incorporated status. "That means we're trading commercially and we have to earn a rate of return commensurate with market practices," Bryant says. BBC Broadcast, he stresses, doesn't receive a penny from the licence fee. Rather, the flow of cash goes the other way, with profits from commercial activities being ploughed back into programme-making.

While Davies accepts that licence fee-payers aren't funding ad production, he still feels BBC Broadcast has an unfair advantage when it comes to pitching for work. The company can spend more than APA members on promoting its services, he says, and there's the more nebulous added value of agencies working with the BBC. "It might give rise to other opportunities - if you're able to develop a relationship with the BBC, it might help you to become one of its roster agencies. That's something the regulations don't take into account and I don't see how new regulations could address that issue," Davies says.

Bruce Haines, the group chief executive of Leo Burnett, which used BBC Broadcast for the recent McDonald's Yum Chums campaign for children, dismisses such a view. Burnett chose BBC Broadcast because of the BBC's expertise in children's programming, he explains. "It was very important to us that we were dealing with people who knew exactly what they were doing. BBC Broadcast has access to people who make children's TV - it's our duty to get the best possible advice and expertise, dependent on the subject matter." Haines added that Burnett views the ads as sponsored content and most of the time the agency would use APA members for ads.

Bryant agrees that there's no quid pro quo for agencies working with his company. "We're entirely separate from the BBC's marketing department," he says. "In fact, it's our client. It's hard to see how our working for an agency would affect the BBC's choice of advertising agency."

He is keen to highlight the commitment he says BBC Broadcast has to the overall independent production industry. He points to a string of BBC promos for which the company brought in up-and-coming directors from independent companies; promos such as the 2004 Olympics campaign, created by DFGW and directed by Camille Bovier-Lapierre from Passion Paris. "There was the opportunity for a relatively unknown director to work on a massive production," he says.

"We also have a commitment to developing talent. Several independent production companies now enjoy the talents of directors who trained at BBC Broadcast."

Not everyone in the industry agrees. "It has made its showreel based on directors it has borrowed from independent production companies, at greatly reduced fees," one independent producer says. "If we'd known it would make a showreel out of that to compete with us, we'd never have done it."

Bryant counters that BBC Broadcast has its own talent, including Ron Scalpello, the director of the BBC's successful "8-Mile" trailer for BBC Radio Five Live.

"When we compete or pitch for any work, all we can use is the showreels of our directors," he says. BBC Broadcast does include other directors' work on other reels, but these, he says, have different uses. "We're very proud of our production work on the BBC's 'rush hour', but if we were trying to compete for an ad job, it's unthinkable that we'd be using it."

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