Rarely a week goes by now when advertising agencies don't appear to be under siege from a corner of the marketing services world attempting to muscle in on traditional agency territory.
One of the most interesting challenges comes from the broadcast arena, in the new creative divisions being launched by some of the UK's most powerful TV production houses.
All of the major broadcasters have at some point dabbled in creating ads when they have had a bit of extra capacity to burn, but it's only recently that the offerings have been seriously packaged and marketed. And they're starting to do some interesting work, work that might otherwise have fallen to ad agencies.
With the exception of ITV - which launched (as Granada) its standalone division, Commercial Breaks, in 1990 - Channel 4, with 4Creative, Sky Creative Agency, BBC Broadcast and Viacom Plus are relatively new.
"These departments have recognised an opportunity in the marketplace where creative ad agencies have struggled at the budget levels and time frames that are often required," Nick Walford, the managing director at BroadMind, MindShare's sponsorship division, says.
"Most have been set up to deliver sponsorship creative and credits with some promotional and tactical ads rather than branding work. There is a bit of a land grab in an area where clients may well have expected ad agencies to get involved but their track record to date hasn't been great," he adds.
For the broadcasters, the underlying reason for doing ads is revenue. "The department is here to drive airtime sales,"Chas Lister, the creative director at Commercial Breaks, says.
Tagging the new departments as proponents of cheap, churn 'em out ads just because they aren't specialist agencies is an accusation that is hotly dismissed.
"We are competitive in terms of cost but it's not just about making cheap ads, we still want good creative," Graham Appleby, the head of client marketing at Sky Media, the division responsible for selling the services of SCA to clients, says. "Ultimately, if we build a deeper relationship with the client and they spend more, then, yes, we would want to get a commensurate proportion of that."
It is who these deeper relationships are being made with that is the cause of a little concern to agencies. Perhaps most telling is Heinz commissioning Viacom Plus to create the launch TV campaign for its frozen snack range Bite Me. The roster agency Leo Burnett would normally have been in line for the business.
On the plus side, for the most part these creative services are appealing to first-time advertisers who haven't had the finances to go through the hoops using a traditional agency.
"Ultimately, it is to everyone's benefit. We have broken the historical stumbling block of the heavy disproportionate requirement for finance for production," Lister says. "TV has been an exclusive club. That is not the case anymore."
Lister says the type of client it appeals to is "medium or small, certainly not the next major car launch". Richard Burdett, 4Creative's acting manager, agrees. "We won't see a multimillion-pound P&G account, but advertisers in the youth market and fashionable popular culture find it appealing."
All the departments derive the lion's share of their work from their parent. Commercial Breaks is the only operation based outside London and as a result services a large number of regional clients. Sponsorship work is the major area for Commercial Breaks and 4Creative. BBC Broadcast is by far the largest of the operations - the size of a top-ten ad agency - providing services from ad production to interactive content. Ad-funded programming and reaching out to external clients are high on the agenda.
"We have ambitions to grow the business and increase work with third-party clients," Andy Bryant, the director of creative services at BBC Broadcast, says. "At least 25 per cent of the business will come from outside the BBC and this will increase over time."
"We haven't pitched ourselves as an ad agency like 4Creative and Sky have," Daniel Salem, the commercial director at Viacom Plus, says. "It is only for our own clients. We won't pitch for work."
Given the audience that MTV appeals to, it is unsurprising that Salem says Viacom Plus has been a hit with children's advertisers, youth brands and the government when it targets youth with campaigns on the likes of voting and racism.
None of the broadcaster's creative departments want to bite the hand of the ad agencies that feed them, but clients are finding the cost-effective nature of the broadcasters appealing. Going forward, a more collaborative model is being proposed as the balance that will be struck. "Advertising is Channel 4's greatest source of income so we would be unwise to compete directly with agencies. We're not trying to be a TBWA or Saatchis, we just don't have their resources in areas such as planning," Burdett says.
"Nevertheless, TV companies produce great creative work on dramatically different timescales to ad agencies. We believe that, as advertisers continue to develop closer relationships with broadcasters, there is a real opportunity for 4Creative to produce work that benefits both parties."
Commercial Breaks was launched in 1990 by Granada Enterprises and is now part of the newly merged ITV. The division is headed by the creative director, Chas Lister, and has six full- time staff. Much of its business comes from regional clients and the division claims to be the biggest source of commercials production outside London. In more than 50 per cent of projects, creative is delivered by the department and the majority of the work runs across the ITV network.
CASE STUDY - BEDFORDSHIRE POLICE.
Bedfordshire Police came to Commercial Breaks for its creative and production resource on the strength of work the agency had done for Essex Police. The brief was to attract new recruits. Commercial Breaks worked within a restricted budget to provide a complete one-location source of commercial production tied into an airtime package. The campaign, which ran on ITV in the Anglia region, outperformed the national "heroes" campaign by M&C Saatchi, according to Commercial Breaks.
Headed by the creative director, Martin Delamere, Sky Creative was launched as a service for outside clients in August this year and now has 34 staff. Most of its advertiser clients are new to TV.
CASE STUDY - COMPANY MAGAZINE.
In August, Sky Creative produced a ten- second treatment for the launch of the September issue of The National Magazine Company's Company, which came with an extra magazine called Shop!. Company is not a regular TV advertiser and NatMags approached Sky because of its cost-effectiveness. Sky created a cartoon-style ad, its first work for an external client. The ad ran on Channel 4, five, E4 and Sky channels. Sales of the issue were good and Sky Creative is in talks with NatMags about extending the relationship.
Headed by the commercial director, Daniel Salem, Viacom Plus is the creative extension of Viacom Brand Solutions. VBS launched in 2001 after MTV Networks won the sales contract for Nickelodeon and Paramount Comedy. VP launched this year as a combined creative and media business offering solutions across Viacom's portfolio of properties - Blockbuster, Viacom Outdoor, UCI, Showcase cinemas, Simon & Schuster and TV which includes MTV and VH1. VBS has worked with a number of clients, but only for broadcast and online work. Around 15 per cent of Viacom's income comes from VBS and VP.
CASE STUDY - HEINZ.
When Heinz was considering how to turn a £3.5 million brief for its new Bite Me range into an effective communications strategy, it decided against a traditional agency. The brand was targeting teenagers. "A straightforward ad campaign wouldn't make the emotional connection that is crucial for this audience," Rebecca Thomas, Bite Me's brand manager, says. Heinz, working with its media agency, Starcom Motive, gave the task to Viacom Plus, which made 26 60-second animated ads for about the same price as a 30-second TV ad. Heinz also commissioned VP to develop radio creative and an SMS competition to run on MTV.
4Creative has a core staff of 14 and launched in 2001. Richard Burdett is the acting manager and 50 per cent of 4Creative's work is sponsorship idents and credits, mostly for Channel 4.
CASE STUDY - NEW LOOK.
New Look was the first external client 4Creative has worked with beyond on-air sponsorship. The brief was for the opening of New Look's flagship store in London's Oxford Street. Working with Michaelides & Bednash, 4Creative developed a strategy of taking Oxford Street icons such as street sweeper, bus conductor and taxi driver and making them gorgeous. In addition to a massive poster presence, the campaign used other avenues, such as knicker- shaped flyers saying: "Get your booty down to New Look."
BBC Broadcast launched in April 2002 and now has 280 staff. It's notched up £100 million in total revenues, £35 million of which comes from creative services. Of that, 80 per cent comes from BBC customers and 20 per cent from non-BBC customers.
CASE STUDY - RENAULT SCENIC.
BBC Broadcast created and produced 16 two-minute films as part of the launch of the new Renault Scenic. This is the first advertiser-funded programming project for Renault and BBC Broadcast. The films, titled Scenic Days Out, were funded by Renault and are running on UK Gold, UK Style and UK History. The project was produced in collaboration with Carat Sponsorship and UK TV's sales operation, IDS. Each film features a location for a great day out somewhere in the UK: movie locations on UK Gold, gardens and interiors of landmark buildings on UK Style and historic sites on UK History. Renault UK's advertising manager, Jonathan Wignall, was looking for innovative ways to communicate the benefits of the new car by encouraging people to "Park the TV".