• by Larissa Faw , October 14, 2014

In recent years, full-service ad agencies have expanded their in-house production capabilities. Now, AICE, the trade group for independent post-production houses, is raising concerns about this trend — particularly regarding the transparency, ethics, and competition or lack of it once agencies take these services in-house. 

At issue, the group contends, is whether clients are getting the most for their money when their agency tells them they want to do a job in-house or when clients themselves dictate that agencies work in-house.

Further, the group alleges that in-house operations at agencies are frequently requesting dummy or "check bids" to present to clients to meet requirements for multiple bids, and that this practice is patently corrupt and possibly illegal, based on the association’s understanding of deceptive trade practice laws.

AICE maintains that despite being touted by agencies as efficient ways to edit and finish work faster and cheaper — a claim it asserts is not always supported by facts — in-house facilities exist largely to create additional revenue streams for the agencies themselves. 

AICE’s position is that transparency can be adversely impacted when it comes to dealing with in-house operations. The group contends that so-called "check bids" are often little more than stalking horses that agencies request but don’t seriously evaluate. Also, the group questions whether clients are getting the best possible solutions, the widest array of options and the full breadth of services from in-house facilities as compared to independent companies.

The trade group obviously has a vested interest in pushing this issue. But the Association of National Advertisers has weighed in, noting that it has its own transparency issues with agencies. In a blog entry posted today, ANA Group EVP Bill Duggan said the organization “has been addressing the ‘transparency crisis in our industry throughout the year. Concerns about the level of transparency of media agencies is likely at an all-time high. That includes issues like not knowing if an agency makes money from the media sellers on a client’s media buy … and murkiness about the role of intermediaries in the media buying process, especially with agency trading desks and programmatic buying.”

Duggan added: “The ANA applauds the fact that AICE has voiced concerns about transparency issues in post-production. We will help educate ANA members on this issue and suggest that they have conversations to fully understand the in-house editorial and post services offered by their ad agencies.”

It remains to be seen what happens next. AICE's primary goal is education, the group says. It wants the client community to understand the ramifications of using agency in-house post-production facilities, the inherent conflicts they present and the impact they have on their ability to get the best possible product at the best price.

"Since our main goal is to raise awareness on the part of the advertiser community, what we hope happens next is an examination of these in-house practices among clients," says Rachelle Madden, AICE’s executive director. "We’d like them to seek a greater level of transparency from their agencies when it comes to their post-production work. We don’t expect agencies to eliminate their in-house shops, we simply want to bring more transparency to the process and help level the playing field in terms of competing fairly and honestly for work."