The Hidden Conflict of Interest in Advertising Bidding Processes
The advertising industry’s bidding process was designed to encourage transparency, competition, and creativity. Yet, in recent years, a growing conflict of interest may have emerged, creating the potential to undermine these essential values. The consolidation of creative agencies and production agencies who are owned by the same parent company has led to a potential for bias in the selection process. The result? A stifling of supplier diversity, reduced innovation, higher costs, and a lack of transparency across the silos of an already complex ecosystem.
The Supplier Landscape
The supplier ecosystem is generally made up of three buckets: Holding Companies aka Holdcos (who are networks of agencies spanning a variety of creative, media, and production services), independents (privately owned agencies and production companies, editorial houses, music houses, etc.) and in-house teams. The recent declining revenue for Holdcos and the rise of independents and in-house teams are fueling direct competition with each other.
Holdcos managing the bidding process may now be incentivized to steer brands toward their own internal production entities — they stand to benefit financially from keeping work within the Holdco owned businesses. So, while this direction or consolidation is presumed to create some operational efficiencies, it may also create a significant conflict of interest.
Agencies controlling the bidding process may favor their internal counterparts over third-party vendors that could potentially deliver better quality, competitive pricing, or more innovative solutions. This bias not only leaves brands with fewer creative options, it limits supplier diversity.
The Silent Impact on Creativity and Innovation
When creative agencies and media companies within Holdcos control decision-making, there is a risk of diminished creative innovation. Third-party suppliers—often specialists in their niche—might not get a fair chance to compete. The result is a narrowing of perspectives and ideas instead of opening the door to fresh, competitive approaches.
For example, imagine a global FMCG (fast-moving consumer goods) brand seeking bids for a premium video campaign. Under a holdco model, the same parties managing the bidding process may also own the eventual production partner awarded the job, paving the way for a closed-loop system that favors familiarity over experimentation. This is also not a true competitive bidding process.
“Over our time in the industry, on the brand side, agency side, and production side, we have seen the advantages of a balanced, unbiased bidding process that delivers optimal results, creativity and quality,” says Jillian Gibbs, APR’s Founder, Global CEO, Speaker, and Author. “We’ve long held that non bias creates the strongest results for both brands and its suppliers.” This independent, transparent approach ultimately optimizes marketing investments, achieving both creative excellence and cost efficiency.
Case Studies
APR’s global CPG client case study highlights the advantages of a balanced, unbiased bidding process. This client leveraged APR’s production expertise to evaluate bids and provide on-set support, ensuring quality outcomes and financial oversight. This independent, transparent approach allowed them to establish trust and optimize their marketing investments—achieving both creative excellence and cost efficiency.
APR has seen the advantages of a balanced, unbiased bidding process with a recent global CPG client. “Our team evaluated bids, provided on-set support, and optimized the production through implementation of a preferred vendor program,” says Jillian Gibbs, APR’s Founder, Global CEO, Speaker, and Author. “We’ve long held that non bias creates the strongest results for both brands and its suppliers.” This independent, transparent approach ultimately optimized the CPG’s marketing investments, achieving both creative excellence and cost efficiency.
What’s at Stake for Marketers and Procurement Teams
Procurement teams and CMOs understand the responsibility they hold in managing multimillion-dollar budgets. Yet, without a transparent process, they might inadvertently reinforce these conflicts of interest. The potential impact goes far beyond creativity:
- Financial Inefficiency: Organizations risk overpaying for services when competitive, more cost-effective suppliers aren’t given a fair shot.
- Supplier Relationships: Smaller, innovative vendors are discouraged from participating in biased bidding systems, reducing supplier diversity that, over time, may result in a smaller landscape of suppliers.
- Innovation: Distinctive boutique companies play a vital role in driving innovation by fostering fresh ideas and agile thinking.
Redefining the Bidding Process
To overcome these challenges, brands must rethink the way their advertising supply chain operates. A transparent and strategically optimized bidding process can deliver not just value for money but also creativity, efficiency, and trust.
Here are five strategies to guide this transformation:
1. Independent Oversight
Engaging a third-party advisor introduces an impartial partner to manage the bidding process, eliminating any vested interest in the outcome. “A player can’t call their own game—it takes an unbiased umpire to ensure fair play,” says Gibbs. This separation ensures that decisions are based on merit, quality, and value rather than internal allegiance.
2. Competitive Bidding Practices
Data from APR’s proprietary framework shows that content campaigns produced via competitive bidding are 11–20% more likely to achieve savings. Competitive bidding introduces diverse perspectives and ideas and promotes different approaches from all suppliers. It starts with ensuring that all bids and/or RFPs are comprehensive and standardized, enabling apples-to-apples comparisons across bidding suppliers.
Best Practices for Competitive Bidding
- Define clear requirements upfront to avoid scope ambiguity.
- Ensure the pre-bid process aligns all stakeholders with expectations, such as budget, schedule, and creative approach.
- Evaluate every proposal meticulously, using bid templates, benchmarks, and expert advice to compare quality, approach, and cost, effectively.
3. Transparency at All Levels
Marketing organizations must demand full disclosure about ownership structures from bidding agencies or suppliers. This includes understanding which entities are owned by or affiliated with Holdcos or other controlling organizations. Transparency enables smarter, more informed decisions while guarding against less visible conflicts of interest.
4. Supplier Variety and Enablement
Building a diverse supplier base fosters creative experimentation and innovation, especially for the origination of content like with creative production and director-led projects. Consider offering opportunities to smaller, independent agencies or production companies that often bring niche expertise and unique talents to a project.
The key to making today’s ecosystem of creative and production suppliers work is the attention given to integration. To address this, establish frameworks where master creative assets are handed off efficiently to agile third-party production suppliers or in-house client teams for adaptation and scaling, sustaining high-quality, creative results, while maintaining costs.
Transforming Conflict into Opportunity
The consolidation of creative and production agencies inherently reshapes the competitive landscape. However, by taking proactive steps to re-establish transparency and integrity in the bidding process, brands can break free from the closed-loop systems that limit creativity and inflate budgets, and create opportunity for all companies to bid fairly.
For procurement teams, CMOs, and advertisers, this transformation is an opportunity to elevate their marketing strategies while strengthening stakeholder trust. With collaboration, transparency, and an unbiased partner, a brand can achieve the perfect balance of creativity, cost efficiency, and operational excellence.
Looking ahead:
APR is here to help you optimize your advertising ecosystem. Reach out today to discover how we can turn your production challenges into strategic advantages.
- Maximize ROI through efficient solutions: Leverage APR’s expertise to create a seamless balance between creative consistency, quality and cost efficiency, ensuring every production dollar is optimized.
- Foster transparency and collaboration: Build trust with stakeholders by implementing clear, collaborative processes guided by an unbiased, strategic partner.
- Transform challenges into opportunities: Turn production complexities into actionable strategies that drive innovation, operational excellence, and long-term success.
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