Well, it’s happened.
Marketers are now starting to rewrite the rules in regards to which production houses an agency can work with. The marketers will contract with certain production houses, locking in the costs of lighting, labor, anything to do with the mechanics of a shoot.
The thinking, I’m sure, is that mechanics have little, if anything, to do with creativity.
In return for agreeing to be “locked-in” to pricing, these production companies would achieve “preferred vendor status.”
It was inevitable that it would come to this. Although procurement specialists have been employed by marketers for some time now, there was the always the unwritten rule that the cost to create the work (production) would be around 10% to 20% of the cost to run the work (media spend).
But today, with viewing audiences fragmenting and different screens (TV, computer, phone) requiring different creative, the ability to aggregate a large enough audience to justify the cost of doing creative the right way is becoming more difficult.
When marketers were able to reach 20 million viewers with one fell swoop, they could easily justify $500,000 plus for production. This is more difficult when the number of viewers is closer to 200,000.
Even though today’s improved targeting methods mean these 200,000 are probably a more relevant audience, it's hard not to do the math and justify the cost of production based on size of audience.
As the viewing numbers get ever smaller, the procurement specialist’s pencils get ever sharper.
Unfortunately, creativity suffers.
Hal Riney, one of the smarter people the advertising business has known, put it this way. “If we can, though the expenditure of an extra hundred thousand dollars or so in production, increase the impact, involvement and memorability of, say, a five-million dollar budget by even ten percent, we’ve added a half of million dollars in value for a hundred thousand dollars in cost.”
Seems like money well spent, doesn’t it?
Those extra hundred dollars or so in production is exactly what marketers want to cut back on. It pays for the lighting, the casting, the music, all intangibles that make one commercial strike an emotional chord while another one doesn’t.
Intangibles are why agencies are hired. Anyone can do the tangibles.
Anybody can strategize, anybody can rationalize, anybody with a few charts and graphs and common sense can find the target market. But to add the emotional element that separates one commercial from another, one brand from another, is in fact, something that only good agencies bring to the party.
To tell them to paint brilliantly, but to only use two colors because the marketer wants to save money, seems to be counterproductive.
I’m not saying that agencies and production companies should have free reign. That’s the other extreme and it has proven to be equally foolhardy. Agencies and production companies need to be held accountable.
But instead of tying their hands upfront, is it not more motivating to tie their profit into outcome?
The outcome that they are immediately responsible for is to get those that express interest in the commercial to actually watch it. Not just ten percent of it. But all of it.
If the marketer pays to have thirty seconds produced, then those producing it should be held accountable for those thirty seconds being watched.
If so, pay them well. If not, well, why should an advertiser pay full fare for failure?
Don’t restrict brilliance. Enable it. Trust in it. If it’s not delivered, then let the profit of those that promised they would deliver it, suffer.
Tying mark-up and profit into outcome (measured as time spent), rather than the size of the job, will have the production companies eliminate some of those lights before the procurement specialists even gets involved.
Maybe it's just me. But I've always found it easier to inspire—rather than punish—someone to brilliance.
For more on outcome-based pricing for agencies and production companies, go here.