The Found Money of State Commercial Production Incentives
April 23, 2012
By Bill Duggan, Group EVP, ANA
Many states now offer financial incentives to advertisers to shoot commercials in their states. Although such incentives originated about ten years ago, more recently they have expanded to additional states and have become increasingly attractive to advertisers. The savings can be quite significant, often ranging from between 15 to 30 percent of production spending in that state.
The film and television industries have historically benefited greatly from these state production incentives. The incentives are clearly geared to reward companies for making the decision to produce in a particular state. Incentive programs target the companies that fund productions and give final approval on the shoot location. In the feature film arena, the largest recipients of these incentives are the major motion picture studios. More recently, advertisers have been participating. Savings can be achieved without sacrificing quality, as many states have been very successful in building production crew bases and equipment suppliers required by the industry.
States base incentives on hiring as many locals and purchasing/renting as much as possible from local vendors. Typically, all expenditures incurred in the state related to pre-production, production, and post-production qualify for state production incentives. The general rule of thumb is that the more the advertiser spends in the state, the greater the potential savings from the incentive.
The list of states that offer commercial production incentives and the specific details for each state, are continually evolving. Commercial production incentives are currently available from Alaska, Connecticut, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, New Mexico, North Carolina, Oklahoma, Pennsylvania, Puerto Rico, Texas, Washington, and West Virginia. California and New York—two long-time commercial production centers—have active state film offices but do not offer commercial production incentives that advertisers can utilize. One resource available to help stay up to date on the various state policies is The Official Guide to United States Production Incentives at http://www.easecommercial.com/.
Production incentive rebates belong exclusively to the advertiser, not the production company or the agency—it’s the advertiser who funds the production and gives final approval on the shoot location. Importantly, contracts with agencies and production companies should be written to reflect the fact that any production incentive associated with the work covered by that contract is the sole property of the advertiser. This is a matter of protecting your corporate assets and receiving the financial benefits that accrue from your marketing expenditures.
State commercial production incentives represent a meaningful opportunity for advertisers and states. It’s a win-win situation. States have invested time and capital in creating these incentives to woo advertisers to shoot commercials in their state to help build their economies. Advertisers can use these incentives to help significantly stretch marketing budgets.
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