Cost Saving Opportunities in Television Production

January 1, 2005

Formalize TV production guidelines.
Use a production expert.
Set production budgets prior to creative development.
Set a realistic timeline prior to creative development.
Think hard about whether multiple-bids or single-bidding is best for your company and the specific board about to be produced.
Consider bundling individual spots into pools.
Consider shooting in secondary U.S. markets as well as offshore.
Verify the number of shoot days required.
Use cost-plus on specific categories.
Break out color-corrected packaging for hero product.
Leverage the overall buying power of your company and your agency / holding company.
Manage roles and responsibilities during the process.
Establish a digital asset library to reuse and repurpose existing footage.
Set up a profit center for music.
Re-visit talent payments and re-use often.

Formalize TV Production Guidelines

Companies including Anheuser-Busch, Campbell Soup, Clorox, Coors, General Mills, Kraft, Nestlé and many others have formal TV production guidelines. The guidelines often become part of a corporation's best practices - requiring compliance by all parties. These guidelines can help outline client, agency, and production company expectations and best practices prior to and during the development of a commercial. Specific items included may cover bidding, the pre-production meeting, color-corrected packaging, etc. The guidelines can outline clearly the clients' expectations for every stage of production, from creative development through on-air talent payments and reuse.

While these guidelines could be as long as 40 pages, a concise one-page summary for agency and marketing managers is especially helpful. These guidelines should be updated on a regular (at least annual) basis. With each update, clearly label "what's different" from the previous version. And these guidelines should regularly be presented to new employees at both client and agency. Finally, some companies even incorporate their formal TV production guidelines into their agency contracts to give them more teeth.

Use a Production Expert

This production expert could be an internal resource or an outside consultant. Production experts provide know-how, and not just cost savings. Remember, the term is production expert, not cost expert - think about the difference. Such an expert can be used on a project or on-going basis. An on-going production expert can provide continuity from job to job and often becomes the equity and execution expert for a brand/company.

Set Production Budgets Prior to Creative Development

All businesses are budget dependent. It only makes sense to develop production budget parameters with your agency team upfront. That doesn't mean your agency should be discouraged from bringing ideas that exceed the parameters of your budget - but make sure they also provide viable options that enable you to stay within your budget. Most advertisers will consider a revision to marketing plans (i.e., shifting budgets within the marketing mix) to accommodate outstanding creative ideas that may provide the spark needed to achieve objectives. Consider providing upfront budgets not only for the entire planning year, but also on a per spot/per exploratory basis. And don't forget about setting budgets for animatics and other forms of testing as well. Also, have upfront discussions on talent needs and reuse budgets.

Set a Realistic Timeline Prior to Creative Development

Clarifying the airdate at the start of creative development will help set a realistic timeline to keep you out of rushed production. Having proper time upfront can also foster true creative collaboration between your production team and a desired director. Saving dollars in production is very often directly related to the amount of time given to pre-production.

Think hard about whether multiple-bidding or single-bidding is best for your company and the specific board about to be produced.

These days, about half of all TV production is multiple-bid, while half is single-bid. The historical reasons for multiple-bidding still hold true today: the opportunity for cost savings, the ability to get creative interpretations from multiple sources, and increased flexibility.

However, in many cases single-bidding can make sense - especially when timing is extremely tight, for shooting a pool-out, or when using an incumbent director. Single-bidding takes tremendous inefficiencies out of the production process for the production company. Bidding a project requires labor-intensive research that becomes a very costly, time-consuming component for a production company - and eventually gets passed along to the client. If the production company is given the appropriate production specifications and budget parameters upfront, the agreed upon bid specs could be delivered quickly, within budget. This strategy works well when managed by seasoned production experts (representing agency and client), who can look at a storyboard and very accurately estimate the cost of a production. Longer term, single-bidding with the same director can also provide the opportunity for volume discounts.

Consider Bundling Individual Spots into Pools

Pooling of similar ads result in production cost savings. Consider that the difference of the price per day between a one-day shoot and a four-day shoot could be enormous. Plus, pooling could provide savings in pre-production and post-production costs. It's easier to consider pooling when budgets and timing are clearly established upfront. If a brand's annual creative needs can be considered in advance, pooling becomes easier, especially if within the same campaign. However, pooling different brands, with different creative approaches (e.g., comedic performance compared to music-driven montages), handled by different agencies, or with different production requirements (e.g., set vs. location) can severely limit the effectiveness of bundling individuals spots into pools. Finally, consider adding product shots required for a separate brand to an existing product shoot.

Consider Shooting in Secondary U.S. Markets as well as Off-Shore

Production centers in places including Dallas, Miami, Minneapolis, New Mexico and North Carolina, among others, can offer cost savings. Cities outside the major markets can provide a wealth of professional talent and other untapped resources. Many of these markets are so eager for business, they provide rebates and tax incentives just for starters. Also consider shooting offshore in countries such as Australia, Canada, Czech Republic, Hungary, Mexico and New Zealand. SAG guidelines recognize the option of an offshore given any one of the following reasons: (1) the need for a specific location (e.g., the Eiffel Tower), (b) weather conditions, (c) and significant savings on production. It is a violation of the SAG Agreement to shoot offshore to avoid talent obligations here in the United States. The decision to shoot offshore must be motivated by cost savings in production, not talent costs.

Often, the decision to shoot offshore is driven by exchange rates. For maximum cost savings, use local crews (rather than pay travel expenses to fly a crew in). But keep an eye on travel expenses and overall time away from the office, since they can offset the perceived value of shooting in secondary U.S. markets and / or offshore. (Note: the locations listed above are examples only and are not meant to be an all-inclusive list.)

Verify the Number of Shoot Days Required

Shave a day, save money. By cutting back one production day and extending overtime (within reason) on a pre-light or shoot day, you can eliminate the cost for an extra day of shooting, saving money overall. Pre-light days are often conducive for shooting product shots. Decisions to reduce shooting time should be initiated during the pre-bid meeting. By extending overtime on a shooting day you can also save valuable time in the post-production schedule. Use your production expert as a resource here!

Use Cost-Plus on Specific Categories

Concerned about specific categories, perhaps due to uncertainty? Convert certain categories within a firm bid production to cost-plus, e.g., crew, film, pension & welfare (handle this cost-plus since P&W has variable rates throughout the year), and location expenses. Cost-plus also gives you the right to audit (which you should have your agency and audit department handle, along with your production expert). However, there's a risk with cost-plus since it makes you vulnerable to paying overages.

Break Out Color-Corrected Packaging for Hero Product

Consider producing color-corrected packaging and mock-ups internally or through your own design resource for quality control. Also, direct bill these, rather than pay agency and/or production company mark-ups. Recycle and reuse these mock-ups and keep them in a central repository for future projects (not only TV, but print, too).

Leverage the Overall Buying Power of Your Company and Your Agency/Holding Company

Given the overall buying power of your company and your agency/their holding company, you may have the opportunity to negotiate reduced rates for certain services. Agencies and their holding companies contract for talent payment services, commercial distribution and element storage companies (if not already managed by client directly), etc. And agency holding companies generally have blanket production insurance for their clients (that also covers post-production). Check to see if your agency has this insurance; if not, consider buying it yourself. Overall, take at look at the amount of buying you and your agency are doing and with whom. You may find some surprising opportunities.

Manage Roles and Responsibilities During the Process

The best advertising is most often produced by the smallest number of people - and those people know their roles and responsibilities during every stage of the development process. Generally, the greater the number of people involved, the less clear the roles become. More opinions and differing points of view can increase the discussion time to reach consensus and therefore increase costs, especially at shoots. Each minute incrementally adds up to hours, potentially putting you into overtime with directors, crews, actors, editors, musicians etc. Smart clients empower one key decision maker to call the shots during prep and production. These clients have buttoned-up pre-production meetings ending with crystal clear direction. One caution: people not involved in the pre-production meetings should generally not attend shoots. They won't have the perspective of decisions hammered out during the pre-pro meetings. This can lead to revisiting "old" issues on the set, with the clock ticking. Some clients feel that they do not have to attend shoots if the pre-production meetings are clear and thorough. This can save thousands of dollars in travel and productivity costs. Just make sure that your agency knows your expectations. You can also manage costs by managing roles during post-production. Overages can add up quickly during post-production. Having key stakeholders provide simultaneous feedback on an edit (rough-cut or final version of a spot) can help avoid an increase in post-production charges. It is best for the agency to collect all the feedback and points of views before making any edits. This applies to both the internal agency reviews, as well as the client review meetings.

Establish a Digital Asset Library to Reuse and Repurpose Existing Footage

Consider establishing a digital asset library to provide centralized, web-based storage (and easy access) of video and audio assets, as well as print label and logo assets. Before production begins, check this library to see what you might be able to reuse. By investing in a digital asset library, you can easily access files and save time and money in the process. Having a digital asset library helps producers reuse everything from food, cars, demos, mnemonics, scenic footage, animation, packaging, supers, clip art, etc. A digital asset library is especially beneficial for international use and also helps create brand equity management tools that guide and teach new production teams.

Set up a Profit Center for Music

Advertisers should actively claim and collect royalties for their original music created for their advertising. ASCAP, BMI and SESAC are Performing Rights Organizations (PROs for short) that collect fees from broadcast stations for the public performance of music on television and radio broadcasts. The PROs in turn distribute these fees as a royalty to the appropriate songwriters and music publishers on a quarterly basis.

When an agency hires a music house to produce an original music track for a commercial, the composer signs a Music Rights Agreement transferring all publishing rights (and the ability to collect publishing royalties) to the client. As publisher, the royalties an advertiser can expect to receive each quarter will vary depending on the amount of original music produced, the number of times these commercials air and the type of media the commercials are broadcast over. This profit center for music can be handled through your ad agency in conjunction with a talent payment service.

Revisit Talent Payments and Re-Use Often

How you contract (buy) an actor and how you use (play) the commercial later, can be the difference between a lot and little savings. Much consideration should go into how you use the actors in the commercial, e.g., as an on-camera versus as an extra performer. Also, consider the total number of actors used in a spot. Discussing these issues in a pre-bid meeting can put you in a better position for negotiating and booking your talent, and can save you money by examining the number of actors you need to pay re-use fees to. These same discussions also apply to the number of musicians and singers you use.

Work with the ad agency to manage the best way to run your spots based on the rotation schedule and holding fee cycles. Sometimes you can eliminate an entire cycle payment by juggling the media schedule just a little.

Revisit talent and re-use payments often. Holding fee payments should be reviewed before each cycle is finished. Savings can be found by releasing commercials you never intend to air again, taking caution not to release spots if you are not sure about their future use. Re-negotiations for released spots can be expensive.