How does a creative production studio win on cost and why would they want to? Is the customer cost conscious? In the past I suppose the answer would be no, but media and content deliverables now have so many possible outputs that the traditional TVC spend is under threat. On-demand, digital TV, regional TV, Hulu, TIVO, etc., mean that traditional production spend is under pressure. How do you make more for less?

The first part of the answer to this question is obvious: end to end digital production methodologies introduce enormous cost advantages to the acquisition stage of the process, native CPU power and a highly competitive software market make the post production side way more efficient and less capital intensive. So why are we not seeing the costs of production plummet (without everything looking rubbish)?

The reasons are a persistent methodology steeped in nostalgia, a big business mindset in dealing with content and media requirements, and rent seeking behaviours.

Let’s start at the beginning of the process. Agencies like to put out a commercial to five shops for them to ‘treat’ on. This is fine, but why is it necessary? Production studios have show-reels, they have credentials documents, websites. So why, when you have a limited budget, do you waste it on an inefficient and unnecessary process (that process is a cost that is recovered in the price the client ultimately pays)?

Why do we not find creative partners who we feel can execute our communication requirement and not make them jump through hoops to win the work? It is that agency master-servant rent seeking behavior that forces the production industry to front load the costs of production to manage margins?

Compliance is not a valid reason either; we have companies like APCC (Advertising Production Cost Consultants) to deal with that. It is because it is the way it has always been done? That’s a poor reason to do something.

Here is an idea: how about we all get rid of mark-up. I call it “zero mark-up costing”              (ingenious name I know). I like this idea, but I may be the only one. The point is, we all participate in this rent seeking behavior that adds 25% at every turn and grossly inflates the cost of production (particularly live action). My proposal is that we allow you access to all of our costs. You will only pay a DOP what I pay a DOP, etc. My requirement is that you settle 50% up front and the balance on completion. Oh yes, and here is the kicker:  you do not mark me up.

The thing is – we got so busy marking everything up that we eroded the value in what we are truly good at. This means we cannot cost the 3 weeks of pre-production or the storyboarding or the creative thinking at the right price. We have devalued what we do and hidden our margins in non-value-adding mark-ups at every step in the process.

Here is a challenge: Calculate your own break-even point (as an agency or production company). So that is fixed cost over gross profit as a ratio. Now consider you run a 100% GP, but your turnover is reduced by whatever your COGS number is. How is it looking? If you are bankrupt, then perhaps you are making money as some sort of creative facilitation firm and not as a creative firm.

TIME

In my last post I looked at an overview of how a production firm or creative collaboration wins on time, cost and quality. In this article we will focus on the time component.

Time is probably the area where most of us would least like to win. Good work takes time, time is money, good things come to those who wait…. all nonsense. Time is not money. A struggling firm has lots of time and no money.

Time is an absolute, but our perception of time is relative: what exactly is a fast turnaround? So, what we are looking at then is how to use time as an order winner – how to achieve a faster turnaround than the competitor.

The first step is to re-evaluate your production process in the light of a changing market and rapidly changing technologies. In our case this re-think resulted in a rework of the production model; a lateral integration that seeks to reduce re-work. Production integration means controlling the creative process more than the ‘production house’, ‘post production facility’ accommodates, especially for hybrid media deliverables.

What does this lateral integration look like? Well, for one thing, the production process ceases to be a linear one – with dependancies and statistical fluctuations – and starts becoming parallel. A parallel process affords smaller batches and increased throughput. “Wait! Are you busy comparing production to a factory?” You bet I am and there are a lot of lessons that manufacturing learned a long time ago that are simple to apply in the content creation and commercials production environment.

The second step is an extension of the first, but perhaps the most difficult, because it requires partnerships. Not only does it require partnership, but it requires partnerships that involve those individuals who like to refer to themselves as director – some may have a prefix (i.e creative). Nothing takes more time than the master-servant relationship that keeps the client and the end creative apart. Ok… so what then? I am proposing a different relationship between agency and creative studio. One that allows a more open collaborative relationship between agency and production, but more importantly, between production and client. I am convinced that agencies feel unless they shield the client from the crazy production creatives, their client will be revolted and leave never to make a commercial again – and this from people whose offices look like lego. This master servant thinking that exists between the agency and the production company results in time consuming reworks usually straight off the bat.

In a Theory of Constraints approach – let’s call the client’s approval the constraint – this means we need to subordinate the process to the client’s approval and make sure the client is never waiting to give said approval. This means the agency can stop guessing what the client wants before they show them and simply show them… quite simple. So, the second step then, is a vertical integration: the logical conclusion of which will be an agency-creative studio joint venture in the interest of faster turnaround times.

TIme, Cost, Quality : a production love triangle (or love triangle production)

I am sure in the course of a career any producer or owner of a production firm has told a client: time, cost, quality …pick two. I myself have used this phrase with dismissive arrogance to the lowly uneducated client- how could they be foolish enough to believe that you can have it all?

In truth I was wrong, now before you have a heart-attack, all you producers out there, I was only partially wrong, but it is a significant error and one that threatens to make our industry uncompetitive. In reality production will always grapple with the tense relationship between these three sources of competitive advantage. The high end players demand time and money and there is little doubt that they produce quality. I suppose the question then is who gets to define quality? Is it possible to have a quality at low cost in a short space of time with a sustainable model that does not rely on loss leaders and the calling in of all the favors you have saved up over the last decade?

Put simply the answer is yes, but it depends on the definition of time, cost and quality…simply put: it is relative.

Well that is an easy out isn’t it, how very convenient. Well not really, we all acknowledge that quality in the area of aesthetic deliverables is a subjective matter, time and cost however are not, they are measurable.

We also all agree that most production studios can win on two, some are great at delivering on time and budget, some are great at winning awards but can you win on all three?

How would this be possible? If it were possible to win on time, cost and quality, surely you would knock it out the park. Well I hope so, but inertia and nostalgia are significant forces in our industry. But back to the fundamental question; how do you win on all three?. Well it pains me to give such a trite answer but here it is …collaboration. Duh you say thanks for waisting my time making me read your meandering tome before getting to such an inane point. Wait, I am not talking of collaboration between production houses, that is for another day, I am talking about upstream collaboration, I am asking agency to involve the  production studio way further upstream than they are used to doing….ah not that trite anymore.

This week we aim to bring an introduction, it is the trailer, a teaser one of those annoying promos that shows all the good parts of the show but in the interests of brevity it is necessary and it allows you to decide wether its worth reading the next three articles or summarily dismiss them as opinionated drivel. Next week I will focus on time  and cost and then the following week ‘quality’ and how we achieve that without making it at the expense of it’s much maligned siblings.

Three things that are democratizing the production industry.

Whilst the production industry has always been a service industry, there has always been a level of capital expenditure required to play in the rarefied air of commercials production that has kept the numbers of players few and the pickings ripe.

That is however changing at an alarming rate, and the reasons are numerous. Let’s look at three as a means of illustration.

1: Full frame HDSLR, micro 4/3rds and any other technology that makes video less sucky.

This was inevitable: it didn’t take a rocket scientist to figure out that DSLR was capable of truly gorgeous shots. The issue was why was video so rubbish?

Then along comes the 5d mk2 and voila; beautiful picture for next to no money. The race is now on with Sony bringing out the F3, the Panasonic AF101, and the much fabled Red Scarlet and Epic. I recently shot on the AF10, routing the SDI signal to our AJA Ki Pro. I was definitely impressed with what the camera can do at the price point. Let us not forget that not long ago the only interchangeable lens camera you could get for under R40 000 was the Canon XL1, when compared to that particular camera this is a massive improvement. No one really cares about why. What we care about is that finally video looks tolerable. Not only that, but an ‘end to end’ high-def workflow generates a totally new look – one which may relegate 16 mm to the realms of nostalgia. More importantly, the workflow has made the traditional commercials workflow redundant. It has totally obliterated the barriers to entry and moved the industry to a point where it is talent that counts – not budget. This is truly terrifying for a lot of people, and exhilarating for the rest.

2: Smoke on Mac:

I have never liked systems. I owned a few Soundscape systems in the old days and worked on many TDM systems and was always annoyed that they were crazy expensive and limited by the closed architecture. When the time came to make a decision for my business we avoided restrictive architecture like the plague. Native processing became the mantra and so FCP was chosen as well as Logic. Many may argue that this is still restrictive – and it is – but we like Apple, so we will let that one slide. What has happened recently is that CPU power has reached a point where the system is becoming, well… not necessary. Smoke on the Mac is perhaps the first real evidence of this. I like the idea so much, that we just bought one. What’s next, Flame for Mac… not sure yet, but what is certain is that the depreciation on a native system is far more bearable than a bespoke system and that means better, cheaper, faster for the client.

3: Alternative Broadcasting (i.e the internet)

What a genius I am, the internet has changed the world and they way we broadcast… Seriously, you ask, is this guy content to state the bleeding obvious? The answer is a resounding ‘Yes’, because the industry has been so slow to even acknowledge the threat, never mind see the opportunity. We still build a business model on the 30 second spot only, still view broadcast as television and still love to boggle all and sundry with the techno jargon that makes us feel that the content we create is far superior to the “loser driven content on the internet”. The truth is that when there is a delivery mechanism that affords people an outlet for their creative expression, then output will happen. Somehow this wealth of output results in a gradual increase in the calibre of the work being output, or at least that is my opinion and MK is a perfect example of this thesis. It would appear to me that the industry is suffering from strategic myopia. This is probably a result of revenue streams and an inability to conceptualize a revenue generation model in the share and share alike world that is the web.

Content creation is the new term for production. Some producers aren’t even sure what it is, but feel it is something they should be ‘exploring’. The truth is, in the rapidly democratizing media universe we are all creating and consuming content. The proliferation of multimedia devices necessitates a cross media execution of all creative concepts. This is great news for those of us who work in this arena. The demand is outstripping supply and may do so for some time. But barriers to entry are now virtually zero. If you have a laptop, a Canon 550D and a whole heap of talent, you can make some seriously pretty images. The industry is no longer capital intensive at all, it is talent intensive.