Since day one, we have offered our clients an advertising production cost assessment service.
This service is designed to provide marketers and procurement with a framework for managing the cost and quality of their advertising production investment, including video, digital, audio and print.
The advertising production cost assessment service includes:
- Reviewing the creative brief and assisting in setting the production budget and timeline expectations
- Reviewing creative concepts from the agency against the budget and timeline requirements
- Evaluating all third-party agency recommendations such as production companies, photographers, etc.
- Assessing the proposed production methodology and cost
- Assisting marketers in negotiating with the agency and production company
- Reconciling final production cost against proposed cost and identifying insights for future improvement
We offer this service, particularly across the Asia Pacific region, by identifying opportunities to decrease production costs while increasing production value.
One of the questions that often arises before our engagement is what savings they expect us to deliver.
The answer is it depends.
We often quote savings of between 10% and 15%.
We do not get paid on savings, but we are pleased to have our services evaluated on value. The easiest thing in the world is to drive down the price of television at the expense of quality. And no one will thank us for reducing costs if the result is a commercial that everyone is too embarrassed to watch.
For comparison, let us look at film and television production across the APAC region. In the six-month period we reviewed, we assessed 25 productions. Of these, 11 were in Asia and 14 in Australia. For the purposes of this discussion, we provide these services in Japan, South Korea, China (including Hong Kong and Taiwan), the Philippines, Indonesia, Singapore, Malaysia, Thailand, and Vietnam.
Overall results
The 25 productions equated to more than $12 million in proposed production costs, and the output was 63 masters. The average cost per production is just under $500,000, and the average cost per master produced is a little under $200,000 each.
Identified savings = 9.5% or $1.2 million
The savings identified were just under $1.2 million, or 9.5% of the total value of the productions. This equates to an average saving of around $47,700 per production. With the average fee of $3,400 per production (fees are based on production budgets and range between $2,400 and $5,200 per production), this equates to a 14-times return on investment.
ROI = 14 times
Asia versus Australia
While not a statistically significant sample, acknowledging that the sampling is not random, and productions are where the advertisers had identified a need for assessment and management, the differences between the Asian and Australian productions are interesting.
| Asia | Australia | Total | |
| No. of productions | 11 | 14 | 25 |
| No of masters | 37 | 26 | 63 |
| Total Production | $6,165,831 | $6,278,320 | $12,444,151 |
| Average budget | $560,530.09 | $448,451.43 | $497,766.04 |
| Average identified savings | $71,808.55 | $27,811.43 | $47,170.16 |
| Average identified savings | 12.81% | 6.20% | 9.48% |
While the total production value is about the same, with fewer productions, Asia’s average production cost was higher. However, with more masters produced, the cost per master (or commercial) was lower than in Australia. The most noticeable difference was the average cost per production of identified savings. Asia was more than double the Australian average identified savings.
Does this mean that Asian agencies were less diligent in preparing their production estimates than Australian agencies?
Production Insights
We have noticed this phenomenon in the markets we have operated in over the past twenty years. Over time, when we have worked with our clients, the average identified production savings will decrease as the agency becomes more compliant with the rigour of the TrinityP3 production assessment process.
In many cases, our clients in Asia will operate over many markets with a different agency office in each market and a different agency team,
In this particular sample, most of the productions and agencies have had three or fewer assessments within the past two years. This is in contrast to the Australian market, where we have operated for more years and where the clients and agencies have worked with TrinityP3 many times and more frequently.
Moving from Investment to Insurance
With all of our longer-term clients, we offer an annual summary of the results of our production assessments. In one particular case, the procurement team noted the fall in identified savings and suggested to marketing that our service was no longer financially viable. The return on the investment in the services had fallen to an ROI of 5 from a high of 18 over the past three years.
The marketers took the advice, and we parted company amicably, as we do not see the sense in providing a service that does not add value. But 18 months later, we were called back to review a production that was seen to be particularly expensive. On reviewing the creative and the proposed quote, we saw many of the hidden contingencies and inflated costs from the agency.
In reviewing the report with the CMO, we asked if we could look at all future productions, as we had done before. I cautioned him that, as always, we could not and would not guarantee savings and that the results and the return on investment may fall again, perhaps even quicker this time, as the agencies were familiar with the process. He told me he would have to consider this an insurance policy, not an investment.
How useful would it be to have an independent and knowledgeable review of your significant production costs?
You can read more about our production consultancy services here, including the production evaluations.