AICP projects outstanding receivables, conservatively, to exceed $200 million
The coronavirus/COVID-19 crisis has put the global economy in jeopardy–and key in any recovery on the other side of this pandemic will be a fully engaged, viable creative community to help bring the consumer marketplace back to life. But any chance of such a recovery is being seriously compromised as many marketers and agencies are not paying production and post companies for services already rendered. This poses an existential threat to the health and survival of the production and post community at a pivotal crossroads juncture, according to information provided by AICP members.
AICP has put a handle on the amount of outstanding receivables owed by brands and agencies, documenting the immediate and potentially grave risk to production and post houses.
In a live poll of over 500 AICP member participants during a Zoom Town Hall late last week, the issue of outstanding receivables was the most immediate concern, of the many issues discussed. It was found that 28% of companies reported that they are owed in excess of $1 million, while 23% are owed between $500,000-$1 million and 34% are owed between $100,000-$500,000. The members were also polled on how late these payments are: 29% reported that payments are 45 or more days late (per their contracted terms), and one-third are 30-45 days late. Extrapolating across the industry, conservatively, this is well in excess of $200 million.
“Marketers and their agencies need to ensure that production and post partners are paid immediately for work already completed,” noted Matt Miller, president and CEO of AICP. “Cash flow for most live action production companies is, like work, drying up, with postproduction slowing as they finish recently produced work (which is mostly being done with great ingenuity remotely) so it’s more urgent than ever that these payments are made.”
During the meeting, AICP members relayed concerns for their employees; the ability to keep staff on payroll; and to keep their largely freelance employees (as well as staff) covered by health insurance. These issues are a huge challenge in general, and in particular when companies are entering a period of uncertain bookings, with so much money owed to them from marketers. Even the most resourceful creative problem solvers feel it could be insurmountable.
“Bad behavior is now highlighted, as rolling cash flow is not covering up for scofflaw clients or agencies that have used small business creative resources to bankroll their projects,” said Miller. “When we come out on the other end of this global crisis, marketers and their agencies will need the ingenuity of the production and post community more than ever to create communications to reach customers and stimulate the economy. Corporations must step up and fulfill their contractual obligations, so that this industry can stay afloat planning for work to serve their needs and get back into full swing when it is safe and practical to do so.”
The ANA recently released a study entitled Payment Terms: Current Practices for Marketing Services which noted that 21% of marketers have unilaterally extended their payment practices for production (and presumably postproduction services, although not specifically separated out) in the past year.
In another poll during the AICP Town Hall, 39% of the respondents said that they had “no jobs” in the works at all, with 25% saying they had three or more jobs in the works. This could mean bidding (some saying for scripts to be carried out as soon as practicable and months in the future); post work being completed; digital production companies (animation, visual effects, and design) in full production; or working on contingency plans for previously planned productions. To continue workflow in all of these areas, staff is required, so it’s crucial that any cash that is owed makes it to the member companies so they may continue operations.
“To keep these receivables outstanding is nothing less than irresponsible and shortsighted for marketers who want to maintain a healthy first-rate creative community and their infrastructure of resources, employees and vendors,” Miller added.
The Many Hires Jeremiah Wassom As Group Creative Director
Independent agency The Many has added Jeremiah Wassom as group creative director.
Wassom most recently worked a decade at Deutsch LA where, as SVP/creative director, he led the Taco Bell account and won new business for the agency. His agency past also includes AKQA and TBWAChiatDay. His creative work has touched the QSR, video games, automotive, fashion, and culture brand sectors. He also served eight years with the United States Marine Corps.
“Throughout his career, Jeremiah has helmed work that has not only made me personally jealous but has consistently pushed brands to show up in memorable and innovative ways,” said Josh Paialii, head of creative at The Many. “One look at his body of work and you will see his passion for storytelling and craft has raised the bar for entire categories, driving participation with many brands’ most loyal fans. Beyond being a world-class creative director and maker, Wassom is a proven team player and strategic thought leader. He’ll be a great addition to the leadership team at The Many working across all accounts. His role will be immediately felt as he guides and supports each of the creative leads in the department.”
A 20-year creative with agency, brand, and freelance experience, Wassom has forged a creative approach which focuses on crafting engaging connections rather than simply make ads. He sees the need for advertising to mean more, not simply do more.
The Many believes that true business growth is made possible by harnessing the power of participation and partners with brands to forge deeper connections with consumers, cultivate trust and loyalty, and maximize marketing spend and execution. The agency is built around a flexible model that offers a suite of capabilities, including... Read More