From “Grrr,” the Honda spot that topped the industry awards circuit, to “Aargh,” the exasperation of a worsening slow payment problem that tightened the financial squeeze on commercial production companies, 2005 had its share of highlights and lowlights.
There was also the dynamic of turning a lowlight into a highlight as after commercials had been excluded from a New York State production incentives bill in 2004, the Association of Independent Commercial Producers (AICP) lobbied vigorously to gain bipartisan support for a measure designed to keep and attract spot production in the Big Apple. Now the hope is that such a precedent setting commercials-only tax incentive initiative will be introduced to the state legislature when it reconvenes in January.
2005 will also be remembered as a year in which the prospects for HD turned the corner, the emergence of alternate reality games (ARG) in integrated campaigns, the changing media landscape (with the unveiling of the video iPod, Xbox 360, new TiVo initiatives), the growth of creatively driven, boutique ad shops and the emergence of a trade association for in-house post operations at ad agencies. Join us for a look at the work, the people and the issues that made a difference.
SLOW PAYMENT
The cash-flow problem became a more serious, prevalent threat to the survival of many spot production companies, a fact reflected in the results of the third annual AICP membership survey, which was conducted and analyzed by independent firm Goodwin Simon Strategic Research, San Francisco and Los Angeles. Nearly 90 production companies–representing about 33 percent of AICP member houses–completed the study, reporting the percentage of jobs for which payment was late.
According to the respondents, on average 20 percent of payments were 1 to 15 days late (in the ’04 study year), 17 percent were 16-30 days late, 12 percent were 31-45 days in arrears and 11 percent were 46-plus days past the production contract deadline. In ’04, four percent of payments were receive before the due date, with 35 percent arriving on time.
Ironically, noted AICP president/CEO Matt Miller, as entrepreneurial production houses bankroll jobs for an inordinate period of time on behalf of major agencies and multi-national clients, a number of ad shops deem it necessary to request credit checks on production companies. “It should be the other way around,” contended Miller, noting that production companies laying out the money up front should be getting financials on agencies and clients, particularly with late payment on the rise and a tenuous marketplace in which it’s being reported that a major agency holding company is teetering on the brink of bankruptcy.
According to the AICP survey, production companies reported that the most frequent explanation given to them for late payment was that the client has not yet paid the agency. However, as many production houses will attest, it’s difficult to determine exactly when agencies get paid by the client. Furthermore, many production house execs point out that generally they cannot easily have a direct relationship with the client without jeopardizing their relationship with the agency. There have been instances where clients say they have paid agencies and are surprised to hear that the production house has not been paid. Whether or not the clients have sent payment, the bottom line is that production companies have been routinely asked to bankroll jobs for an extended period of time, jeopardizing their financial health.
Production company study respondents identified timely payment as the greatest factor impacting the financial health of the commercialmaking community. Miller said that it’s shortsighted of agencies to engage in payment practices that jeopardize production houses. He related that advertisers and agencies should have a vested interest in maintaining a healthy production house community that’s capable to providing the talent needed to help create and to execute effective pieces of communication ranging from traditional TV :30s to new media forms. Miler cited the contributions of bicoastal Chelsea Pictures/Campfire to the Audi “Art of the H3ist” integrated campaign from McKinney+Silver, Durham, N.C. The multi-faceted campaign successfully launched Audi’s A3 automobile in North America.
NEW FORMS
“Art of the H3ist” is a prime example of an ambitious integrated campaign that included an ARG. These game events also were integral parts of the ESPN/Sega “Beta 7” and Sharp Aquos campaigns, among others. They underscore the continued emergence of new forms and media for advertisers.
2005 saw the creation of advertiser channels. For example, Jeep is launching its own mobile phone channel with MobiTV, with content available to about half a million subscribers–many in the coveted 18-34 age demographic–using Alltel, Cingular, Sprint and other mobile networks. In the U.K., Audi started the Audi Channel, which is being broadcast to some 7.6 million British households over the Sky Digital satellite TV platform. The 24/7 channel can also be accessed via broadband Internet via Audi U.K.’s Web site. Bartle Bogle Hegarty, London, worked with Audi on the development of the channel for more than two years. Under a new type of broadcast license available from British media regulator Ofcom, advertisers like Audi can become broadcasters and use their own channels to promote their products and build brand. Audi Channel content is a mix of infotainment during the day and more entertainment-driven fare during primetime and on weekends.
Last month Nordstrom introduced a downloadable broadband channel: Nordstrom Silverscreen. Created by Fallon, Minneapolis, the branded channel offers video content that combines fashion, music, technology and pop culture–as well as click-through capability to the retailer’s Web site that enables viewer to buy Nordstrom apparel.
Furthermore, Video On Demand (VOD) is being explored by clients as a means to launch their own channels. For example, discussions are underway between General Motors and Cox Media about the possible formation of a GM Showroom channel.
Add to this the introduction of the video iPod, the unveiling of the Xbox 360 and the PSP, plus the upcoming PlayStation 3 which present the possibility of new spaces for advertisers and programmers. Also, TiVo plans to offer a searchable database of ads that consumers can seek out if they are interested, for example, in making a purchase in a certain product category.
Plus the Internet gained considerable momentum in ’05 as an ad medium. The Internet Advertising Bureau (IAB) reported that Web advertising revenues exceeded $3 billion for the third quarter of the year, a quarterly high, which puts the medium on pace to hit $12 billion plus for calendar year ’05.
Offering corroboration that advertisers are seriously exploring new media was the recently released 18th annual American Association of Advertising Agencies’ (AAAA) Television Production Cost Survey. The database of commercials has decreased steadily over the past decade per the AAAA study.
It’s reasonable to conclude, said David Perry, chairman of the AAAA broadcast production committee, that clients are indeed shifting some of their TV investments into alternative media. Perry, who is also executive VP/head of broadcast production at Saatchi & Saatchi, New York, said the pattern of decline is becoming clear. He pulled out results of the AAAA report covering ’94 in which there were 1,958 national commercials reported by study participants. In ’95, there were 1,932. Perry noted that over the past decade, the total number of national commercials in the annual AAAA study database has plummeted some 19.3 percent.
“Ten years ago, there was concern voiced over declining TV viewership,” related Perry. “But back then, alternative new media weren’t mature enough to siphon off a significant amount of business. Now that’s no longer the case.” Perry specifically cited Internet advertising, and product placement in TV programs and theatrical features as media gaining momentum.
HD
The digital transition–and notably High Definition–made noteworthy strides in 2005.
Availability of HD programming is becoming significant. In the U.S., CBS and ABC are now broadcasting their entire primetime series lineups in HD, and NBC is broadcasting a large amount of primetime HD. Saturday Night Live went HD this season. And special events including the Super Bowl are aired in HD–while for the first time this year, there were a sizeable number of HD spots produced for the big game. HD cable outlets are also growing–HD brands now include ESPN, HBO, Showtime and HDNET. And cinema advertising has prompted additional interest in HD spot post.
Abroad, HD momentum further grows in areas including Australia, Japan and other parts of Asia, as well as Europe.
Meanwhile, the tools continue to become more accessible and less expensive; today most post houses are equipped to support HD. At the same time, the dialogue about the possibilities of datacentric, digital intermediate-type workflows for commercial post has started.
What will happen in ’06? HD drivers on the TV side could include the Winter Olympics in Torino, Italy, which will be broadcast in HD. Meanwhile, the Digital Cinema transition could prompt more HD cinema spot production.
IN-HOUSE POST
In-house ad agency post shops also become more prevalent in ’05, underscored by the growth of the Association of Agency Creative Editors (AACE), which was formed to foster communication between and among in-house postproduction units. Another prime AACE goal is to gain recognition for the creative talent and wherewithal in agency post operations. The group plans to hold various regional meetings during the course of each year, with an annual national meeting held during the National Association of Broadcasters (NAB) convention in Las Vegas.
Some in the editorial community have perceived agency post as a threat. And the topic generated buzz at SHOOT‘s annual Forum in New York.
Lisa Hinman, president of San Francisco-based Phoenix Edit.Effects.Design, a company that she founded in ’91, was recently named president of the Association of Independent Creative Editors (AICE) for a two-year term, beginning Jan. 1. Of in-house agency editorial, she related, “There is a place for this kind of thing that can be efficient for things like test spots and account presentations,” she said. “There’s currently movement for some agencies — to create profit centers by their holding companies so they invest in editing equipment and use staffers to edit full up spots.
“I don’t think that will last as it doesn’t serve the client in producing the best product possible,” Hinman opined. “There will also be competition within the free market system that produces the best creative and drives the pursuit of excellence. We feel AICE represents the best editors in our industry. The organization wishes to support them in their pursuit of excellence.”
“GRRR”
Dominating the industry awards tally this year was Honda’s “Grrr,” a fanciful animation ad directed by Alan Smith and Adam Foulkes of Nexus Productions, London, for Wieden+Kennedy, London. Among the major awards scored by “Grrr” were the Grand Prix at the Cannes International Advertising Festival as well as at the Shark Awards, the Grand Prize at the London International Advertising Awards, the Grand Clio, Best of Show at The One Show and Gold at the British Design & Art Direction Awards.
However, while W+K made a major mark in ’05 with its creative work–from its Portland, Ore., London and Amsterdam offices–as did SHOOT Agency of the Year Crispin Porter+Bogusky (securing the Volkswagen and Sprite business), and TBWA/Chiat/Day, there was much to be said for smaller agencies this past year.
Spanning both new media and traditional forms, creatively driven, boutique ad shops gained prominence in ’05. Many of these agencies wound up doing work for major marketers, such as Anomaly, New York for Coke product Dasani; the newly opened Toy, New York, for Oxygen Media; Wexley School for Girls, Seattle, for Nike, Amalgamated, New York for Cablevision, Ben & Jerry’s and Unilever) and Strawberry Frog, New York, for Old Navy.
KATRINA
The devastating impact of Hurricane Katrina brought out the best from the commercialmaking industry. SHOOT chronicled grassroots relief efforts that sprouted up throughout the business, ranging from fundraisers at Crossroads, bicoastal and Chicago, to supply caravans organized by Janimation, Dallas, Post Asylum, Dallas, Backyard Productions, Venice, Calif., and Zoic Studios, Los Angeles.
Directors, including John O’Hagan of bicoastal RSA USA and Matt Ogens, also individually went to Katrina to help those displaced. Additionally Ogens and several other helmers shot film in affected areas on behalf of the American Red Cross.
Public service campaigns also emerged in the wake of Katrina, including one in immediate response for the American Red Cross out of GSD&M, Austin, Texas.
Diary entries from those who visited the impacted areas appeared in SHOOT, bylined by Ogens and Backyard executive producer Blair Stribley. And in our fall Directors Series profile of O’Hagan, the helmer reflected on his Katrina relief trip, saying of the damage he witnessed in Waveland, Mississippi, “I’ve never seen anything like it. There are parts of the town where there is nothing but splintered wood where there were houses.” O’Hagan collected donated supplies which were loaded onto a cargo van and driven from New York City to Mississippi. “People really need to help down here–just sitting watching it on TV was frustrating. And I was lucky enough to be in a position where I actually had some time off, so I just decided why not help?”
