This past April during the Association of Film Commissioners International (AFCI) Locations Trade Show, the State of Michigan generated arguably the event’s biggest buzz by significantly upping the ante on its filming incentives program. The measure became among the most, if not the most generous lensing stimulus initiative in the U.S., providing a 40 percent rebate on production-related spending in the Great Lake State. The Michigan incentives were originally slated to apply to commercials. However the final language of the incentives act was ultimately intepreted not to be inclusive of spots–and that will be the case for the first year of the measure at the very least.
Back on January 1, Wisconsin entered the incentives act when a refundable tax credit of direct production expenditures for feature films, TV, broadcast advertising and video game production formally took effect. The program helped Wisconsin to catch a big feature fish, Universal Studios feature Public Enemies starring Johnny Depp, Christian Bale and Marion Cotillard. The film is being directed by Michael Mann, a feature filmmaker who is repped for commercials by Alturas Films, Santa Monica.
The Michigan and Wisconsin developments continue a pro-filming incentives tradition in the Midwest, which includes Illinois’ ground-breaking package of some years ago which has since been sweetened further to attract film, TV, commercials and new media projects, as well as Minnesota’s long-standing Snowbate package. Indeed the success of the Illinois incentives program influenced other states–within and outside the Midwest–to explore and ultimately adopt economic initiatives, affecting the film commission business model.
Appropriately enough, the Midwest itself is redefining business models, a recent prime case in point being mainstay Chicago editorial/post house Optimus which has extended its reach into production with the launch of Optimus oNe and the hiring of agency veteran John Noble to head up the new venture (SHOOT, 7/25).
And the expansive Midwest mind-set is also taking the form of a planned soundstage facility just outside Traverse City, Mich. The key movers in this development are David Kenneth, president/executive producer of Innovate Entertainment and I.E. Effects, both in Southern California, and local Michigan developer Ron Walters.
To get a better handle on business models, the nature of the business being done in the Midwest and the impact of filming incentives, SHOOT surveyed a cross-section of the region’s executives and artisans. The questions posed were:
1) How has your advertising industry business model changed over the past year or two? How have you had to adapt to an evolving marketplace with such dynamics as: new forms of content beyond the traditional broadcast :30 becoming more prevalent; the pending transition to DTV; a tight economy (dare we say, “recession”); or other factors that you care to cite (more client-direct business)?
2) What’s the nature of the ad content business you’re attracting? National TV campaigns, regional spots, broadband video/mobile content, sponsored web films, webisodes, etc.? (You can cite specific projects as examples.) How has the nature of this business changed over the past year or two (For instance, whereas production of a web project might have been piggybacked in the past onto a broadcast :30 shoot, are exclusive shoots now the norm when it comes to web content or other “new media” projects?
And 3) How have the high-profile filming incentives programs in Illinois, Michigan and/or Wisconsin affected your business? Has industry infrastructure been positively impacted in your market?
Here’s a sampling of the feedback we received:
Mark Androw, executive producer, Story, Chicago
1) We are doing more non-traditional media projects every month and see that as an increasing part of our business. Client direct work is increasing as well as we are handling more projects through finish. All these changes are very positive for the directors who love being involved earlier in projects and like having their hand in the finishing phase.
2) We shot a huge commercial package for General Motors which will end up on TV and the Internet for Leo Burnett. Bob Ebel shot a Dixie Cup spot which also is piggy backing TV and internet. Most of our work in new media still involves an element of TV and this is fortunate since the TV budget still carries the weight of the production costs.
Two of our directors, Laurie Rubin and David Orr, are accomplished still photographers and often their projects include a print portion. Laurie has shot projects for Element 79 and Quaker Oats doing both stills and film.
3) We have been using the tax incentives in Illinois, New York, Georgia, Texas and Hawaii for various productions. These incentives allow us to stretch our clients budgets further. The Illinois incentive is very easy to use but of course if we need to shoot exteriors in January we are more likely to utilize the Hawaii incentive.
Jim Annerino, FX artist/partner, Hootenanny, Chicago
1) In this slower economy, non-traditional forms of advertising are becoming the norm, both to maximize new technology as well as stay within a budget. In the last 6 months, Hootenanny has finished traditional spots for air and web, webisodes, editorial content for websites, and internal films for Fortune 500 companies. Though budgets and technology may change, our goal is still the same: to put forth the best creative work to sell our clients’ product. Our lean yet flexible workflow allows our clients to focus on the creative work, as we handle the challenges of the various deliverables.
Mitch Apley, executive producer, Resolution Digital Studios, Chicago
1) Three years ago we started producing some of the first content made specifically for mobile delivery on a large scale for Sprint through Intersport. Since then we have seen a dramatic increase in combination or even digital-only delivery. Increased broadband and mobile penetration combined with tighter budgets across the board are probably the main factors in this trend. As a result, our marketing has emphasized our capabilities in terms of being a digital production house first and foremost.
2) For our 2007 “Earn Your Stripes” campaign for Kellogg’s via Starcom, we produced nine :60 second Award Shorts primarily for web, highlighting kid athletes–two of which were broadcast on-air nationally. In 2008, the :60 time limit was abandoned as all the pieces were web only which allowed us to tell each story more effectively. That, I think, shows a major shift in the advertiser’s mind-set in a single year from traditional broadcast mentality to an online mentality.
3) We have helped support a handful of indie features in the past few years that certainly wouldn’t have been here were it not for the film tax credit. We’re also seeing more long form documentary work coming through as a result of the credit, which clearly improves the number of day-to-day jobs in the city.
Tom Duff, president, Optimus, Chicago
1) The business model has certainly changed from it being just the traditional broadcast :30 spots, as we all know. Yet, as much as it has changed in diversity of media type, it is still moving images, so that basic model of creating content is really still the same. The challenges of creating visually appetizing content in many more mediums makes this time more exciting than ever before. There is more collaboration, more partnering among agencies, production, and editorial because we are all facing the new challenges together. We all need each other and that team approach brings a whole new spirit of mutual reliance. We are all learning new ways of shooting, editing and providing the necessary deliverables to meet the challenges of the transition to DTV and the HD world.
2) The question itself actually contains the answer: Yes, the webisodes used to be piggybacked on to traditional packages, and were really considered throw-ins. Now, there is much better quality on the web and other media outlets, and that ups the ante for advertisers to remain competitive. So, now we are being asked to provide the same quality as a TV spot for web projects. But, it goes a step further, actually. It’s not just that exclusive shoots are being requested, budget challenges have us also seeing more requests for shoot through finish all as one package, and this is probably the most exciting new world for us in the post business. We have new opportunities to open production arms as a new component in response to our client needs.
3) In Illinois, the IPA (Illinois Production Alliance) has done an incredible job of getting the film incentive program to bring in a number of big time films over the last five years or so. It has revived Illinois as a thriving film state. Unfortunately, there has been minimal impact on the commercial business. A couple of production companies have used the credit pretty consistently, but it is tough with a smallish local commercial production business, and also the somewhat cumbersome filing/reporting structure.
Michael Graf, principal/director, Spot Filmworks, Madison, Wisc.
1) Over the last two years we’ve seen a much fiercer competition for agency work. We’ve also seen agency production budgets stagnate or actually get smaller. The ongoing challenge for us is to continue to provide high quality production and exceed client expectations while managing rising production costs (labor, fuel, etc.) and working with more limiting budgets.
2) Regional and national advertising still is our bread and butter. However, we’re seeing more of that work multi-purposed for both broadcast and the Internet.
3) We’re excited about the new incentives that Wisconsin has initiated. However, most of the state’s focus has been on feature and independent production. There’s been a learning curve in regards to commercial production and the special needs commercial producers have. We’re actively working through that with the state. It’s a process and we’re at the beginning of it. Wisconsin is starting to build its production infrastructure and that’s good for everybody.
Samantha Hart, co-president, Foundation, Chicago
1) We began diversifying our business model over two years ago in response to what we saw as a rapidly changing advertising landscape. Now we’re a fully integrated production/post production/visual effects company with thirty employees. We shoot large and small-scale productions on location and on our fully equipped stage including everything from music videos to webisodes to national spots. This fall we are ramping up our content division to include a base in Los Angeles. That’s quite a growth spurt from our humble beginnings as a strictly post production company with five employees just four and a half years ago.
2) National and regional spots, broadband video/mobile content, sponsored web films, webisodes, music videos and in-store advertising. Foundation strives to do work that is innovative, original, inspiring and honest. We believe great ideas can come from any area of the company. For example, our director of new media, Vignette Noelle Lammott, and our director/editor Anna Patel just had a short film produced by Foundation Content accepted to the Chicago International Film Festival.
The budgets have gotten increasingly better and are capturing more attention from the agencies and clients so the creative is getting better too!
3) We actually got a tax rebate for one of our larger production jobs from Illinois! We think that the tax incentives are a positive thing for the states participating, which obviously has to have a trickle down effect even for small businesses.
Kirk Hokanson, president, Voodoo Films, Minneapolis
1) Traditional commercials are becoming more competitive and budgets are tighter. Agencies will recommend using an approach that utilizes the newest technology, even if it does not produce a better production value. We are also seeing many clients that want quality video on their websites, often direct to the client.
I am also seeing confusion from agencies regarding the DTV transition For a long time, AICP has been educating agencies and hopefully clients about what has to happen. Now as the DTV deadline approaches, clients are being informed that some things in HD will cost more–compositing the new deliverables, and often the details in a set because of four times the resolution in HD. Next year will be a bit rocky until the DTV conversion is conquered. Sadly, the 16×9/4×3 center cut protection will be here awhile.
Lisa Masseur, executive producer, Radar Studios, Chicago
1) Radar hasn’t changed its business model much. It was established eight years ago on the philosophy of being an artist-driven production company where an agency could come for one stop shopping. Production through post including FX, animation and design. We’ve also been finishing spots in HD for several years now. Whereas we only shipped a handful per year in HD before, this year that has jumped to 80-90 percent. I think our company has grown so greatly in the past couple of years due to the fact the agencies like working at one facility that has artists working together and plusing up the work. Now many production and post companies are trying to switch to this one-stop model. In some cases, the business demands it. Especially with the diversity of work beyond the :30 spots now.
2) The vast majority of our work is still traditional spots but with our young comedy director, Sam Macon, his work is a mixture of all –web spots, webisodes, some that he has written and directed–commercials, and web content.
3) It has definitely brought an increase of work to the city and helped increase the infrastructure here. Also, our commercial budgets simply go farther here due to the tax credit.
Don McNeill, president, Digital Kitchen, Chicago
1) For DK it’s actually been a great 18 months. Being a hybrid agency and focusing on non-traditional work has never been better than the last year or two.
The changing environment has forced us to hire people who think differently. There is not a huge market for experienced “non-traditional” thinkers–creative or production.
Since DK has been able to serve as the training ground, we are fortunate to have a decent pipeline of quality talent knocking on the door. That’s absolutely key to success in new forms of content.
The other major change is how we approach new business. It’s so important to be clear and concise about our offering, yet the new world of marketing communications is very amorphous.
2) DK tends to attract very high production value jobs, very visual and technical, yet strategic in their delivery.
For instance ATT U-Verse is all about delivering on three screens–TV, mobile and Internet. So we are developing campaigns designed from the get go for all three touch points with equal attention.
Or Microsoft’s MS Live campaign where we built a 65-foot sphere and projected dynamically generated graphic content in NYC’s South Street Seaport. A viewer could take a photo, set it projected in HD on a seven-story ball, and then we filed that and put it online!
3) For the film business, it’s been a home run. For commercials, I still think the incentives are a major plus. I think they are absolutely having a positive impact for Illinois workers and businesses.
Yet I still believe the incentive is a bit misunderstood. It’s simpler than you think once you get used to using it. Major film folks are willing to learn because of the huge financial return to the producers.
On commercials, it seems small for an individual job, but it adds up quickly. The state has been terrific. So now that it’s active again, I think everyone will get even more benefit in 2008 and 2009.
John Noble, executive producer/director of production, Optimus oNe, Chicago
1) The Optimus oNe production model was built specifically for the seismic changes that lie ahead for commercial advertising business. Budgets are shrinking, timelines are condensing, and the requests for “smaller jobs” (250K and under) seem to be multiplying like rabbits. Couple that with audience fragmentation and the mass acceptance of digital technology (broadbrand 2.0, mobile, 3rd screen, etc.) and you’ve got a corporate client with many needs. This means the agencies will need to deliver a diverse offering of more visual solutions as opposed to just one big TV campaign. The good news is that this will ultimately create more work and thus a greater chance for break through creative opportunities. The bad news is that budgets will continue to be a challenge. Solutions like “one stop” production will continue to trend forward.
2) We’re all about giving the ” much needed love” to the smaller creative jobs out there. We’ve been bidding on everything from TV spots to corporate documentaries and everything in between. For capturing images we’re utilizing and exploring every new technology out there today – anything from the Red Camera to the new Vision3 super stocks from Kodak. The game has changed, and will continue to change, and great work must now be produced at all budget levels.
3) When I ran the production department at Element 79 we were really starting to utilize tax incentives that Illinois, Wisconsin, and now the biggie, Michigan, had to offer. We used it quite a bit on the Quaker brands when we shot multiple days here in Illinois. Because it was all about tax credits that took months and months to process, it required some client hand holding and convincing to gain approval to shoot in Illinois. It also took a bit of outsourcing to properly process and ensure the somewhat laborious paperwork and filing mandates required by the state. To date, neither agencies nor production companies are properly staffed to handle that kind of workload; so further simplification would go a very long way in bringing more commercial production to the respective home state. At oNe we plan to utilize state resources and tax advantages available to us as long as they continue to make creative and financial sense for our clients.
Diana Schroeder, managing director, Red Car Chicago
1) Our business model at Red Car really hasn’t changed. We’ve always been in, and will always be in, the business of storytelling. And whether the story is :30 for TV, thirty minutes for a webisode or three minutes for You Tube doesn’t change the need for a well constructed, well told story. Creative editorial is our business. So as technology changes, we find ourselves the happy recipients of more and more creative (and efficient) ways to work. It’s an incredibly exciting time to be doing what we do.
2) We produce a variety of broadcast and web-based projects. Several years ago, web work was an afterthought. But in many cases, our clients (creative teams and agency producers) would conceive ideas that begged for non-traditional media. We’ve always relished the opportunity to collaborate and to assist our clients in producing “new media” — although it doesn’t feel that new anymore.
3) The “savings” apply to post only when it is bundled with primary film production. So the filming incentives in Illinois haven’t really affected our business that much. However, if filmmakers and commercial production companies were to bundle more, and effectively leverage the talent within both the production and post communities of Chicago, we might have a different story to tell next year.
Michael Suggs, managing partner, Milagro Post, Southfield, Mich.
1) We’ve seen an agency shift from almost exclusive broadcast content to more cinema, web based and cell phone advertising. Agencies are using websites like YouTube to gauge viewer interest in campaigns. It seems this is the new “focus group” forum.
Michigan now offers a film incentive, of up to 42 percent for dollars spent here, for feature film, episodic and documentary productions. We are well positioned to take on post for this work. We’ve been creating and integrating cinema grade content for our ad clients for over two years. Additionally, with the push to alternative content, such as web based advertising, we have started snapLounge, a web development company, which has been very successful due, in part, to it’s access to our artists and technology. We can provide very high quality content for snapLounge that most other web companies cannot afford or have access to. This lets us create content for ad campaign deliverables for cinema, broadcast, print and web. Michigan’s economy has had a profound impact on this market. We see agencies single sourcing their work, reducing staff and partnering with us more for creative development, execution and project management.
2) Primarily regional cinema, broadcast and web ad work. It seems exclusive shoots have been the norm, such as one production for spot work and another for print, but we recommend the agencies have single productions with different crews for the multitude of deliverables. Real cost savings are evident in that approach.
Steven Wild, president, Grace & Wild, Inc., Farmington Hills, Mich.
1) Our “auto-centric” Detroit-based advertising marketplace has endured a great amount of pressure over the past few years. Grace & Wild began developing alternative skills oriented to new media content creation and distribution around five years ago. This has broadened our opportunities in a transitional marketplace. Producing images and re-purposing them for use in multiple media formats is a common request now. We provide customers with resources that span beyond traditional broadcast to include web, mobile, podcast, print, digital signage.
2) The ad content created within the various Grace & Wild divisions serves a broad range of customers, from local to regional to national advertising messages. These are augmented by versioning and repurposing. However, other forms of ‘ad content’ are also appearing and require specific production capabilities. For Borders, as an example, we provide four camera HD production and post services to create videos highlighting authors and books that are integrated into the www.borders.com website.
3) In April, Michigan passed a lucrative film incentive package. Grace & Wild’s hdstudios and Filmcraft Imaging divisions have benefitted from several projects that came here as a result. Filmcraft has been busy processing film for documentaries, indie films and major studio features. Hdstudios has provided equipment to those shooting HD, soundstages, editorial and dailies services.
