The Martin Agency and the Virginia Film Office announced that they have entered into a partnership, now in its fifth month, designed to bring more commercial production from national advertisers into the Commonwealth of Virginia. Per the arrangement, The Martin Agency gains designated access to $2 million of tax credits under Virginia’s filming incentives program for an 18-month period which began back on January 1.
At press time, The Martin Agency had thus far shot two Pizza Hut commercials in Virginia under the new initiative. Both were lensed in March and directed by Lucas Krost of Richmond-based production house The Branching. The commercials, “Hutlovers Deal” and “Crazy Cheesy Crust Pizza,” were edited, respectively, by Sean McAllen and Mark Myers of Running With Scissors, which also handled online and VFX. Post/animation shop Running With Scissors is a unit of The Martin Agency.
Steve Humble, sr. VP/managing director of production and development at The Martin Agency, said that without the incentives, neither Pizza Hut commercial would have been lensed in Virginia, though Running With Scissors would have likely still done post and VFX. Humble added that The Martin Agency is currently exploring lensing opportunities in Virginia for such clients as Discover Card and Walmart.
“We’ve been trying to bring more commercial production to Virginia for years,” said Humble. “Production costs in Virginia are approximately 15 percent lower than New York and Los Angeles, and now with the additional savings this tax credit offers, Virginia becomes an attractive alternative for our clients.” He estimated that those combined savings could amount to 30 to 50 percent in Virginia as compared to shooting certain jobs in NYC or L.A.
Andy Edmunds, director of the Virginia Film Office, projected that the $2 million in tax credits held at The Martin Agency over the next 18 months would translate, if used entirely, to $9 million-$10 million in qualifying expenditures. Using a conservative economic multiplier (on those qualifying expenses), the $2 million in tax credits, he said, could generate a positive impact of some $17.7 million on Virginia’s economy.
Overview
Refundable tax credits in Virginia start at 15 percent of all qualifying expenditures, including wages. If the project is shot in an economically disadvantaged area as designated by the Virginia Economic Development Partnership, the base amount increases to 20 percent. An additional 10 to 20 percent can be added for the payroll of workers from Virginia, and each first-time industry employee is eligible for an additional credit of 10 percent.
The Virginia Motion Picture Production Tax Credit Program covering features, TV, commercials and other disciplines took effect back in July 2011. While features have taken advantage of the initiative, commercials, even though they are eligible, have not tapped into the film credits nearly to the same extent. Edmunds is hopeful that The Martin Agency’s active participation in the program will raise awareness throughout the commercialmaking community, prompting agencies, production companies and clients from in and outside the Commonwealth to produce their projects in Virginia. Such projects can be eligible for the incentives as long as each had at least $250,000 in qualifying expenses in Virginia.
While the cap on the overall Virginia Tax Credit Program is some $5 million over two years, Edmunds noted that there is some flexibility as the film office can review feature motion pictures on a case-by-case basis, particularly those projects that carry a high ancillary tourism value. He added that the Commonwealth has other enticements, including a growing infrastructure, a high-caliber crew base and great diversity in its locations.
Those locations span mountains, ocean views, farmland, small towns, metropolitan areas and four centuries of historic sites and architecture. Virginia has served as the backdrop for assorted feature films, including Steven Spielberg’s Lincoln in 2012, which generated an economic impact of $64.1 million in the Richmond/Petersburg areas.
Backstory
The groundwork for the partnership between The Martin Agency and the Virginia Film Office started to fall into place during the fall of 2011 when Humble attended the premiere of Spielberg’s War Horse. Spielberg had just wrapped shooting Lincoln locally so the War Horse debut screening took place in Richmond. There, Humble reconnected with Virginia Bertholet, a former producer at The Martin Agency who at the time was a marketing contractor to the Virginia Film Office. She was exploring ways to help draw more national commercial production to Virginia, particularly in light of the recently enacted tax credits.
Their constructive dialogue led to Humble being invited to a reception a month or so later in NYC to help promote tourism and other business (such as the wine and filming industries) in Virginia. There, Humble met Virginia Governor Bob McDonnell who agreed that commercials were an important part of the filmmaking mix that Virginia wanted to attract. This helped to build further momentum as The Martin Agency and the Virginia Film Office considered how they could best spark ad industry interest, ultimately entering into their deal, which Bertholet brokered for the Commonwealth of Virginia. (Bertholet is now freelance producing for production houses and ad agencies.)
Humble noted that even though The Martin Agency is directly engaged in the partnership with the Virginia Film Office, the budgetary savings from the tax credits will not be realized by the agency but rather passed on to its clients. He said that the refundable tax credits should go directly to clients in that they foot the production bill, a stance that coincides with that espoused by the ANA (Association of National Advertisers) in its white paper released last year titled “The Found Money of State Commercial Production Incentives.” Contesting that assertion is the Association of Independent Commercial Producers (AICP) which makes a case for production companies being entitled to such incentives given the budget-challenged realities of production. The AICP reasons that tax credits, rebates and the like can be key in making it feasible for a production house to deliver high-quality production despite a tight bottom line. (For a more detailed rundown of the advertiser/production company debate on filming incentives, see SHOOTonline, 5/4/12.)
Humble is a 14-year vet of The Martin Agency. He has helped to create and build multiple business units within the shop, including Running With Scissors as well as an in-house digital production group that develops and turns out apps, banners, YouTube and Facebook pages and microsites. Prior to joining The Martin Agency in 1999, Humble spent 10 years in the production department of Leo Burnett Chicago where he worked with such noted pros as Al Lira (the revered executive VP/corporate director of production who passed away in 1991) and Chris Rossiter (former head of production who just a couple of months ago became managing director of Dictionary Films, the production arm of Cutters Studios).
Edmunds has been with the Virginia Film Office for 16 years, and has served in his current capacity as director of the film commission for the past year.
