The Insider's Guide to Production: The future has arrived

A long period of pessimism has given way to an era of rich opportunity for production companies.

Yes, after years of anxiety (or, more accurately, years during which we were told we should be anxious), the new media landscape is upon us and it looks good.

The idea that the television commercial will not be a key component of advertising has passed into oblivion, like the millennium bug. At the same time, whatever we might call the internet, branded programming and advertising on interactive TV, mobiles and outdoor screens, it really is happening, and commercials production companies are doing that work.

There are challenges ahead: ever-increasing pressure on budgets, intense competition, profit targets and how to create a business model for branded content that works for clients. For post-production, the challenges come, again, from intense competition, procurement seeking to commoditise what they do and the opportunities and threats provided by low cost centres.

Tough competition is a given, but other challenges are new, including the consideration clients are now giving as to whether to engage commercials production/post-production through agencies or directly themselves.

Decoupling is being investigated by a number of clients as a possible means of increasing efficiency in commercials production. Existing structures should be questioned, of course, but we believe the current system of client, agency and production company has several advantages that enable it to produce the advertising that works best for advertisers.

TV commercials continue to be at the core of advertising for many brands because of their proven effectiveness. Indeed, British TV advertising continues to hold the position of the world's most admired. It is built on a strong collaborative process between advertisers, agencies and production, of which the agency TV department is an integral part.

To change that system in the hope of cutting the cost of producing commercials would clearly be counterproductive if it meant that the full potential of the idea and strategy the agency was engaged to produce was not realised.

APA members engaged in TV commercials production recognise that agency TV departments are key, valued clients, and they are not about to lose sight of that. That said, clients' consideration of how they undertake commercials production coincides with the arrival of new/digital media and branded content opportunities.

This means audio-visual advertising material is now within the reach of all sorts of advertisers who did not contemplate advertising on TV because of media costs or because TV did not suit their target customers. For them, the creative skills of commercials production will be a rich resource in creating audio-visual advertising that fulfils the potential of their brands.

So, whatever our members' preference, it is likely that there will be more of a mixture of relationships in the future, with some work coming through agencies and some direct from clients. That will present opportunities for commercials production to provide additional services.

Branded content can present clients with very cost-effective ways of engaging customers, but the belief that it should automatically be cheaper than commercials production is holding back its potential in some instances.

Commercials production costs are very tightly managed, with the best low-cost production centre sought out and the cost of all inputs and services squeezed as a matter of routine. Those inputs are not magically cheaper because what is being produced is branded content: if a director of photography who can maximise the potential of the material is required, for example, it will require the same expertise as on a commercial and cost the same price.

There is scope, though, for branded content to be produced more cheaply than TV commercials, by thinking about it differently. Clients are doing that and are prepared, in many instances, to accept that, for a small budget, the idea will be turned into a film that is presented to them without their involvement in the process. They are prepared to take that risk to get a film at a low cost; with TV, however, where the media cost is typically in the region of eight to ten times the production cost, they cannot take that risk.

Shooting on video and using smaller crews can also play a part, but as the picture quality of computer screens gets closer to that of TV, those factors will become less significant.

Rights are being handled differently, too. Commercials, with very limited exceptions for animation, involve copyright being assigned completely from the production company to the agency (and on to the client).

The APA draft branded content contract grants rights for use of the content on the media it was commissioned for. So if the commission was for a viral for the internet, the rights granted would be for use on the internet. If the client then decides to use that branded content in other media, an additional fee is agreed. In some instances, production companies create the whole concept, and it follows that they have the right to benefit from the success they have created for the client.

So, if there is an additional benefit to the client in using the material in a way not previously contemplated, the production company shares that benefit.

At a time when their worldwide reputation is higher than ever, through film and TV work as well as commercials, London post companies are fighting to ensure that commercials procurement understands that they are creative experts - which have technology, too - rather than technology suppliers. As such, they are resisting attempts to analyse what they do purely in terms of rates and discounts.

A new opportunity arises from low-cost centres, such as India and China.

While the scope for offshoring is more limited in commercials, which require closer collaboration between the VFX artist, director, agency and client than on long-form material, London post companies are well placed to develop such potential as those centres have and to use that to help meet their clients' expectations in terms of costs.

As ever, our members will forge ahead in applying their creative and production talents to making each commercial (or any content, for any platform) as good as it possibly can be and ensuring it arrives on schedule, to an exact brief and to an agreed budget. And all at their own risk.

- Steve Davies is the chief executive of the Advertising Producers Association