UK commercials producers won't need reminding that the past two or three years have been the toughest in memory; the hangover from the mid-90s party is a stubborn one to shift. Is there any consolation in the knowledge that the rest of the world has had it just as tough?
Unlikely, because producers here are (hopefully) too busy looking forward to a booming summer of sport and its attendant advertising gold rush to spare much time to indulge in schadenfreude.
Just like in the UK, things are starting to pick up in the other of the world's largest commercial production markets. Producers from LA to Tokyo are cautiously optimistic about their books for the first quarter of this year, although there are markets that appear to be bucking this trend.
The German production sector was hit particularly hard by the advertising recession, and - according to Utte-Sabine Haerling, the head of the German Association of Commercial Film Producers - although the year looked to be starting well, things faltered somewhere along the line. The problems of high unemployment and archaic labour laws continue to rumble, and recovery has been limper than Germany, and the rest of Europe, had hoped.
China is another market that is ignoring the shift towards faltering growth. Ask a producer in Shanghai how business is, and "crazily busy", is one of the more temperate answers you'll get.
Unsurprisingly, given the $155 billion that America spent on advertising last year, the US production industry dwarfs those in other major markets.
Valued at $5.5 billion when talent payments and post-production costs are factored into the $3.5 billion the industry spent on direct production in the year to June 2003, the US market has taken a big hit over the past two years.
The pendulum appears to be on the upswing again, though. Location shoots are used by the Association of Independent Commercial Producers as a measure of how busy the industry is: a steady average of 70 per cent of US commercials are shot on location, and all productions have to file for a permit to shoot. "When we look at the numbers that the film offices release as permits, we get a good idea of how many days are going on," Matt Miller, the AICP president and chief executive, says. "February this year was one of the biggest on-location days in LA that I've seen in the past ten years."
While work is on the increase in the US, it's not necessarily in TV commercials.
The recent internet-only campaign for American Express starring Jerry Seinfeld and an animated Superman was produced by @radical.media's LA office and the work is indicative of a new kind of campaign that, @radical.media's chairman and chief executive, Jon Kamen, says, is increasingly expected of a production outfit.
For Kamen, future company growth won't be in terms of adding to his global network of production companies (LA, New York, London, Paris, Berlin and Sydney) but in the type of work they do. "Our expansion is in terms of the way budgets are being spent and where they're being spent. Call it branded content, call it alternative media, we've been preparing ourselves for it not just in the US, but in all offices across the network."
A wise precaution, it seems. Katsumi Kimura, the president and chief executive of M-One Productions in Tokyo, is also eyeing new markets. "When Japan comes out of the recession, it won't be the same country," he says. "Doubts are growing over the effects and efficiency of running mass-media campaigns such as TV commercials," he adds, pointing to infomercials, branded content and product placement.
Years of recession have fuelled creative frustration in the Japanese ad production community. Japan is a country where creative agencies still buy media and where brand advertising is next to non-existent. A creative backlash is brewing. "Everyone in the industry needs to regain and revive their passion for their work," Ryoichi Okada, a Beacon Communications production director (the Japanese equivalent to agency producer), says. "People are too business-focused and this has a bad influence - we need an environment where we enjoy what we do."
Whether this frustration will translate into work is unclear. Japan's advertising industry, dominated as it is by three companies, is notoriously conservative. When the UK's Advertising Producers' Association took members to Japan to promote UK work, 45- and 60-second spots were watched with interest, but ultimately seen as irrelevant in a market where the 15-second ad is still considered the best value for money.
Foreign production in the Japanese market runs at about 10 per cent of the 6,226 spots produced for Japanese agencies annually. The US has the largest share of this business, with a 4 per cent share of the overall market. Australia comes in second with a 1.5 per cent share, while the largest European producer in Japan is France (1 per cent). The UK has a meagre 0.3 per cent share.
The big land grab at the moment is in China. The past five years have seen monumental growth in the Chinese ad market, and although ad producers on both the agency and production company side are still in the learning stages of their craft, the quality of scripts and resulting spots is increasing fast.
Production is concentrated in three cities: Beijing, Guangzhou and Shanghai.
Local directors tend to hail from a TV company background, but there are large numbers of Taiwanese and Hong Kong-based outfits that have opened offices in mainland China to take advantage of growing piles of work.
Yvonne Ho, the head of TV at Leo Burnett China, recalls producing almost 80 commercials for one client alone in China last year.
Budgets in China vary wildly. Small, local spots come in at the micro-scale, barely topping $10,000. Most of China's 80,000 domestic advertising agencies churn out 30-second spots at a cost of around $40,000 (the UK average is $180,000), and the quality of the average film is mostly pretty poor. But some big productions command up to $1 million, particularly for the country's booming car market.
Nelson Cho, an executive producer at New Life, one of the many Taiwanese companies that has opened up in Shanghai, thinks that, on some jobs, rates in China are better than those he'd get back in Taiwan. "We're shooting a lot of car commercials at the moment and, in China, budgets for them are at least one-third higher than in Taiwan."
With an annual ad spend of $19 billion, Germany is by far the largest market in Europe. However, this doesn't necessarily translate to the production sector. Manfred Vogelsaenger, the director/producer who runs Vogelsaenger Film, complains that the recession bit harder in Germany than elsewhere in Europe. "Some companies were as much as 40 per cent down on their figures," he says. "This year is getting better, but nobody wants to make any predictions yet."
Over the past few years, there has been a gradual shift in the production sector in Germany. German outfits still don't sign directors exclusively, but the type of directors they are working with is changing. "Companies used to take pride in having a lot of British or American directors on their books; there are more new German directors now," Vogelsaenger says.
"German agencies used to do a lot of work with foreign production companies. Recently that work's been coming back."
Vogelsaenger sits on the board of the GACF (the trade body run by Haerling, which has strong links to the APA in London). The organisation hasn't commissioned any official survey into the size of the German market, but its membership numbers just 40 companies compared with the APA's 160.
And, despite the move toward more home-grown directors, international competition is still strong. Haerling complains that pitches are growing too large, with up to ten companies from across Europe invited to pitch for work the agency hasn't necessarily won. And while mark-ups in Germany have stayed at a gentlemanly agreed 26.5 per cent, if the scripts aren't there, there's no profit to be had.
So far, the production company merger seems to be limited to a handful of UK companies. Internationally, the trend for production companies is still the small start-up, led by a producer who tires of the larger company and decides to go it alone. If there's one feature common to all markets, it's the woeful supply and demand gap between work and directors, and the international glut of directorial talent doesn't seem to be abating soon.
So what future for the industry? Noises in the late 90s that it was heading towards a more globalised business model seem to have quietened. Few production companies can claim to be a truly global network, and with a business model that differs greatly from that of the international ad agency and has been hit hard by the advertising recession, further expansion looks to be, at best, on hold.
"At the end of the day, it still comes down to matching the talents you have in-house to the project and then being able to execute it," Miller says. "If you take on a large network, you're taking on a fairly large overhead and you'd better have a tight business plan to maintain that. That's a difficult dynamic in this business to maintain," he says.
There are few producers, from London to Tokyo, who would disagree with him.
COMMERCIALS PRODUCTION IN THE WORLD'S BIGGEST AD MARKETS
Advertising Ad production Number of ads
market ($000s) market ($000s) produced per year
US 154,609,783 5,500,000 n/a
Japan 36,888,645 917,000 6,226
China 22,715,401 n/a n/a
Germany 9,160,338 736,000 1,500
UK 14,216,757 700,000 5,000
Sources: Initiative, Global Advertising Expenditure 2004, AICP, APA,