The World: Insider's View - US

The UK's recent agency/production company row may mean it is heading toward a US-style production process, HFI Productions' Kerstin Emhoff says.

As a producer who has worked on both sides of the Pond, I can safely say that there has always been a significant amount of jealousy among American producers regarding the British system of producing commercials, particularly the way the UK includes both the creatives and director from the beginning. We Americans, however, have managed to fragment this process and seem almost to have lost the ability to see a film through to completion with all the parties working together.

The row between Bartle Bogle Hegarty and the Advertising Producers Association concerning editing contracts comes as no surprise to US producers. We have been going down this path for a long time and now the UK may follow.

It is a way that is smashing the process into so many pieces it's frequently hard to keep a cohesive vision.

At the same time, we are in the middle of a technological explosion that needs a strong, hands-on production community. The potential for us is spectacular and we all feel the buzz. That being said, we all feel the squeeze as well. We are now at the point where many production companies can barely afford to stay in business. Incredibly, just one job can make the difference to survival.

Consider: on a typical $500,000 job we spend $5,000 on a treatment.

We talk to production service companies in Prague, Bucharest, South Africa, South America and the US to find the best company to do the job. The guidelines request that we separate travel, labour taxes and film from the budget with a 10 per cent handling fee. We have ten days to pull the job together and will have paid 90 per cent of the location costs by the last day of the shoot.

The production service company fee of 15 per cent must also be covered by us and our fee can be no higher than 25 per cent. The production service has gone $60,000 over budget as it did the bid quickly. It has no incentive to stay on budget because it gets its fee anyway.

The effects company is missing some plates and it needs more money. The agency has no more money so it turns to us. We all want a great spot and for everyone to rave about the job, so we have to find the cash. Then we have to wait between three and six months before we receive our fee.

The bottom line is, most production companies are working at less than a 5 per cent profit margin. What kind of business can manage to stay afloat in this situation?

We all need a strong production community. We can pull off a $1 million production job in three countries with two weeks of prep. We support amazing creative talent and help to develop the talent of the future. We want to collaborate to figure out the future of entertainment and brands and forge new paths. But we need to be partners and evolve together.

- Kerstin Emhoff is the executive producer and vice-president, commercials division, at HFI Productions.

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