Feature

Flip the script: what happens to production when clients slash agency budgets?

Directors have been treated like gods since time – or at least, the modern advertising industry – began. But times have changed. And while diva antics from an auteur ad man like Tony Kaye were once tolerated as the price of genius, clients now prize work that arrives without its creators’ fingerprints and without the associated cost. Why wait for a ‘Bicycle’ when you can have ‘Shot on the iPhone 6’?

Amid wider industry trends directors and production staff have, for years now, watched on helplessly as their budgets have all but disappeared. Clients under ever-increasing pressure from shareholders and a C-suite that's afforded mere months rather than years to whip bloated brands into shape continue to sacrifice legacy-building for fast content: more of it, for less money, and with their own mucky mitts all over it. Meanwhile, agencies continue to wedge themselves in the middle lest they be forced out of the process completely; some even training their creatives in the art of direction and offering production as a mere bolt-on.

And when client in-housing does occur, production companies know better than to expect much of that budget to come their way – leaving the director at the front of the set but at the end of the budget, floundering without agency.

Alex Nicholson is a director from Sunderland who currently lives in London and has worked with Vice, San Miguel and Craghoppers. In the past 12 months alone, he has had three different agencies approach him with briefs to replicate exactly what he's done on other ads or films. When it came to final sign-off, however, he says they 'decided to go another route'. “From past experience, this means they are giving my idea or script to an in-house team. Two scripts I wrote for agencies were given to another director to make.”

Even when scripts do get signed off, however, things are no more likely to go a director’s way. “I’ve seen a managing director with zero experience as a creative overruling an executive creative director on an edit as it wasn’t ‘how he saw it in his head’”, says Nicholson. “And I've had seven jobs signed off that ended up being cancelled – two of them I'd shot already and that meant me and my team not being paid.”

Even studios such as Rankin aren't immune to these shifts in client practice. “As a company, we have completely changed our method of working and now go direct to brand,” Rankin tells us. “We recognized this trend about four or five years ago, so we’re really ahead of the game, but there are situations where directors are just stranded in this new approach.

“I see my old assistants shooting stuff a lot cheaper than me, so they’re underbidding me. I’m lucky in the sense that I’m of an age where the work, fortunately, keeps coming in because of who I am, but I’ve had struggles in the last two years. Luckily, I haven’t had a complete shutdown of work, but a lot of people have. There’s a lot of talent that’s leaving the business because they don’t have a way to make money anymore.”

Since The Drum spoke to Rankin, the photographer has announced that the formerly independent Rankin photography studios and Rankin film will now fall under a newly formed, full-scale agency.

It isn't a problem unique to London either. Over in LA, that mecca for professional directors, agency-side jobs are diminishing according to a commercial director there who asks us not to print their name, and ad agencies and clients have ”started their own production companies with in-house folks to save money”.

And speaking of money, our LA friend tells us payment schedules there are "horrific" – “I’ve shot directly for a company that only pays after I bug them for months. Agencies and clients do this to save money and they don’t seem to care that they’re sacrificing quality.”

Sacrificed quality is the creative crux of this issue. Setting aside for a moment the money that disappears from the system through cost-cutting or the opacity that smothers budgets and causes distrust. Setting aside also the young directors who are losing their first shots and big breaks, and the immorality wrapped up in the theft of IP. What's left is a prevailing wisdom that suggests this industry-wide shift towards in-housing ends in work that is, objectively, worse.

It's the kind of thinking that leads to nondescript, ignorable creative – and occasionally full-blown catastrophes, such as Pepsi's pilloried Kendall Jenner spot.

Back in London, we catch up with Andrew Barnard who says that there is “a role for in-housing that means it will always be present". The former managing director of 18 Feet & Rising, Barnard recently co-founded 20something – a new creative shop designed to offer an alternative to clients choosing between a traditional agency, a production company or an in-house setup. He says the question for him is "more around the nature of the work these clients are doing, and the hiring of creative directors and creative teams for their higher-ticket channels".

"How long that will go on for is hard to say. And while I’m sure some are working brilliantly, I’d be interested to know how the chief marketing officer/creative director relationship is when that chief marketer has literally hired the creative director, and she or he is fully immersed in daily office life.

For him, the best work always seems to have "a certain tension" around it, "most probably because the people involved actually care and are actually trying to push past convention". But he wonders: "How does that work when the distinction between ‘client’ and the ‘agency’ becomes, at best, notional? How is that tension managed, and how do people keep pushing on through when they have nowhere to retreat, no camaraderie with people detached from the stress?

“It’s as difficult a question to answer as 'what’s happening with Brexit and what does that mean for the UK economy', and let’s be honest, the two are inextricably linked.”

Indeed, Nicholson notes that the UK is now its “own beast” because of Brexit. From what he is experiencing, it means more money flooding into service companies (“it’s cheap as hell here at the minute”) but is likely a trend that will stop in time.

Leaving Brexit behind and heading back to the US, the founders of creative studio Chapter are facing their own set of problems in San Francisco's Silicon Valley as they struggle with the fallout of fast tech, fast investment, fast in-housing – and fast layoffs. “We are having to spend a surprising amount of time educating clients on well-established production protocols, sometimes starting with explaining implications of even 'awarding' a job,” write Neil Robinson and Gareth Kay in an email.

“We've also witnessed the almost constant internal reorganizations and – in more dramatic instances such as Uber [which laid off 400 marketers in July] – the results are very drastic. This is coupled with the reduced tenure or absence of leadership, which leaves fundamental questions about organizational structures and the role of marketing/brand/comms teams.”

So, where next for the industry? There are, by and large, two schools of thought. One is that brands will continue to drive prices down until there is nothing left to be cut – the agency goes, the triple bid goes and, to quote Nicholson, it’s “Johnny Instagram Director with 20,000 followers” who is given the script for pennies. He does a crap job, but who cares? The client will need brand new content for tomorrow and, besides, all their competitors are doing the same.

And then there is the sunnier future, one no less reliant on market forces. Laura Gregory, the founder of London production company Great Guns, disagrees that it is the in-house model that is driving prices down. When bidding against holding company or in-house units, she notes that they are in fact often more expensive than her offering, and “lack the global experience of production houses who support talent with on staff producers and production teams”.

In-housing, she says, relies on freelance staff who come on board as work ebbs and flows. "The selection of directors for in-house work is limited to the freelance pool or agents who broker talent; many of that freelance pool are available because their work isn’t consistently in demand to warrant being represented by a company, or they are new directors starting out who want to build their reels.

“We are five years into regular in-house production and still only a small percentage of in-house work is achieving any global recognition at award shows. The biggest accolades continue to be awarded to agencies with external production houses working as a team. In-house production [in agencies] ... is often an attempt to bolster dwindling income. And, as many agencies are finding out, making money in production is not as easy as they thought.”

Like many trends in marketing, it is entirely possible we will see a shift back to the old school, as soon as enough clients accept the new system does not pay as well as they hoped it might. Agencies with in-house units may retire the idea and choose to improve their margins by cutting loose the baggage of account management instead.

It is possible – probable, even – but only if the craft of production is respected by the holders of the purse strings. The minute more clients lose sight of what is good and beautiful will be the minute the race to the bottom really begins.

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