Case studies on how production assessments can add value to television advertising costs
February 14, 2012
Since 2000 we have been providing our clients with an advertising production cost assessment, cost estimates and management services. It is often a part of our business not popular with many of the agencies (as evidenced in this video introduction from the Caxton Awards in 2010).
But these services we offer at TrinityP3 have proven to be a real money saver for clients:
Here are two case studies that demonstrate how we have delivered those savings.
Case study 1 – Setting budget expectations
A client, unsure what their production budget should be for an upcoming TVC, asked us to review the proposed creative and estimate the production cost.
Based upon the production spend of their last campaign, the client was considering spending $400K.
However, after consultation with the client, agency and production company, our ballpark estimate came in at $320K. All parties were willing to produce the TVC for this budget.
Prior to this assessment, the agency’s estimate to produce the concept had been $400K , based upon the client’s budget and previous production spends.
Had we not been involved, the agency would have given the production company a target budget of $400K and the budget would have come back to the agency at around this budget.
As the client had already included the production budget of $400K into their overall budget, the subsequent saving of $80K was added to the media spend to achieve better reach and frequency. Based on the cost of the process this was a 30 times ROI.
Case study 2 – Bringing due diligence to supplier selection
A client asked us to review the preferred creative for a campaign and provide a ballpark estimate to set the production budget.
Our analysis was based upon recent exposure to a very similar production and production technique, and the result came in well under the agency’s estimate ($350K) from their preferred production company.
Subsequently, we recommended to the client that the job be put out to competitive tender, as many of Australia’s directors and production houses were capable of the creative and technical requirements for the project.
At the client’s request, we were involved in the tender process, with all the requested production estimates, including the preferred agency supplier, coming in within a 10% variation of our ballpark estimate.
This represented a saving of some $60K and as the agency’s preferred Production Company was able to match its competitors’ they were awarded the job.
The total cost to client for the production assessment and tender management was less than 2% of the production budget and delivered a 17% production saving, representing an 800% ROI.
The figures speak for themselves.
Things to consider when selecting a new advertising agency
February 12, 2012
Choosing a new agency, be that creative, media, digital, experiential or any one of the many other types of service providers is not something to be taken lightly. The cost and time involved and the impact on the business is significant. Here are a few worthy considerations when selecting agencies.
If you are looking for business or marketing strategy it is better to select a specialist in this area than to expect the communications provider to supply this.
Look for: a clear distinction of the strategic functions they provide; demonstrable strategic performance, probably as case studies; clear demonstrations of consumer insights that led to strategic insights.
Many providers will have a New Business Team for the pitch, possibly never to be seen again. It is important to identify the resources that will be working on your business short and longer term. While small agencies can be an advantage with access to the most senior people, as the agency grows or if something happens to key staff they may not have the flexibility to manage your business. Likewise, large multinationals may have higher turnover through career development.
Look for: a loyal, long term staffing base (low churn); dedicated resources or guarantees of time and effort by individual name or specific level of seniority/expertise; depth of resource as well as breadth.
The conundrum is many advertisers want an agency with recent experience in their category without account conflicts with competitors. While it may be ideal to have a provider with experience in your category, it could be that this comes with a package of set thinking.
Look for: expertise in your category or industry (both historical and current) in a range of individuals; a cohesive team that provides both youthful creativity and mature experience.
Agencies are business units in their own right, and managing their own revenue and profit centres requires skill. The experience these management teams bring to the table are critical to your success.
Look for: key personnel who have experience across many industries and categories; managers who have ‘skin in the game’ (hands-on with clients); demonstrably good management skills (strong and consistent agency performance).
Remuneration is most often based on a ‘cost plus’ formula that sees the provider remuneration comprised of a salary + overhead + profit calculation based on the advertiser’s needs and expectations. In some cases, advertisers also enjoy a Performance Based Remuneration (PBR) of Value Based Compensation (VBC) aspect that rewards or penalises the agency on performance.
Look for: a flexible remuneration arrangement based on reasonable salary structures, overhead multiples and base profit margin; the willingness to participate in PBR arrangements; demonstration of putting their profit on the line (case studies); a workable review facility that recognises the ebb and flow of budgets and workloads.
One of the most important parts of the relationship between provider and advertiser department is ‘chemistry’ or ‘fit’. Most relationships that do go long-term are based on mutual respect, understanding and consideration.
Look for: a willingness to listen as well as talk; something more than the camaraderie of the new business pitch; a genuine interest in or passion for your business; an open and honest approach that will engender trust and respect.
How big or important do you want your account to be within the agency? Dominating the agency could mean that you end up funding the infrastructure that others benefit from, while being one of the smaller clients may mean that you may be overlooked at times.
Look for: What are the other clients at the agency? Consider both size and type and where you fit in. How demanding are these other clients? Eg. Retail or high volume clients may demand resources to a greater extent than high media spending clients. What impact would the addition of your business have to the agency size?
While some advertisers are happy to source the best provider in the market, no matter where they are located, most require a local supplier. Considering so much of the business is built on relationships, long distance management needs to be considered.
Look for: Does the agency have other long distance clients? How successfully do they manage these relationships? What are the additional costs both in time and money? What are the alternative offerings? How can technology be used to increase interaction and shorten time issues and lower costs?
What other considerations do you use? Let me know by leaving a comment here.
How to make the most of your media negotiation to increase value
February 9, 2012
As consumer confidence remains sluggish, advertisers are increasingly interested in understanding how effective their media agency is negotiating. This raises two main concerns:
1. What are the issues affecting negotiation effectiveness?
2. How effective are the advertiser and agency in achieving additional cost efficiencies during each campaign?
With most communication strategies based on exhaustive consumer analysis and insights from a plethora of syndicated and bespoke research, a clear understanding of your target’s ‘media imperatives’ is one of the most powerful negotiating tools available.
Understanding how to reach a ‘light TV viewer’ who is also a ‘heavy on-line reader’ might seem obvious, but the essential communication elements of your particular product or service may dictate otherwise.
On one hand, using TV to try and reach consumers who don’t watch much can be inefficient and expensive. On the other hand, trying to explain a complex visual scenario on radio just because your targets listen a lot can be just as ineffective.
Getting the media mix right and the balance between effective and efficient communication channels – both between and within your chosen selection – can have a marked effect on the ability to leverage spend during the negotiating and buying process through more effective channelling of budget.
Is bigger better?
In media negotiating terms, size does count. And not just how big your budget is but also how much clout your media buying agency has overall.
In the typically ‘three-tiered’ process that makes up most major media negotiations, the media agency (or buying group) size sets the first discount off base rate (usually known as the ‘ceiling’ for agency-based advertisers).
Your individual spending volume then comes into play, as the client-specific discount structures are set based on volume or share.
Finally, the actual rate paid on a campaign by campaign basis is the result of the leverage your buying team can exercise on top of these first two discount levels in the context of the current market conditions, lead times, placement strategies and a range of other variables.
One lump or two?
Naturally, negotiating strategy can play a big part in the rate base outcome. One, two or three networks in your TV negotiation? Two contracted and a float? Specific target, specific need – one network? Newspapers by masthead or by publisher? Magazines likewise? Do you know your high, low and walk away positions?
Having an agreed negotiating strategy, the courage to stick to it and a good team in support can make all the difference between a great outcome and a bad feeling in the pit of your gut. And remember, in any negotiation, the best result is a win:win!
The power of process
Even with the best team, a great strategy and terrific leverage, the best laid plans can go astray if the basic process rules are forgotten. These rules apply at the macro (doing the annual deal) and micro (campaign by campaign buying) levels.
1. Give the agency and yourself time.
Negotiations don’t need to be protracted but you will need breathing space so both sides can properly consider their positions and come back with well thought out counter offers along the way. Time is particularly critical in the campaign negotiation/buying process where the best spots and/or positions are always the first to go. In the seller’s market that has characterised conditions over the last couple of years, there have been no prizes for coming in late!
2. Make sure the brief is clear, concise and based on as much factual information as possible.
Basic factors like timing, seasonality, distribution and geography are obvious factors in ensuring the negotiation is based on your business plan. Of course, critical factors like target audience are essential elements that must be spot on or you’ll end up wasting your money despite the best of intentions.
3. Make sure that both you and the agency understand and agree what your expectations, goals and objectives are for the negotiation.
Many times, the agency comes back thinking they’ve done a great job, only to find that the client’s expectations were based on issues only partly communicated and understood.
This brief review only scratches the surface of rate negotiation effectiveness. We have been providing advertisers with a benchmark report on how their negotiated media rate compares to the industry rate across the main media for the past ten years. But more importantly we benchmark how effective you and the agency are in capitalising on this rate as it is applied to your campaign activity.
Social media clearly explained via #donuts and promoted on social media
February 7, 2012
They posted a blog
For those who don’t know @threeshipsmedia is their twitter account.
It was posted on Instagram
As you can see, in plain and quite amusing language, using donut examples, it explains the different types of social media.
And it has gone viral.
More than 100,000 people have liked it on Facebook.
And thousands have retweeted it in a few days.
Take a look at these other stats for content that went viral -
The Old Spice Ad: 39 million views, 45,000 comments, 141,000 likes.
Or Double Rainbow: 32 million views, 139,000 comments, 151,000 likes.
This Ford Fiesta campaign resulted in: 5 million social media shares, 11,000 videos and 50,000 people said they wanted to know more about the Fiesta when it came out. 97% of these people didn’t currently drive a Ford.
A Southwest Airlines / Make a Wish Facebook campaign resulted in 1 million new Facebook fans for Southwest Airlines.
And this one from the 2012 Super Bowl – The Dog Strikes Back for Volkswagen: The biggest viral ad from the Super Bowl so far – 8 million views, 25,000 likes, countless embeds on websites and blogs, huge numbers of shares through Facebook, Twitter and other social media channels and all this in a matter of days!
Okay everyone, back to work.
How to ensure the price of your advertising production equals the quality delivered
February 5, 2012
When you pay top dollar, you expect the highest quality.
In television production, the delivery of quality is a subjective and often nebulous concept and one that is often used to drive up the cost of production with negligible improvement in value.
There have been numerous examples of where budgets have had the latest, and therefore the most expensive camera equipment, where a suitable less expensive version was available. Like the director who wanted the latest high speed film camera to shoot talking heads to camera in a studio. Or the producer who loaded the quote, but presumably not the truck, with every lens available. Or the director who still insists on shooting film and then allows stock shoot ratios of 500:1.
So here are a few ways to ensure your budget delivers every cent in quality on the screen.
In many discussions about production quality, the production house will justify costs with the comment “Doesn’t your client demand the very best”.
This retort usually ends the conversation as the implication is that every production needs to be the highest quality. For the production house the measure of quality is not the effectiveness of the execution in achieving the marketing objectives, it is achieving the highest possible production values, which means using the latest technology, embracing the latest techniques, allowing time to experiment, being able to cover multiple shoot options as insurance if one of these “new” techniques fail and having the latest equipment.
What they are really saying is “Doesn’t your client demand the very latest and therefore most expensive”. The answer to this should not automatically be yes, because each of these is adding cost, but is it adding value?
A culture of spending
There seems to be a culture within the TV production industry of using (and using the client’s money to pay for) the latest equipment and/or technology whether it’s required or not.
The people that benefit from this culture of “the latest” are the equipment hire facility who hire out the top of the line stuff, the production house who get to mark up the top of the line stuff and the technicians who get to use the top of the line stuff. So there is a strong lobby to maintain this culture.
The knowledge to know better
Some agencies are often complicit in this culture as often agency personnel don’t fully understand some of the technical aspects of production and post-production – whether there is actually any “value add”.
When confronted with the question “Doesn’t your client expect the very best” they have to nod in agreement, and are often coerced into using high-end hardware to keep the director and production company happy, and is in many cases, over and above their client’s expectations and needs.
The expansion of this culture relies on the client’s and sometimes the agency’s ignorance and production pre-ambles full of esoteric jargon and unfathomable technical terms.
So how do you discourage this culture? By having someone “on-side” that:
- understands the technical aspects of production
- understands the jargon and who is not intimidated by the technical gobbledygook
- asks the right questions at the right time on the client’s (and by default the agency’s) behalf.
Instead of simply advising clients on their production costs we manage their production costs for them. After all, the director has his producer to look after the interests of the production company. The Creative Director has the agency producer to look after the interests of the agency. So why shouldn’t the advertiser have a producer to look after the interests of the client.
It is very common in North America and Europe and is becoming increasingly so here.