One
of the more frustrating aspects of television production
is the cost exploding beyond the budget.
Many advertisers are told by their agency that the budgets
are not high enough and they should be increased.
Television production
costs are not increasing
P3TV recently provided the AFA evidence that television
production costs, in the form of crew rates and
equipment hire, had increased 8% and decreased 3%
respectively in the past 4 years. Television production
costs are not increasing more than CPI. The problem appears
to be that expectations of television production
costs are increasing.
One way to control production costs is
to implement this process with your creative agency:
1.
Set and provide a budget
Based on your total media spend, provide the agency
with the production budget you believe is warranted
to achieve the marketing task at hand.
Guidelines include 10% - 15% of your total media budget,
past expenditure, etc.
Put
the budget in writing in the brief and make the agency aware
that this is the budget they are to work with.
2. Ensure each concept
is accompanied by a ballpark cost
When the agency presents concepts to the brief, ask
the agency to provide ballpark estimates for each concept.
These ballpark figures are prepared by the agency producer
and do not require the agency to obtain external quotes.
At most the agency producer may call an external supplier
for advice.
The ballpark figure should also cover all permutations and
combinations required as part of the final production, including
cutdown versions, various media options, etc.
Most professional agencies have the producer check
that the concept is achievable within the budget
before the concept is presented, so this should not require
additional work by the agency.
3. Hold the agency to
10% - 20% of the ballpark cost
The agency should be informed up front that if the
final estimate is more than 10% to 20% higher than the ballpark
supplied at concept presentation, the difference
is to be funded by the agency.
The choice of 10% - 20% variance depends on the category,
budget size and production type. Some categories
are more difficult to ballpark than others, though most
experienced agency producers can create an accurate ballpark
estimate for long-term clients.
For lower budgets, say under $300,000, a 10% variance is
$30,000 or less, so lower budgets should have wider variance,
while higher budgets should have lower variances.
Techniques like in-camera and post-production visual effects
can be complex and difficult to cost without the extensive
input of the specialist supplier.
You can use the benchmarks
to judge the value of the concept
Of course, the agency could present a number of ideas, but
using the ballpark figure you can ensure that at
least one of them is within the budget and also
be able to judge if the other ideas are worth the cost if
they are above your budget.
But how do you know if the agency is over quoting
a concept? You get P3TV to benchmark
the estimate to ensure it represents good value
for money within your budget.
For more information on how to implement this process with
your agency or for assistance benchmarking your
television production costs, contact P3TV
by sending an email to tv@p3.com.au
talking remuneration
