There was a rule of thumb many years ago that production costs are usually 10% of the media costs. But in the past 12 months P3TV have assessed production costs as high as 50% of the first year’s media.
In this edition of P3-news we look at how media fragmentation is impacting on television production costs.
In this P3 e-news… – media fragmentation and production costs – the cost of failure to comply – P3TV workshops with Channel 9 – communities of practice workshops
media fragmentation and tv production costs
Many people in agencies and the film production industry complain that production budgets are not increasing, but what they fail to consider is the overall context of the production budget,
primarily the media investment.
The traditional TV only model
The brand manager has an advertising budget of lets say $3 million per annum. Each year they spend $500,000 on production and the other $2.5 million dedicated to television media over the year. The
production cost is 20% of the media investment.
The fragmented media model
The same brand manager is now following a strategy of using multiple media options to target their audience and create a media multiplier effect to increase the effectiveness of the media investment. Now he has executions across a number of media including magazines, outdoor, internet and television. The $3 million budget is now split $700,000 for production and $2.3 million for media.
The ad agency argues that the TV production cost should remain the same or increase. But with a production budget of $500,000 for television, the media investment for television is now only $1.5 million with the other $800,000 across outdoor, magazine and internet. This means that the production cost for television is now 30% of the media investment and now much higher than their competitors.
The arguments for and against
The agency argues that the same or higher budget is needed to create the cut-through and that a decrease in budget will compromise the creative effectiveness.
Meanwhile the media agency is struggling to deliver the reach and frequency objectives across the duration of the campaign. It could be you end up with a highly creative television
execution that your target audience may never see.
The problems with this argument:
1. There is no direct correlation between cost and effectiveness. There is evidence to suggest that creative cut through increases communication effectiveness, but need not impact production cost. 2. If the media multiplier factor works, then why would you over invest in one medium at the expense of the other media productions and the media investment itself? After all, it only appears to be
television production where this is critical. 3. If the audience does not see your message, no amount of creative cut through will make it work.
In briefing the creative agency, be very clear on not just the production budget, but give them the media budget and the marketing objectives this budget is to achieve. If you need assistance or are interested in how the market apportions production to media investment contact P3TV. We can provide you will an assessment of your budget allocation based on our
For more information contact firstname.lastname@example.org or call Sydney 02 9279 4997 or Melbourne 03 9682 6800.
the cost of failure to comply
As reported in B&T Online on March 28, BankWest will stop and amend the campaign for its popular BankWest Lite Mastercard after ASIC deemed the ads misleading because they failed to adequately disclose the card’s 8.99% interest rate excluded cash advances, which attract a 19.99% interest rate.
To avoid this happening to you, organise a P3 TPA Compliance Workshop. Held in association with Minter Ellison Lawyers, it combines a practical interpretation of the
law with a detailed understanding of the advertising process. For more information email email@example.com
To be held in Melbourne and Canberra on the 19th and 20th April respectively, “Starting and Sustaining Communities of Practice” is a highly
interactive full-day workshop.
The workshop, run by Anecdote, is designed to help participants to design and foster sustainable communities of practice within their organisations, be they public sector, private enterprise or