While it is convenient to let the agency package production costs, due to the state of the Australian production industry there are some great deals to be had. But are they benefiting the advertiser or their agency?
In this P3 e-news, Clive Duncan of P3TV reviews the ways advertisers can make industry production negotiation work for them.
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tv production reward points.
where are yours?If like most advertisers you have negotiated with your agency to pass on all external costs at net (ie what the agency pays they charge you the same with no mark up) then you have really only just scratched the surface of what is currently available in the way of discounts and rewards. (If you still allow the agency to mark up external costs then read on anyway)Paying mark ups
In the days of media commission and service fee agencies would charge up to 17% on top of external charges. In today’s market some agencies still charge a mark up, usually 10% and this can be seen in costs of $556 (eg 10% commission on $500) within the estimate. If the advertiser is using the agency as a cash flow management system paying invoices on 90 days plus, then it is legitimate that the agency charge a small interest fee – usually the cash rate per annum – which is more like 5% pa effective rather than 10% flat.Leveraging the competitive market
In this day and age of commercial competition many companies large and small are offering their loyal clients discounts and other incentives. As a major advertiser with total annual production budgets adding up to several millions dollars where are your discounts and reward points? Are they being passed on to you or do they end up in your agency’s pocket. How the agency leverages suppliers
Lets say you are a major retail client with a big TV spend and most of your TVCs are postproduction heavy. The agency negotiates a 10% discount with a postproduction provider to put all of your work through that particular postproduction house.
Now the agency can ask for the negotiated 10% to be taken off each and every bill and pass this saving on to the advertiser or the agency can negotiate for all bills to charged at full rack rate and a 10% rebate to be paid back to the agency ever quarter.
In this case, if you were the general manager of an advertising agency under pressure from the board to maximize revenue, (with a lucrative incentive clause built into your contract), what would you be doing?How you can leverage suppliers
Let’s say you are a large producer of FMCGs and your brands are spread across several agencies. Some agencies negotiate bulk discounts based upon the agency putting all their client’s on air dubs through one particular distribution provider and through various accounting procedures get the client to pay rack rate and the agency pockets the discount.
What is to stop you the client insisting that all your agencies channel all your on-air station dubs through one distribution provider and, you the advertiser negotiate a bulk discount with that provider and reap the rewards?Opportunities for advertisersStation dubs, post production rates, casting fees, camera equipment hire are just a few of the areas that as a procurement professional you can secure the discounts so they come off your bottom line, not the agencies.
P3TV will help you identify the non-creative elements within TV production budgets that, through negotiation, can be discounted to your advantage.P3TV can also discuss with you alternate TVC production procurement procedures that work well in other major markets of the world to the advantage of the advertiser. To find out more contact P3TV by email on firstname.lastname@example.org call Clive on 03 9378 3223 or Darren on 02 9279 4997
marketing and advertising summit – sydney 2005
The Australian Marketing & Advertising Summit is on again on September 21 and 22 at the Sydney Convention Exhibition Centre.Themed Partnership for Success, P3 is again involved, sponsoring this valuable industry event and chairing the session on the use of music in advertising.To find out more or to register go to www.acevents.com.au/ad2005/
reducing government costs
Darren Woolley, founder of P3, is speaking on “Reducing Advertising Production Costs” at this year’s AMI 2005 Government Marketing Conference.
Title “New Ways for Government Marketers” the confernece is an ideal opportunity for Communication and Campaign Managers at all levels of Government to hear on the latest industry insights, techniques and processes.
The conference is to be held at the Marriot Hotel, Surfers Paradise from Wednesday 3 – Friday 5 August 2005.
For more information click on the link to the AMI website
finalist in business awards
P3 is a finalist in the 2005 Telstra and Australian Governments’ Small Business Awards.Winners to be announced on June 28 at the Soffitel Hotel in Melbourne.