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Commercial success and successful commercials

The first quarter of 2018 has been and gone, and with its passing, a question appears to linger over the commercial production industry in Los Angeles; a question without a straightforward answer. The question in question, the one posed by production companies across Los Angeles (and beyond), is far from rhetorical. What on earth is happening?

Recent figures released by FilmLA suggested that commercial shoot dates increased by 9% in the year to 2017 when compared with 2016, an undeniably positive study, albeit centered on Los Angeles.  Arguably, the industry-psyche going into 2018 was cautiously optimistic.

Fast forward to mid-April and the mood is bleak, illustrated grimly by Sir Martin Sorrell’s inauspicious ‘resignation’ from WPP after a glittering 33 year stewardship. The industry is in a state of flux. World class directors are fighting for ever smaller jobs. Big budget shoots are rarer than ever before. Profit margins are being squeezed ever tighter. Heads of Production are asking one another quietly where the work has gone.

Comparisons can, and will, be drawn with London’s commercial production scene; one that has itself struggled to grow meaningfully over the past 5 years, and which was one reason why we have seen a raft of production companies expand across the pond to Southern California. So surely, the mecca of production, Hollywood itself, cannot be experiencing a similar phenomenon. The question therefore is pertinent; what really is going on?

The advertising industry is changing. Prevailing narrative since the mid-2000s points the finger at ‘digital disruption’, the oft-used sound-bite to describe the end of traditional television advertising as we know it. Technology and commercial production have been long been uncomfortable bed-fellows. Long gone are the ‘golden days’ of advertising, when a television commercial was a nationally talked about event, a campaign which was the talking point over a family meal, replaced instead by targeted advertising, likely consumed via smartphone.

The future of the 30 second television commercial is under threat, and the trickle-down effect of ‘digital’ means commercial production companies are now competing not just amongst one-another, but with social media influencers and You-tube stars for their share of the available advertising spend.

A clear example of this was Drake’s recent music video ‘God’s Plan’. Armed with a production budget of nigh on $1m, instead of employing the services of a traditional production company and director, he simply gave the entire sum to charity. Production was taken care of via a team of volunteers at next to no cost. The project was launched on social media alongside the moniker’ go out and be nice to each other’ and was an unbridled success, highlighting the challenge faced by the industry. Not only the fact that social media ‘influencers’ are now as big a draw to marketers as the celebrity endorsements of yesteryear, but perhaps more worryingly for the production companies, the fact that content of such impressive quality can be produced (almost entirely) on a smartphone-sized budget.

The bellwether of the advertising industry in the US is the Super Bowl, where the price per second of a commercial was recently estimated to be as high as $168,000. This once seemingly untouchable behemoth of consumerist culture will surely also have to reinvent itself in order to stay relevant with the millennial generation. The 2018 edition scored the lowest TV ratings since 2009, which will inevitably lead advertising executives all along Madison Avenue to question the value of the commercial experience against the far more measurable targeting advertising that technology is able to ensure can interact and engage with the consumer– again potentially piling more pressure onto the traditional production company model.

So where does this leave an industry struggling to hit 2018 forecasts?  The Association of Independent Production Companies is due to release its annual survey in Q3 of this year, by then we will have seen whether the current hiatus in production volume is temporary, or a more ominous sign of things to come.

But there are, and will always be, opportunities to be had by those productions companies brave enough to explore them. One example is China, a booming economy whose advertising spend is forecast to top $50billion in 2018, and a market in which we are seeing more and more clients willing to explore. Companies can no longer rely on a single market, and must be willing to engage with overseas shoots.

Remaining closer to home, the key to success will always remain the talent on the roster, and so  tailoring the right deal to ensure your best talent remains on your books will be crucial to ensure success in the coming months and  years, irrespective of where the advertising industry ends up.

If you have any questions or would like to discuss this article further, please contact: Gareth Jones, gjones@ksbarlevi.com.