Members of The Commercial Producers Council have been reporting a higher frequency in the number of commissions to treat and bid on projects which are subsequently being canceled due to client budget cuts or are being dramatically altered, with clients making significant creative changes.
In the past, the situation tended to occur once or twice a year but production companies are now reporting that it has been growing in frequency and occurring approximately 20-25% of the time in recent years.
The impact of these frequent changes in scope is becoming increasingly challenging. To put this into greater context – each time a production company engages in a bid, it draws on a range of internal and external resources and expertise to contribute to the proposal, including producers and executive producers to research and cost out the project; directors; writers; image sourcing; layout designers and on occasion, storyboard artists and concept designers.
All of this “behind-the-scenes” work results in the production company spending on average $3,000 – $5,000 per pitch, and sometimes much more.
The situation has largely resulted from advertising agencies facing constant and increasing timeline pressure from clients themselves, which is restricting them from scoping and producing the project properly from the start. This means that in order to achieve tight deadlines and not pass on excessive time pressure to production companies further down the track, agencies are having to approach them much earlier on than is ideal and frequently before the project is approved by the client.
The CPC would like to recommend that advertising agencies work more closely and transparently with production companies and notify them at inception as to whether the concept and budget have been fully approved by the client or not.
To facilitate this, set out below, are the CPC’s recommended terms of engagement.
- If the agency has client approval, then all parties should proceed to treating and bidding, with an addendum to the terms: Should the job be canceled or changed dramatically during this process in creative or budget, that means either the director or production company cannot proceed, then an agreed fee of $3000 will be payable to the production company. This fee is not payable if the director or production company discontinues the pitch of their own choice, for whatever reason.
- If the agency has not had client approval, this should be clearly stated prior to any briefing and a scoping fee should be agreed upon for the production company, in the event that timings, budget, or concepts change during the course of bidding. It is the responsibility of the agency producers to outline these parameters and payment terms to the client
- The CPC appreciates that there will be exceptions subject to negotiation; for example, where a production company engages in treatments and bids to assist an agency with a proactive concept to sell to its client. When this occurs, and assuming all parties are aware of the circumstances before the process of treatments and bidding gets underway, no cancellation fee will apply. If it is not made clear that it’s a proactive pitch to a production company, they will be within their right to change the $3000 cancellation fee
“We are recommending these changes to safeguard the industry,” says CPC Co-Chair, Martin Box (Airbag Productions). “We need to hold clients accountable to ensure production companies can thrive and survive in very tough times.”