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December 2017
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In the magazine
Only available in print
  • The Televisual Commercials 30
    Jon Creamer introduces Televisual's exclusive annual report, the Commercials 30, and finds that while budgets are down and production companies are under threat from agency in-house units, commercials producers are finding new horizons beyond ads too.
  • Commercials 30: Best in Show
    Commercials producers also get to vote for their favourite directors, stand out ads and top rated agencies along with their favourite post houses, editors and vfx ops. We reveal the results
  • Commercials 30: The Top 30
    Televisual reveals the Commercials 30 itself, the 30 top rated commercials production companies in the UK
  • Music in Motion
    So what’s next for the music behind the commercials? Will it be another year in the ascendant for London Grime perhaps? Portugese house? Afro beats or the Angolan kuduro sound?
  • Televisual Factual Festival report
    Last month saw Televisual's annual Factual Festival return to Bafta. How to stand out in a world of ever increasing viewer choice was the big theme this time. Tim Dams reports
  • Alison Kirkham in interview
    At the Televisual Factual Festival, the BBC's controller of factual Alison Kirkham outlined the shows the corporation is looking for in the year ahead
From the magazine
Available to read online
  • 2017: the year in review
    Two very different stories – the rise of SVOD players and the Harvey Weinstein abuse allegations – defined TV’s year. Tim Dams reports
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Reports&
surveys

Commercials 30 Survey 2017 Back to Reports & survey Listing

Budgets are down and production companies are under threat from agency in-house units. But commercials producers are finding new horizons beyond ads too

In last year’s survey, we found that many in the commercials production world were reporting an ‘uneven’ 12 months.

And this year seems to have been no different. “The past year has been similar to 2016 i.e. up and down,” says Bold and Blink concurs: “Curiously, it can go from absolutely dead with no scripts to manically busy at the flip of a switch.”

Perhaps not too surprising considering that issues in the wider economy haven’t changed either. Brexit looks no closer to any resolution and uncertainty about the future of the UK economy still reins. “The lack of stability over Brexit is definitely causing some nervousness for crew and clients,” comments 1stAveMachine. Dark Energy, among many others, also points to “Brexit and the knock on effect this will have on advertising budgets and the amount of work available.”

Brexit is already having a sector-specific effect too, particularly when it comes to the talent pool, and that’s before any rules come in regarding possible limits to the European workforce. Those operating in animation in particular are already worried about a “lack of available talent as European animators, vfx artists and coders/developers avoid the UK as their base,” says Nexus. Picasso too, says that “finding crew is becoming a lot harder since Brexit was announced. The supply of European talent from esteemed post grad schools is the lowest in quite some time. There seems to be a fear amongst our European freelancers that there is no point trying to get established over here with the future uncertain.”

money’s too tight
It will come as no surprise to anyone that ever-decreasing budgets are a major point of concern for pretty much every respondent to the survey. We try to track average budget levels each year by asking respondents for an average budget for a 30-second spot. It came in at £172k this time, down from £191k last year.

And, of course, those budget drops don’t come with a commensurate drop in expectations from clients and agencies. ‘More for less’ has been the order of the day for some time now and a big concern for production companies is to constantly find ways to “keep delivering quality commercials on hugely reduced budgets,” as Another Film Co puts it. HLA, a company hitting its 30 year anniversary in 2017, says: “We have become used to margins being squeezed, but now we are faced with ever increasing lists of deliverables on each production.” Biscuit Filmworks sums up the mood, saying: “It feels like the same answer to this question every year… But it’s getting tougher on commercial production companies. As the margins get tighter, the competition fiercer, the creative safer then the struggle to get something truly great made continues to grow. The knock on effect is that we often don’t have enough time on a project to develop it in a way that many would like to.”

Often, creative ambition is still high, but budgets to fulfil them are not. “We often see fantastic creative briefs from well-established clients and agencies, but with budgets that just don’t match the requirements of the scripts,” says Partizan.

Budget cuts have been soaked up by production companies over time, trimming the fat and finding innovative ways of working. But there is a sense that there is no longer any fat to cut without creativity suffering. Budget levels are becoming too unrealistic now. “We have been the recommend on three jobs this year, only to be told at that stage that the client had halved the budget, but wanted the same result, and so we had to pull out,” says Skunk.

The focus on cost rather than creativity and excellence will have a detrimental effect on quality and effectiveness. “The procurement process is stripping out any flexibility in budgets and is killing creativity,” says Pulse. “There’s nowhere to go to when the creative or production approach is changing as the job evolves (as it naturally does).”

tanks on the lawn
There are other concerns at the forefront of production companies’ minds too. With clients increasingly turning away from the retained agency model, that’s “driving the move for agencies to find new profit centres including content production,” says Great Guns. “In-house agency production companies are our biggest threat. They are our client AND our competitors,” says Fat Lemon.

Agencies retaining production work in-house leads to substandard work, say many. “These AIP units produce vast quantities of sub-standard work without the creative or financial filters of having many companies pitching for the task,” says Bang TV. “It’s exactly the kind of poor content that gives advertising a bad name.” Nexus agrees: “By going to the open market you end up with best creative solution for the best price and so keeping these projects in-house is not serving the client’s best interests.” And while until now, the work that agencies have retained in house has been the ‘bread and butter’ stuff, “how long will it be before agency in-house production departments start to encroach into shooting the more creative jobs?” asks Knucklehead.

And what will be the knock on effect on new talent, something production companies are expert at nurturing. “There has to be a commercial mechanism to develop and nurture those people,” says Knucklehead. “If the work to fund that is taken out of the market then I don’t see how the next generation of film makers will get the support they need to break through.” Though, reckons Blink, it will be clients who ultimately realise this folly. “We expect production opportunities to grow as clients own marketing capabilities and expertise grow. Increasingly clients will recognise the limitations of agency in-house production and how the competition between independent production companies represents the best value and ultimately the best creative outcome.”

But there is also an increasing prevalence of production companies working directly with clients. A question we’ve been asking in the survey for a few years now is how much work producers did directly for clients without agency involvement. It’s grown from almost none to 12% last year and 15% this year. “Advertisers working direct with production companies without an agency is becoming commonplace,” says Bang TV. “Production companies that are comfortable being client-facing will thrive.”
“The game is opening up, and has been for some time,” says Skunk. “But now that big clients like Eurostar are going direct to production companies, it’s anyone’s game.”

And there’s more to life than ads for many production companies. Companies in the 30 are already diversified across film, TV, ‘content’ and everything in between. On average, survey respondents now derive 30% of their turnover from work outside of commercials. Biscuit is producing a new Watership Down film, for instance; Hunky Dory says “programming and client branded webisodes and content is the exciting way forward.” Independent says it’s “looking to move into the factual entertainment space;” Outsider is “becoming makers of branded entertainment,” Stink says it’s “pushing much further into entertainment by making new hires and building out our TV and film division.” And that’s just a snapshot. “Whereas once we made one type of product – TV ads – now we make numerous products,” says Rattling Stick. “And whereas once we had one type of process and one type of client now we have many different processes and our client base spans brands, studios, commissioners, labels, platforms, organisations as well as agencies.”

The trick then is getting known in those other sectors. “The source of the best creative work is very diverse now so it’s getting our message out about our brand to all of those sectors,” that’s key, says Hungry Man.

THE STATS
£13.4m - The average turnover of a commercials production company in this year’s  survey (it was £11.9m last year)

£172k - The average budget for a 30-second ad reported by respondents (that’s down from £191k last year)

50% - of respodents said that budgets had fallen this year. 18% said they’d risen and 32% said they’d stayed the same

65% - Of production companies said they made more commercials this year, 21% said they made fewer and 14% said the same

26 - Is the average number of directors on a production company roster (the figure was 24 in last year’s survey)


CREATIVE TRENDS
What have been the major creative trends of the past year?

1st Ave machine
The film scripts we receive have mostly been mixed media, interesting performance and graphics together

Another film
There appears to be more UK-centric comedy work coming out of agencies on behalf of clients

Bang
Advertisers working direct with production companies without an agency is becoming commonplace.

Believe
VR has been big this year and we have worked closely with production partners so we can be open to this offering for our clients.

Blink
VR still hasn’t really happened in the UK. It might be a bust in terms of tech being applied to advertising. However, AR could change things in the next year.

Bold
A little less emphasis on street cast reality based work. It is still prevalent but more imaginative. Comedy based work is starting to gain ground.

Fat lemon
Diversity in casting is something we are seeing more and more often.

Independent
The only trend we have witnessed is the lack of trends. Brands appear to be using a multi-faceted approach for creating engagement.

Knucklehead
We got a lot of doc style briefs where the agency wants us to find the story. It’s not a quick fix though. Sadly not everyone realises that..

Partizan
There has been an increased desire for mixed format work, especially amoungst the younger directors. A decline in the need for ‘real people’/documentary work.

Rogue
The major creative trend is creatives actually writing simpler ideas to fit within the budget and timing constraints. Longer-format ideas, however, have gained traction.

Skunk
Clients are still wanting those big TVCs but we’re really beginning to see the wealth of mini-series, content films and documentaries

Somesuch
Reflecting diversity continues to be big on the creative agenda.

Stink
We’re seeing much more demand for comedy – partly because it’s cheaper to make, but also because it reflects a desire by brands to lift the national mood.

Sweet Shop
More than ever, it’s about a simple, core idea expressed well and that makes me feel something.


OUTSIDE THE BOX
What are you making outside of TV/Cinema ads?
Biscuit
Watership Down for the BBC/Netflix. Snapchat, Facebook, Instagram specific content. Music videos, short films, experiential.

Blink
We’re developing I is Pig with Emer Stamp, Simon Pegg and Nick Frost. Don’t Hug Me I’m Scared is set to become a big budget US TV show.

Caviar
Developing films and documentaries

Hungry man
Client direct TVC’s and web content, documentaries, movies.

Hunky dory
We are making web sponsored shows for clients and branded content in features and standalone creative films.

Independent
Kidspiration – (kidspiration.tv)
An online factual channel for kids.

Great guns
We’ve recently opened our first Gastro Pub. The new venture, Great Guns Social, echoes Great Guns support of new talent by providing a showcase for new chefs. 

Nexus
We crafted the ‘1600’ augmented reality app for the President Obama administration and Bafta nominated AR app The Gruffalo Spotter,

Partizan
Continue to collaborate with Kate Dawkins studio on projection mapping live events & installations.
 
Pulse Films
Film, scripted and unscripted television, music video, live music, branded content and brand funded programming.

Stink
Music videos, shorts, feature films, branded and digital content, DOOH, AR and VR, physical installations.

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