With all the flux and change that’s going on in the advertising production sector, it’s good to revisit every now and again the international benchmarks on which commercials are made. A clear understanding of expectations and good synergy between the client, agency and production company are key to the success of any project.
Here are 10 points for all parties to contemplate.
1. Meeting clients’ objectives
First and foremost, it’s essential that clients’ objectives be met as the goal of commercial production is to deliver the highest standards of technical and artistic quality to clients within their expectations of cost, time and policy. To achieve this, it’s vital that all of the client expectations are realistic, fair, fully disclosed and well-contemplated from the outset of the project.
2. A common vision for all parties
Sometimes misaligned expectations are the root of all problems that may arise on a production. All parties involved in the process should be encouraged to voice concerns, raise issues and debate solutions to ensure consensus and the achievement of a common vision.
3. Non-disclosure both ways
Non-disclosure agreements (NDAs) are becoming the norm for agencies and clients when embarking on a new project or campaign. NDAs should be reciprocal as the production company’s approach, bidding information and intellectual enhancements are specific to that project.
4. Bidding protocol
Before a project is put out to bid, it should be signed off by the client and a maximum of three production companies should be invited to bid. The companies invited to bid should be advised of other companies bidding as this helps to shape expectations and the desired outcomes. If the agency or clients want to invite more than three bids, the production companies involved should be informed in advance so that it may decide if it’s worth its while to participate in the process.
If the project hasn’t been signed off by the client and doesn’t go into production, production companies involved in the process should be able to charge a fee for the time and resources they have invested. In South Africa, this “pitching fee” is currently R20 000 per company invited to bid.
5. A written contract
To ensure a clear understanding of what the production company is producing for the ad agency, the production company should be contracted in writing. The contract should establish the rights and responsibilities of the parties and set out the expectation of the parties. The contract should provide for a mediation or arbitration process in respect of disputes that arise under it.
6. Fixed bid or cost-plus?
Production companies should either be contracted on a fixed bid or cost-plus basis. Under a fixed bid, the production company accepts all of the risk of the production (with the exception of some items the agency has elected to cover) and the fee remains the same, ie a fixed amount.
When there are many unknown variables that make it difficult to estimate the cost of a job, the agency or the production company may recommend using the “cost-plus” method. Under cost-plus, the agency pays the actual cost of making the commercial (which may be more or less that the original estimate) and a predetermined production fee (usually a percentage “markup” on the best estimate of costs). In each of these scenarios, both entities are protected from prices that can’t accurately be estimated.
Under either system, there should be a payment schedule that is agreed to and guaranteed by all parties involved, recognising that timeous payment is part of the contract.
7. Upfront payment
A significant portion of the budget (50% in SA) should be paid upfront to the production company at least seven days prior to the first shoot day. This is because some of the budget must be paid out prior to the commencement of the project or shortly thereafter to ensure all commitments are met.
8. Interest on late payments
Contracts should include that interest is payable if the agency fails to pay the production company in accordance with the contract. This is to reflect the fact that the production company will have to finance the production for the personnel and equipment it’s paid for or committed to. The rate of interest, and when it is due, should be clearly set out in advance.
9. Cancellation and postponement provisions
Unfortunately, cancellation and postponement of projects do happen and, as such, the provisions for cancellation and postponement should be agreed upon in advance so that, in the event of such, the production company may be paid all the costs it’s committed to, as well as the fees and markups that fairly compensate the production company for the work performed, time committed or other opportunities lost.
10. Choice of suppliers
As the production company is responsible for the services the supplier provides and, ultimately, the finished product, the production company should have full control of choosing its suppliers, including service and facilities companies. The production company can’t be held responsible for the output of suppliers selected by the agency, as may be required by certain products or brand specifications.
While many of these points may seem obvious, they’re sometimes overlooked or ignored completely which may result in frustration and a breakdown in the process. If production companies are to deliver on their mandate to marketers and their agencies to deliver a finished product, in which their artistry, unique skills and specialised talent fully realise the potential of the creative idea and breathes life into a marketing concept, then it’s important that the fundamental principles aren’t overlooked.