The Changing Landscape Of Advertising

For a supposedly creative and progressive industry, the advertising world has been a traditional rule-bound environment for decades. Now radical change in the form of new technology and the insatiable demand for content to put on it is breaking up the old advertising landscape – borders between agency, production company and post house are being breached and the market’s various players are caught in a land grab as they renegotiate their roles in an unsettled industry.

But Danny Edwards finds brave industry leaders facing this uncertain future without fear, enthusiastically embracing a new opportunity to do what they’ve always done – make great work

Things change, that’s an immutable fact of life. And of business. Evolution is the key to success and adapting to the changing world around you is something most of us understand as a given. Most businesses, including advertising, alter over time, and certainly the last decade or so has seen technological innovation progress so quickly that not to embrace at least some of that change would almost certainly mean the death knell for any business, especially one in the creative sector.

Yes, change can be good, but it can also be scary and somewhat challenging. Change can also be slow, and sometimes it can be resisted because, well, as the old adage goes, ‘If it ain’t broke, don’t fix it.’ Whether something is broken or not is a matter of perception; whether you can fix it depends on the tools you have at your disposal.

Advertising has worked in the same way for, give or take, the last 50 years: a client wants to advertise, it hires the agency it sees as best able to fulfil its brief, the agency comes up with a great idea and strategy and then – because more often than not the idea has a filmic element to it – hires a director via a production company, which in turn works with post, editing and sound houses. Simple. Effective. Standard operating procedure. That method suited everyone for a long time and it has birthed a cavalcade of memorable, award-winning work.

That method still suits much of the industry but, more and more, it’s a process that’s being eroded. That traditional production narrative can no longer be taken as a given. Many agencies now have their own in-house production companies; production companies can often work directly with clients, circumventing the agencies; post and VFX houses have creative divisions that collaborate directly with clients to produce work; some production companies are now even able to provide a creative offering within their business. So what does this all mean for the landscape of the advertising industry and the traditional production model, and why has this breakdown of the old order happened?

“It got to the point where we had to offer an alternative solution to making videos,” states managing partner and chief production officer at BBH London, Davud Karbassioun. “We were making £2 million global films as well as £5k promo videos and it became apparent that our clients needed more video at a completely different price point and which also had a different purpose; not just cheap TV ads but good content for online distribution.”

BBH, with Karbassioun and executive producer Anthony Austin at the helm, launched their in-house production arm, Black Sheep Studios (BSS), at the start of 2015 as a way to meet the demand for low-cost quality video content. They were careful to work out where BSS would sit in the production ecosystem. “It was important to create something that was a complement to the [traditional] BBH production system,” says Austin. “We didn’t want something that was designed to take over production and become the new way of making things. BBH production is still alive and well and all of those partnerships and relationships [with external production partners] are still there.”

Crossing the lines in the battle for content delivery

This thinking is repeated at most creative agencies. The demands of clients wanting more content at a lower cost meant change was inevitable; the lines between what agencies, production companies and post houses can and should do have blurred. “The nature of content has changed, and with it the rules of engagement,” says Dermot McPartland, creative director at VCCP Kin, VCCP’s in-house production arm. “We’re producing more content at a faster turnaround rate and on more challenging budgets, so the content providers have had to evolve so they are fit for purpose. There are no ‘lines’ anymore. Whoever holds the client relationship feels they are best placed to deliver the content.”

“The deliverables, the volume, the time and the money have all changed,” says Sally-Ann Dale, chief creation officer at Droga5 in New York. “Our in-house studio has made it possible to keep up with the parameters of faster and cheaper, while still meeting the demand for work that is engaging and effective. Inevitably, this has meant that, out of the 40-plus skillsets that make up [our business], some of them have to, albeit very slightly, blur. Some production companies are now working directly with clients. Post houses are doing more too, and overall our relationships with each other have become more flexible.”

“The spaces available for advertisers have remained consistent for a long time,” adds Spencer Dodd, managing director at production company The Sweet Shop Europe, “then along came the internet and everything changed. There’s now a host of different platforms available [and] this shift has created a demand [from clients] for a level of output far beyond what previously existed. It’s provided those who couldn’t traditionally afford to advertise on TV with a space to publish branded films.”

So it’s purely down to client need that the industry is changing? “It’s changing,” states Robert Campbell, founder of production company, Outsider, “because content is king. Because there is so much of it needed to fill every single vacuum [and] somebody, somewhere has to make it and agencies have seen that as an opportunity. I mean, 10 years ago, who would have dreamt that VW would be making films about the workings of their air conditioning or new active suspension systems? So now you’ve got people knocking out 15 grand’s worth of content showing someone how a fucking seatbelt works.”

Content is indeed king and, as far as creative advertising is concerned, has always been so, but with a recent Cisco survey predicting that 75 per cent of mobile content will be video by 2020, the speed at which clients are demanding that content is ever-increasing. What isn’t ever-increasing are the budgets allocated to these projects and that’s, in part, where the beginning of this new blurred-line approach to production originated.

The money assigned to many of these online-only content projects is limited, to say the least, and there’s a tacit agreement that in many cases it wouldn’t be worth a traditional commercial production company’s time to take on such jobs. Plus, agencies are being more shrewd about what they can achieve in-house and how much they spend on production. “We learn through watching rather than reading now,” explains Ben Hampshire, executive producer of Rogue Films’ car-specific production arm, Carnage. “So brands are expected to produce a gazillion hours of content every month… which is why agencies have put these [in-house production] units together. I also think that within the agency model there’s an imperative from their holding companies to not let the millions of pounds they spend on production go [out of the business].”

Pushing out production companies or opening doors?

The worry for some production companies is that those in-house agency production arms might, sooner or later, decide to take more of the production action. “Well,” adds Hampshire, “there’s definitely more work to do but there’s no doubt that as they get better they’ll eat more and more of that production company cake.” Steve Davies, chief executive of London’s Advertising Producers Association agrees that there’s a risk of APA members being short-changed.

“The issue for our members is that they’re in a very competitive market and there’s too many of us fighting for work. If agencies start doing a chunk of that work in-house that’s going to be a chunk of work taken out of the market. Agencies might say to me that their clients have some quick turnaround stuff that they want them to do, and that they can do efficiently, and if they’re going to do it for that reason then that’s entirely their business, but a concern for us is where we see them doing bigger and more creative work that we think could be done better by production companies.”

Anthony Austin’s counter argument is that the new model is not necessarily a competitive one for traditional production companies, at least not always, but more of a gateway for a different type of collaboration. “We don’t have in-house talent at BSS,” he says. “We don’t have a director roster, or producers, so we build talent around a job: directors, editors, producers… all those people. We’ve always tried to say to production companies that this is another way for them to engage with BBH, that this isn’t necessarily a competitive offering, just a different type of doorway.”

It’s understandable that production companies would be nervous about agencies impinging on their core business, as Davies suggests. But on the other hand, the evolution of any business is a natural process and many would argue that you either change or die. “It’s about how we all adapt to this changing landscape,” states Alan Traquair, executive producer at Burger Films. “More and more clients are taking the work in-house so it’s not just post and production companies that need to adapt, but the agencies too.

But it’s not a time to panic, it’s better to hold fast and continue to make great, strong creative work, as that’s our USP. Budgets are shrinking, the industry players expanding and more boutique agencies, production companies and post houses are vying for their place at the table. I think the days are gone when you could start a business and limit yourself to one discipline. The ‘above’ and ‘below’ lines blurred a long time ago and so has the essence of production. This could be seen as a negative from some people in the industry, but I disagree. We work in an evolving industry and should be excited about that fact.”

Production companies such as Rogue Films have recognised this, which is why Hampshire is now on board as the EP of Carnage. “There’s so much more that production companies could do but don’t at the moment,” says Hampshire. “My pitch to Rogue was, why not think about a specialisation? We’ve got the [directorial] talent, we’ve got a through-the-line offering behind the scenes and brands are attracted to this idea even though we haven’t started to market it properly yet. It’s also bringing the post production mentality of ‘You’re our client, don’t worry about it, we’ll fix it,’ rather than being a top-end production company that says ‘We’re not going to get out of bed for less than £400k.’”

Caviar Content’s managing executive producer, Sorcha Shepherd, agrees that change is inevitable and must be embraced. “We can’t stop progress so we should accept that there is room for and a need for these blurred lines to exist. Caviar is constantly evolving and we’ve been creating non-branded content for a while, everything from feature films, TV shows webisodes and beyond. We aspire to produce content of the highest quality and more and more film, TV and advertising content will overlap.”

One shop that has set its stall out as an evolution of the traditional production company is Pulse. “Pulse was set up with the sole intention of telling stories across different mediums,” says James Sorton, Pulse’s MD for commercial and music videos. “It was never just a commercial production company and we don’t refer to ourselves as a production company, but as a studio.

Our perspective on [the changing landscape] is that this is an opportunity for people to work together in a different way. I mean, at Pulse we also make movies but there’s never just one production company in that situation, you might have five producers from five different production companies who’re all bringing something to the table, be that a creative vision, strategy or finance.”

Missing out in the middle of the road

It seems companies need to embrace the new, but what are the dangers of neglecting the current model? There’s a consensus, even among the most forward-looking production companies, that there will be hard times ahead for two distinct groups: new directors and (the slightly patronisingly named) mid-level production companies. An integral tenet of a traditional production company is the nurturing of talent because that talent is the company’s true USP.

Many in the production world think agencies and agency in-house production arms are not concerned with investing in or nurturing that talent. “We think of ourselves as a talent incubator,” states Pulse’s Sorton. “We invest in talent right from the beginning. An in-house agency arm – I don’t think that’s what they’re interested in.”

“What bothers me most,” adds Caviar’s Shepherd, “is that traditionally we have used smaller budget pieces to help build young directors’ showreels and give them experience. Without this, young directors are missing out on great opportunities to develop.” But production companies aren’t the only ones worried about this. “An area of concern is if agencies decide to keep low budget jobs in-house, what scripts will production companies have to give their up-and-coming directors?” asks Droga5’s Dale. “What will happen to the cycle if we stop cultivating great directors?”

As for the so-called mid-level production companies, they seem potentially exposed to the harsh realities of the new way of working, being neither small or nimble enough to create the low cost, fast turnaround work, nor having the requisite talent base to attract high fee paying clients.

“You have the smaller companies doing the low budget, quick turnaround stuff,” explains Outsider’s Campbell, “and then you have companies like Blink or Outsider doing the top-end, beautiful, well crafted work. And then you have the median, and right in the centre of that, you have the ultra-median. Those people are getting close, cost-wise, to the companies at the top but the quality isn’t there, but they’re much more expensive than this lot at the bottom.

These are the people who will suffer because they are relying on some of that work that agencies are now taking in-house. That’s where you don’t want to be at the moment, in the middle, because you have to have some sort of speciality.”

One man’s land grab is another man’s evolution

One area of the business that does have a speciality is post production. Replicating what’s achievable in such places as The Mill or Electric Theatre Collective (ETC) is almost impossible for production companies and agencies alike because the skillsets and equipment needed aren’t something they have access to. The post companies themselves, though, have an array of talent and experience in their midst which enables them to become originators as well as facilitators. This blurring of lines means the question of an ongoing ‘land grab’ across traditional work boundaries rears up again.

Mill+ is The Mill’s “content-driven collective” and has created a number of start-to-finish commercial projects, but Oliver Allgrove, Mill+’s executive producer, denies that they’re somehow impinging on other companies’ work. “There is no land grab. It’s just being evolved as a creative company. It’s just being the most adaptable, flexible creative company you can be, because everybody has to be.

The Mill is a company that survives on understanding and motivating technological advances in filmmaking and out of that comes a natural consultancy side, particularly in things like VR and interactive technology. Some of that is servicing [in the traditional sense] and some of it becomes, ‘Can you do this for us from beginning to end?’ It’s a natural evolution.”

MPC Creative, part of MPC’s offering, aims to use the company’s talent to create “spectacular visual experiences”, says Ben Cyzer, MPC Creative’s head of creative strategy. “MPC Creative is a vehicle that allows us to enter into these new and exciting spaces and use our talent to create experiences that are innovative and at the closer end of origination, rather than just execution. I’d say that MPC Creative, in our mind, is the future of what a production company should be, and by that I mean that it’s multidisciplined.”

So the future of the business is that companies need to offer a diverse range of services? “I think that everybody is trying to find efficient ways of delivering a client’s needs and that naturally leads to many businesses trying to offer additional services to their core offering,” continues Cyzer. “Visual effects will always be at the core of MPC but I think our business will become more integrated and the lines between post production, creative services and origination services will blur.”

ETC, too, can no longer be defined as simply a VFX house. They have talented people working on projects that have no real client and don’t fit easily into a pre-defined box, such as the recent Leo’s Red Carpet Rampage, a mobile game created by in-house team, The Line, which launched just before this year’s Oscars ceremony Executive producer Alex Webster states that ETC is taking a proactive stance on its future direction and identity. “Rather than waiting for a brief to land on us from an agency,” Webster says, “we’re now looking at the market and trying to understand where the holes are and how we can fit within them.”

Webster also thinks that, as much as post houses and agencies might be treading on the toes of traditional production companies, there’s a possibility of post and production companies taking work from the agencies in the future. “We’re going through a period of profound change,” he says, “and the interesting bit will be what happens when post houses and production companies get into strategy as well.

There is a whole generation of people who have grown up within the industry where traditional rules clearly define who does what, and within that ecosystem you knew where you sat and you knew where your role started and finished, and that’s the bit which is now being eroded. But there’s this growing comprehension that the world is different and for us all to survive and find a place within it we’ve got to make our own rules.”

Taking comfort in the growing demand for content

At the moment, those rules are still being tested. To a large degree there are no rules, which makes the landscape very exciting, or very scary, depending on your outlook and how well future-proofed your company is. The one thing everyone agrees on is that the sector of the business that benefits is the one at the top of the tree – the client. With a vast array of companies offering a multidisciplined approach, the choice of who they work with and on what has grown enormously.

The need for content, whether that’s a VR film, an online video or a 60-second TV commercial, is the other thing that’s grown and, for many, that’s the most important element. “If that wasn’t the case, we’d all be fucked,” concludes BBH’s Karbassioun. “We’d all be thinking, ‘Maybe I should learn how to code.’

But filmmaking and video is proven on every level to be the increasing form of communication, the increasing form of entertainment. So, that’s the thing that I would say to anyone in our industry. That we should celebrate that immediately and go out there and make great work.”