As new content demands continue to shake up traditional systems in the world of advertising, an increasing number of commercial production companies find themselves facing a pair of pivotal questions:
Should they continue working through ad agencies?
…Or would it be better to work directly with brands?
While the best answers to these questions are highly debatable and largely dependent on the characteristics of each production company, this post will take a look at the fundamental differences between working with agencies vs. working directly with brands. Our breakdown of the essential pros and cons behind each choice is designed to help you strategize an answer that’s unique to you and your own organization.
Let’s dig in.
Before we break down the specific pros and cons of working with brands or agencies, let’s take a moment to review how the commercial production process works under “typical” conditions.
Long before a commercial opportunity approaches the eyes or ears of a production company, a brand will usually reach out to its advertising agency with some creative opportunity. They may need to generate a promotional campaign to support a new product, a seasonal sales opportunity, a shift in brand identity, or to meet an incalculable number of other potential requirements.
This first step is vital in setting the goal and tone of the final product that will eventually emerge. Traditionally, production companies have no role whatsoever in this stage of the process (we’ll get to direct-to-brands soon).
Next, the advertising agency will pitch a concept and strategy to their client, the brand. Depending on the brand’s initial requests, the agency may be pitching an entire campaign or promotional direction, not just a commercial. However, it is at this step that the commercial’s creative brief begins to take shape thanks to the agency’s creative director.
In general, production companies are still not directly involved at this stage.
*Though there are nuances that can occur within a “traditional” process. An agency might ask a favor of a producer and director before they pitch the brand. One example, an agency producer might reach out to a production company to pull together a quick animation of their idea in order to get the client to say yes to their agency. The client loves it and the agency and the production company begin the job.
Once the brand approves their agency’s proposal, agency producers will reach out to directors through the production companies with which they are signed. If a director is available, they’re given a chance to pitch their take on the agency’s creative brief.
At this stage, production companies are involved in the process as managers or partners with the director. They act as facilitators, providing official bids, additional creative materials, and personal support through the involvement of the companies’ executive producers.
Finally, after a director wins the pitch and their production company is awarded the bid, the production company is given the green light to bring the commercial to life. While filmmaking itself is complex, this step is arguably the most straightforward in the entire process. This stage encapsulates what most of us think of as “commercial production.”
Once the production company delivers a final product and wraps its books, the process comes to a close. Rinse and repeat.
Now, let’s examine an alternative.
So what changes in the commercial production process when brands bypass the ad agency and work directly with production companies? Depending on the brand’s organization, the process could unfold in many variations, but the basic shape looks something like this:
Assuming that the production company is not literally replacing the ad agency (which can happen), the brand itself will start the process by generating creative direction through its in-house marketing team.
What the brand develops at this stage will usually be more complex than what’s often presented to an ad agency, but less defined than the creative briefs that agencies usually present to production companies. It’s a subtle shift, but it bears significant consequences, as we’ll see in our next step.
When bypassing ad agencies, brands will approach production companies directly. The production companies, in turn, pitch specific executions of the brand’s creative direction.
As you can imagine, this is where the process begins to look very different.
When production companies pitch directly on a brand’s creative, they’re also directly involved in the conception of the commercial they’ll eventually produce. At this stage, production companies working directly with brands take more responsibility in the overall creative process. They often have to engage in activities that agencies would normally handle, like copywriting and even campaign strategy, or at the very least, working with the brand’s in-house marketing team for alignment on those things.
If a production company wins their pitch, they’ve essentially cut out the middleman and can proceed directly to production. This stage, in theory, unfolds exactly as it would in the traditional process of working with agencies, but with one major difference:
In this case, the people who generated much of the creative are the same people who physically crafted the commercial.
*There are, of course, a slew of variations for how these dynamics can play out. Brands can choose to build a production arm in-house, while still working with an ad agency or bypassing both agency and the production company altogether. Or, an ad agency might build their own production house, cutting traditional production companies out but still hiring freelance crew. There are so many different ways relationships and jobs can manifest.
But now that we understand the basic procedural difference between working with agencies and working directly with brands, let’s jump into our pros and cons breakdown.
Working directly with brands may cut out ad agencies as middlemen, but what are the real advantages of doing so?
The most immediate draw of working directly with brands is the chance for production companies to simply make more money. By engaging in the creative process from a much earlier point, production companies are essentially performing a wider variety of tasks for which they can charge. Though the actual accounting may not be this straightforward, you could say that the production company has effectively created new revenue streams.
In other words, when working directly with brands, production companies are no longer being paid just for production.
(And that’s almost always a good thing.)
One of the frustrating realities of making virtually any kind of visual media for commercial purposes is that there are frequently too many cooks in the production kitchen. For good and very understandable reasons, brands and agencies generally have many representatives involved throughout the commercial production process, each acting as a gatekeeper and/or supervisor whose ultimate function is to protect their own organization’s best interest.
When working directly with brands, however, production companies drastically reduce the number of people who have input on the process. Working directly with brands closes the gap between initial creative and final production.The creative passes through fewer hands and is, therefore- theoretically- less prone to distortion or pollution.
For production companies that value creative, this increased level of control is a major draw of working directly with brands.
Though the role of a production company is certainly complex, that role is also relatively limited in the grand scheme of the advertising process. Under certain circumstances, production companies are largely subject to the wills of other corporate entities, but that’s not necessarily the case when working directly with brands.
Production companies working directly with brands have access to a higher level of prestige. They’re not just acting on creative supplied by an agency and filtered through a director. Instead, the production company is generating that creative themselves. As you can imagine, this can have an enormously positive impact on your professional reputation, particularly if your spot wins an Emmy or an AICP award.
And there’s a financial incentive too. In general, agencies always receive residuals, while production companies simply don’t. By working directly with brands, production companies enjoy increased access to previously un-mined sources of passive income.
Now that we have an idea of the basic reasons that a production company might want to work directly with brands, let’s take a look at a few counterpoints. Here are some of the cons of bypassing ad agencies.
While working directly with brands comes with the opportunity to increase revenue, it also comes with inherently higher costs. Production companies cutting out the agency will find themselves saddled with new overhead fees associated with the extra time, infrastructure, and personnel needed to manage the added workload on each project’s front end.
Under the best circumstances, these additional costs should be negligible. Under the worst, however, they could steadily erode a production company’s financial health.
The trade-off for having more control over a project is the extra responsibility that comes with it. Production companies that choose to work directly with brands report straight to their clients, with no buffers in between.
In effect, this means that production companies now have to work harder to cover more bases for essentially the same type of job they’ve always done. They have no organizational partners with whom they can split key tasks or decisions. Responsibility for every single action falls on the production company’s shoulders.
And, yes, that goes for mistakes too. An issue that may have previously been passed off as a minor, solvable miscommunication between all parties involved, now looks more like a clear failure to either listen or observe by the production company alone.
In the service industry of commercial production, more responsibility creates more vulnerability.
One of the major benefits of building a successful relationship with a particular agency is that the agency will be more likely to funnel new clients your way in the future. However, if a production company chooses to work directly with brands instead, its relationship with agencies will be complicated at best and nonexistent at worst.
Working directly with brands creates two significant, foreseeable consequences for the agency-production company relationship.
First, a potential source of new business is diluted or diverted altogether. Ad agencies have little motivation to share clients with production companies who have a history of cutting them out of the equation, especially so if there’s any concern that the production company might poach the client’s future business.
Second, the production company becomes more intensely reliant on individual client relationships. Winning repeat business from individual brands is a key to both financial stability and healthy growth for any production company, but it’s a matter of survival when there are no agency contacts in the picture.
You could say that strong agency relationships offer a kind of long-term security to a well-run, traditional production company. Without them, a production company takes on a higher degree of risk.
For production companies, working directly with brands is a complex but feasible strategy in the current content ecosystem if they take the time to ask the right questions. The above list of pros and cons is by no means exhaustive, but it should provide an entry point into your own deliberations.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.