There are two standard payment arrangements supported by the SPAA when it comes to paying for advertising film productions in Australia.

1. Pay to Estimate - the most common method.
2. Cost Plus - an alternative many are unaware of, or have heard disaster stories that make this seem only for the brave hearted. Let's define the two alternatives.

Method 1: Pay to Estimate: The agency briefs the film company on the project and the film company comes back with an estimate to produce the scripts. On approval of the estimate the advertiser pays the agency 50% of the film company costs prior to the shoot. (You may also be asked to pay 50% of the agency's estimated costs up front.)

Then the 50% balance is invoiced on delivery of the final master, to be paid within 30 days. With this method, the agency and advertiser cannot audit the film company or claim a rebate for any unspent funds once the estimate is accepted.

Advantage: The film company declares their profit margin, which resides under the heading "production fee" on their estimate. With this method you know what the film company's cost is before you start. This does not mean that the final cost will not be higher if you make changes to the brief during the production, but it does mean the film company will carry the cost of any unforeseen problems that may arise.
Disadvantage: Any film company that has been in business more than a year knows the idiosyncrasies of both agencies and advertisers and will factor a margin into their estimate to cover these predictably "unpredictable" factors. However, trouble can also arise when the film company has a profit share incentive above and beyond the standard director and producer fees, which encourages extra profit taking. Take the film stock budget. A prudent director can shoot well under the allocated film stock by exercising restraint. Using less stock than estimated means less processing cost, less telecine cost and less digitizing costs. The result is the film company profit increases.

Options: Ensure that before an estimate is approved it is thoroughly and critically reviewed. Identify all contingencies within the estimate and ensure the film company and agency justify any excessive costs.

Method 2: Cost plus: This alternative has the film company quote the job with an agreed markup or profit margin. On completion, the film company has to disclose all their actual costs then the mark up is added. In this case the advertiser and the agency have the right to audit the film company costs.

Disadvantage: It's in the film company's interest to spend as much money as they can with their suppliers, as this will increase their own profit margin. A savvy director can shoot well over his or her allocated film stock budget to drive up the profit.

The stock budget overrun (along with the crew overtime required to do so) is often justified with "We had to do sixty takes to get the magic we were after".

Of course, the advertiser never gets to see the fifty-nine takes that weren't quite "magic" enough. Nor do they get to make up their own minds as to whether the "magic" is all that "magic' after all, whether it was worth all that extra cost, and whether it makes the communication any more effective?

Advantage: At the end of the day you only pay for what was spent on the production plus the pre-agreed profit margin for the film company.
Options:

The only way an advertiser can win with the Cost Plus method is to have their own watchdog at all stages of the production, questioning unnecessary costs. It goes without saying that the watchdog has to know production inside out and that some tension in the process is inevitable but manageable.
Conclusion

Many of the production choices made not only have a huge effect on budgets they are also incredibly subjective. The best way for an advertiser to curb costs is to articulate precisely what they require and leave nothing up to subjective interpretation, because many suppliers making a subjective choice on the advertiser's behalf will always chose the most expensive alternative.

Author: Darren Woolley

Hopefully going to tender for a new agency is a sign of growth or expansion rather than a sign that the wheels have fallen off the existing relationship. But no matter what the reason for pitching your business, there are some key considerations that need to be made before you go to pitch.

1. What do you hope to achieve?

Often when a pitch process becomes protracted or stalls, it is because the pitch team disagree on the desire outcomes or at the least the selection criteria for the agency.
A fundamental step before any pitch is to clearly articulate and agree the desired outcome in detail and the selection criteria essential to achieve that outcome.
These should be developed in clear and quantifiable measures, not just vague platitudes.

2. Do you have the time?

Most clients usually underestimate the amount of time required to run the pitch. Typically, a review of eight agencies to a short list of three for a strategic or creative presentation can require 600 - 800 hours of internal head hours depending on the size of the agencies and the account, the scope of the review and the levels of approval.
3. Is it worth the cost?

Time is money and never more so than in a pitch process. All of the hours are head hours taken away from productive, income-generating activity. When we discuss this with many clients, they are shocked at their cost. It makes the fees charged by pitch consultants seem like chicken feed.
On the agency side, many agencies have been known to invest tens and hundreds of thousands of dollars in a pitch, often on the production of theatrics alone.
So why do they do it? Because you've got to be in it to win it.
4. Will it be fair and equitable?

Everyone has a story about a pitch being pre-determined, or one agency having the inside running because they know a key client decision maker. Likewise, advertisers have been known to run a pitch purely as a way to negotiate a lower remuneration rate with the incumbent. Or to go to the market to spot check the current rate they are paying.
With any tendering processes, there is a responsibility to act with due diligence and integrity.

5. Is it worth the risk?

To get any sort of meaningful result from a strategic and creative pitch means a client has to expose the potential suitors to details about their business and their brands.
Even with confidentiality agreements, this information could be exposed to your competitors during the pitch process, or even be used by unsuccessful agencies in presenting their credentials following the process.

But the main cause of security risk is the large number of external suppliers that come and go through the various agencies during the pitch, such as print reps, always looking for some valuable information to trade.

Author: Darren Woolley

An article titled "Marketing Reality Check: Blogs, Pods, RSS" recenty appeared in AdAge in the US.

The article by Abbey Klaassen, published August 20, 2006 said that "The Reach Most Marketers Crave Still Comes From TV, Print and Internet Ads" as if this is somehow ground breaking news.
As proof it provided research summaries such as:

"According to Jupiter Research, 7% of American adults write blogs and 22% read them; about 8% listen to podcasts and 5% use RSS feeds".

"According to a separate study by WorkPlace Print Media, 88% of the at-work audience doesn't even know what RSS is".

"Recent data from word-of-mouth research group Keller Fay indicate 92% of brand conversations were taking place offline -- far more than the commonly assumed rate of 80%".

"Only 1% of the country's 210 million mobile-phone subscribers said they choose service providers based on entertainment options, according to Jupiter Research"

"A study by Frank N. Magid Associates, 66% claim they never watch video online and 41% never listen to or download free music online. When it comes to paid content, 84% have never paid to watch or download video and 71% never pay to listen to or download music. Sixty-nine percent never use social-networking sites, 71% have never posted a comment on a blog and 79% have never written their own blogs (though 15% do so frequently)".

"Pew Research Center for the People & the Press surveyed 3,204 adults and found that those who logged on for news spent an average of 32 minutes online daily, significantly less than the time the same group recorded for other media sources -- 53 minutes watching TV news, 43 minutes listening to news on the radio and 40 minutes with a newspaper".

The conclusion is "We understand that while they're powerful new tools, the bulk of human interaction is still high-touch rather than high-tech," said Brad Fay, chief operating officer at Keller Fay.

But the problem with this whole article is it is a prime example of the Heisenberg uncertainty principle from quantum physics. Here you are presented with a whole lot of data about penetration of new technology into a market place at a point in time, but nothing about the trend in uptake in the technology.

Of course not all new media opportunities will be embraced by the population. But the internet and digital technology is changing the communication and marketing opportunities faster than ever before. For marketers to embrace the opportunities these media present they need to have in place rigorous measures to monitor effectiveness and calculate ROI. Otherwise you could quickly find yourself throwing good money after bad with no real insight or learnings.

Author: Darren Woolley

For anyone that has been through a pitch to select a new creative or media agency, one of the key issues is managing the industry and managing the media.

Just look at the recent Myer media pitch, which is currently underway.

The pitch makes ideal news because there is invariably going to be a winner and losers. But while many advertisers and marketers take a silent approach, it is actually much better to spend time planning the process and the way you are going to engage the media and industry to minimise the feeding frenzy that occurs and ensure the best possible outcome.

The problem is that very soon after the news of the Myer media review broke there were headlines such as "Singleton pressed to cut its fees" and "Melbourne agencies prepare for battle" with the corresponding industry chatter.

I think I received more than twenty calls in two days asking me if I knew of or was working on the Myer creative pitch so I can only imagine how many calls the Myer marketing department received from agencies wanting to get in on the pitch.

This is a distraction that any marketing department wants to avoid.

The way to manage this is to:

1. Have media liaison plans in place to handle all media enquiries quickly, rather than avoiding the problem and hoping it goes away

2. Have a standard response for all enquiries to the marketing department. Even consider appointing someone to handle all of these enquiries or if you have an pitch consultant, refer all enquiries to them.

3. Brief all staff on an appropriate response so that if they are contacted they have something to say that reinforces the agreed position.

By the end of the week Myer had their act together with headlines such as "Singleton hangs on to Myer retail account", "MYER RENEWS SOM CONTRACT, BLASTS "CRAZY" PITCH RUMOURS" and "SO&M retains Myer" filling the trade press and hopefully hosing calming the creative agency feeding frenzy triggered by the media review.

Author: Darren Woolley

The agency has convinced you that U2's "Joshua Tree" will make your TVC an anthemic masterpiece. And let's say U2 actually sold the rights to their music for advertising (which they don't). And let's suppose they (unlike The Beatles) sold both the publishing and master rights to anybody with enough money to buy them. What happens next?

The agency contacts the company that has the PUBLISHING rights to the song. They inform the publishing company what product you're selling, duration of the campaign, territories the campaign will run in and mediums you intend to use (TV, radio, cinema etc). They also contact the company that owns the MASTER recording rights to the track.

Here things can sometimes become tricky. The Beatles for instance will sell you the publishing rights to their music but not the master rights. So you can buy a song and get someone else to perform it, but they are not allowed to sound like the Beatles (this is known in the industry as "passing off" and is legally prohibited).

Or let's say you have chosen a track that has both the Publishing & Master rights up for sale and you negotiate one fee with the publishing company and another fee with the holders of the master rights and at the end of both written quotes are the words "Most favored nation rights apply" which means if one fee is higher than the other then you have to pay the higher fee to the holder of the other rights even though they quoted you a lower price.

Also when you purchase the rights to a piece of music it is usually non-exclusive beyond your product category. So you may find that your car commercial is sharing the same song as a shampoo commercial (although this is not a common occurrence and is directly related to how much you spent on the rights in the first place).

Ultimately, music negotiations can take some time so if you want your agency to get the best possible deal make sure they have reasonable lead time. Let the publisher know that their particular composition is one of a few you are considering (competition real or imagined always leads to keener pricing).

Music can quite often drive a TVC and become synonomous with a product or company, so it is important to get it right. Don't let your own emotions drive your choice or expenditure without finding out exactly what your target demographic thinks about the proposed piece. Then you need to consider what the options are, and what is the most cost effective.

Author: Darren Woolley

The benefits of sending and receiving artwork files and corrections electronically are clear to anyone familiar with this process. Not having to rely on couriers, where expenses can be high, poor delivery times and occasionally lost artwork.

Adobe PDF files are now commonplace when sending and receiving digital files by e-mail or the Internet. But how accepted is this process and the actual file to the end users, and what are the advantages and disadvantages of approving artwork using traditional email?

How reliable is email?

When you look at it, using conventional email for artwork approval is not that different to sending a hard copy proof, but it comes with its own set of issues. Email is primarily a one-to-one communication method, although you can address the message or file to many people. The process however is still the same as sending proofs. You send an email with artwork attached, hope the person has received it and has been able to view the file on their screen (without possible firewall corruption, file size limitations, or software compatibility issues).

Managing versions

If they can open the attachment, each stakeholder makes his or her comments before e-mailing those comments back for revisions, then the artwork is reissued. Now, unlike a hard copy proof, there can be multiple copies of the artwork and multiple copies of multiple versions.
But what if not all of the comments from the previous version are returned? Or what if comments from different stakeholders conflict? Having various versions of the artwork 'out there' can lead to confusion and delays, exactly the opposite benefit of electronic artwork.

How reliable are pdfs?

Viewing files on screen is very different to that of proofs because monitors are colour calibrated differently and all are displayed in red, green, blue (RGB), while the printing process is always cyan, magenta, yellow and black (CMYK).

This raises the question of whether electronic proofs can be of sign-off quality? In the black and white area, this will be accepted in 90% of all cases, particularly with standard documents such as those used in government, legal and education, but for high quality print, a hard copy proof is irreplaceable.

Size and resolution force you to choose to view the overall composition (zoomed out) or relish the fine detail (zoomed in) but never adequately both, simultaneously. Colour and contrast consistency is irrelevant, since set-up of the viewing monitor and the environment in which the monitor is placed can be vastly different in each case.
The alternatives

There are some very clever and simple to use programs in the marketplace that unlike traditional e-mail, can make getting artwork approved easier, simpler to track and manage the entire process. These systems are generally collaborative. They allow extensive tracking of your job, its progress, and who's doing what, eliminate firewall and file size limitations, make those involved accountable and therefore continue to lower costs and reduce turnaround times.

Author: Darren Woolley

Many advertisers like to attend the shoot of their latest commercial.

Here is an example of how it can horribly wrong which you can view on YouTube.

It is part of a short film called "The Reel Truth" which is available on DVD from Amazon.

Worth viewing before you attend the next shoot.

Author: Darren Woolley

There is a great DVD at Amazon called "Truth In Advertising" where the actors say what they think instead of saying what they usually say.

Very funny and very insightful. It is a fun way to remind yourself of what not to do.
Check out a snippet of the video on YouTube here.

Author: Darren Woolley

One of the biggest problems faced by advertisers in relation to production costs is the judgment call on quality.

It's like selecting wine in a restaurant. Most people who know nothing about wine and are afraid of being exposed as ignorant or uneducated to their fellow guests (or even an intimidating waiter) will chose an expensive wine believing that cost equals 'best'.

If someone else is paying, then the "It's not my money" syndrome comes into effect. This has been known to affect an advertiser's own staff just as much as the agency or film company.

At the center of this is a culture that believes the best product is made from the most expensive ingredients.

The truth is that the best product is made with the right ingredients, not always the most expensive.

Without any research, quality control or benchmarking, many people resort to applying the wine in a restaurant rule, and who ends up picking up the tab at the end of the meal?

The advertiser.

Author: Darren Woolley

This case study is an amalgam of incidents we have encountered and illustrates how an advertiser can spend more than twice their budget on a tv production.

The brief
: The client provided a brief for the development of a major tv production to be utilised over the next two years. A production budget of $300,000 was specified.. The on-air date was 12 weeks ahead.

Creative development
: The agency developed a numner of concepts over the following three weeks that were presented for approval. The advertiser accepted one concept and rejected the others as they were off-brief. The agency was asked to develop additional concepts as the current practice of the advertiser was to concept test before committing to production. The agency developed additional concepts over the following two weeks, which were presented and all three concepts went into research.

Research:
After two weeks of testing, the results of the research indicated that the original concept was clearly the one preferred by the target audience. This concept was then approved to proceed to pre-production.

Quoting:
The agency provided the showreels of three directors for approval. These were approved for quoting. An estimate for $750,000 was presented almost two weeks later. The competitive estimates were within $20,000 of the recommended estimate. There was now just 4 weeks to the on-air date.

The options:

1. The advertiser asked the agency to obtain further quotes. The agency responded that this would take time and already the production schedule was tight. The agency maintained that this concept required a highly skilled and therefore expensive director to do the concept justice.

2. The advertiser asked the agency to re-look at the estimate and see what saving could be negotiated. The agency returned 48 hours later with a $25,000 reduction, declaring the estimate had been cut to the bone.

3. The advertiser concidered asking the agency to prepare another concept that was within budget, but rejected this as it would require research. In the end that advertiser had no option but to approve the production at $725,000 and bought forward funds from future media to accommodate the difference.

Recomendation:
There are a number of steps the advertiser could have taken to manage this process more effectively. The three most obvious are:

1. Have a schedule prepared at the time of briefing and before media is booked, that takes into consideration the time required for all stages of the project including: concept development, research, approvals and production to avoid running out of time and options.

2. Ask the agency producer to provide a "Ballpark" production estimate at the time the concept is presented or at least before any concept research. Inform the agency producer that you will require the "ballpark" estimate to be within 10% of the final estimate.

3. If the agency believe the solution cannot be achieved for the budget, ask them to support this by presenting concepts that can be achieved for the budget as well as their preferred concept. In this way the advertiser can compare the quality and suitability of the proposed solutions before committing to the additional budget requirements.

Author: Darren Woolley

I picked up Paul Arden's book again for the hundredth time and was flicking through it when I discovered Paul Arden appears to be a huge fan of scam advertising as a way to win creative awards and build your reputation?

In his book, "It's not how good you are, it's how good you want to be" on page 99 he gives Junior Account Handlers instructions on how to defraud client funds to pay for speculative creative ads that if the client doesn't like you can run yourself on an Irish radio station and then enter into awards for fame and fortune.

Makes me wonder if any of his creative awards were for scam advertising.

Sure, scam advertising appears to be largely a thing of the past with all major award shows cracking down on it five years ago, but for a industry that often struggles for credibility with clients, this coming from such a luminary is very disappointing.

Author: Darren Woolley

Statistics are an important tool in analysis data, but often stats are misrepresented to give the impression the publisher wants to convey.

The recent "Media Buyers Survey" from Free TV Australia has some interesting stats. Based on an online survey of "around 100" media buyers from "Australia's top media agencies" the survey is a measure of the perception the media buyers have of free to air TV, which is surprisingly similar to the information provided on the Free TV website.

The question is, does the Media Buyers Survey support the facts about the performance of Free TV or the marketing ability of Free TV Australia to influence the minds of their audience, the media buyers of Australia.

What do the advertisers themselves think? After all, the advertisers are the ones that are actually paying for the media, the media agencies are just advising and placing the media on their behalf.
I am not questioning the performance or otherwise of FTA TV, but I do object to the sloppy use of statistics to support a case, where the sample size and selection process is either misleading or flawed. There are standards for the design, analysis and presentation of survey statistics supported by the Australian Statistician.

On page 3 of the report they have a chart of "Household penetration of technology" that is referenced to their own estimate and various sources but no date. Then the balance of the report provides the response to very loaded questions like "Television is the best way to reach grocery buyers with children". Was this the question to which they agreed or disagreed? Were they given a number of options, like agree, strongly agree, disagree, strongly disagree? Or was the question, please rank these media buy their ability to reach grocery buyers with children.

The results were mostly given as a percentage. But then only 86% had an opinion on page 9 as to if Free-to-air TV strengthens the performance of other media. Does this mean only 86% of people understood the question, or had an opinion, or did only 86 respondents answer it? We may never know because none of the axes were labelled.

Before you believe any statistic, make sure you understand the methodology, the result and the significance of the result.

Author: Darren Woolley

In yesterday's Australian Financial Review on page 52 in the marketing section, Neil Shoebridge reported that DJs has reappointed Team Saatchi and in the process employed the Creative Director - Andrew Henderson.

Damian Eales from David Jones said "Andrew's a strategic asset for our company, so it makes sense for him to work for us directly". That makes business sense. But what is the difference between contracting Andrew through the agency and employing him directly?

I worked with Andrew in 1987 in Melbourne agency Mattingly and Partners when we both commenced in the advertising industry. I wonder now how Andrew feels being employed by his client but working still within the agency?

Perhaps this is the start of a new remuneration model. With the move to resource based retainers based on direct salary plus overhead (including indirect salary costs) perhaps David Jones has found a way to reduce their agency remuneration.

If instead of paying the direct salary costs of your retained agency resources, multiplied by the overheads (utilities, rent etc 50% - 70%) and the indirect salary costs (admin, finance staff etc 30% - 40%) plus profit, perhaps the model is higher all the agency staff direct and pay the agency just the overheads to accommodate them and save yourself the 30% - 40% indirect salary costs.

Mind you, it does mean that suddenly all these agency people appear in your head count. I guess it is just a case of wait and see if this works.

Mind you, it is not the first time DJs have done this. They have been retaining Ted Horton's services for years.

Author: Darren Woolley

A friend of mine, Shawn Callahan from Anecdote, drew my attention to Lovaglia's Law and sent me this link.

Lovaglia's Law: The more important the outcome of a decision, the more people will resist using evidence to make it.

It got me thinking about how this applies to marketing. Especially as in a recent Adage audio interview with Greg Stuart, co-author of the new book "What sticks", he says that "the practice of basing advertising-campaign decisions on gut instinct rather than scientific research is responsible for the massive waste of marketers' money".

Is Lovaglia's Law the driver that will often see marketers reject research that does not support their beliefs or "gut instinct"? Or commission research with a predetermined outcome to support their decision?

Occasionally after benchmarking or reporting an obvious cost savings that can be achieved in their advertising spend, we have seen marketers ignore the recommendations based on "gut instinct" rather than minimize their exposure to failure through adopting our recommendations.

Author: Darren Woolley

It is interesting to think that marketing and especially advertising are one of the few professions that has a department dedicated to "creativity". So much so that many advertising agencies even have a department called the creative department.

More interesting is that the structure of this creative department has not significantly changed in most of the major agencies in more than forty years. Today, writers and art directors are still teamed together under the management of the creative director just as they were first done in the 1960s.
While many would say "If you are on a good thing, stick to it". But perhaps it is more a measure of the attitude of "We have always done it that way", one of the key drivers of the status quo.

There is a great story I was emailed and you can read in our December 2005 P3 e-news about the ramifications of this attitude.

For proof this attitude is alive and well in the advertising category, only two weeks ago at the Advertising & Marketing Summit in Melbourne, a CEO of one of the major agency networks suggested there was a lot to be said for the old media commission system. The same system thrown out by the advertisers almost ten years ago. Seems even when things do change, not everyone moves on.

Author: Darren Woolley

With the increasing role of procurement in the marketing category, it is funny to witness some of the mistakes they make in this area. Don't get me wrong, I think procurement has a valuable role to play in bringing process rigor, accountability and transparency to this category, but unless the procurement professional has a deep understanding of the category they can be quickly made to look a fool.

Here are three great traps for the uninitiated:

1. Many time we have seen RFTs and draft contracts sent out during the tender process that have absolutely no relationship to the engagement of a professional services supplier. Usually what has happened is the procurement professional has selected a "standard" supply contract or RFP full of references to plant and equipment and contingency plans for the failure of the same. Imagine sending this type of contract to your lawyer or accountant? The advertising agency, and especially the incumbent, is looking for any opportunity to demonstrate how out of touch or irrelevant procurement is to the process, don't give them any ammunition.

2. The cost of acquisition or cost per transaction is a great measure if you are comparing like with like. Unfortunately much of the media and services purchased are not like with like in the advertising space. I had a procurement team ask my advice on the calculations they had run on the number of media transactions during the year against the media budget. The figure they arrived at was totally meaningless as the cost per transaction of a Zone 1 TV spot was being compared with one of 30 run of station radio spots. Measurement is good and insightful as long as you understand what you are measuring.

3. Agency remuneration is often a point of contention between the advertiser and the agency and the procurement depart has much value to add in this process of developing a fair and equitable remuneration. But it is surprising how little many procurement people do not understand the drivers within an advertising agency. Of course agencies, like all businesses need to make a profit, but many agencies will sacrifice profit (reluctantly) for the opportunity to do great creative work. Understand the agency and what drives it and you will develop better remuneration that foster the relationship, not just lower the cost.

There are plenty more to tell. Let me know your examples of funny procurement stories. Or to hear more come to the CIPSA conference in Melbourne in October.

Author: Darren Woolley

While many marketers may argue that they need to have the flexibility to react to the market place, this is certainly no excuse for the lack of a marketing communications plan.

Some marketers have even countered that there is no point planning, because the plans are out of date before they are even completed. This represents a marketing department that is totally reactive with little or no strategic planning, yet often responsible for spending millions of dollars in the provision of marketing communications.

With the move to resource based agency remuneration, the agency needs to understand the scope of work for the coming year to they can estimate the level of resources required.

However, some marketers are unable to provide a scope of work because they do not have a plan. Instead in these circumstances, the marketing department, like the agency, is effectively providers of advertising services, rather than strategic partners.

But what is the cost to the advertiser? In our experience this lack or activity planning leads to huge waste in:

1. premium payments to secure short term delivery

2. wasted resources through the need for re-work and mistakes

3. over-investment due to an isolated or myopic view of the project with a broarder strategic context

So what does this represent in real terms? Again, purely as a worst case scenario, many advertisers are wasting up to 30% in production and agency remuneration costs and potentially up to 50% in media planning and buying.

Yet all it would take to reduce this waste is a comprehensive marketing activity plan.

Author: Darren Woolley

Both Lord Leverhulme and American John Wanamaker are credited with saying ""I know half my advertising is wasted. I just don't know which half."

But a new book to be published next week has researched $1 billion in advertising spend across 36 marketers and found that rather than 50% waste, the figure is 37.3%.

AdAge reports that "What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds," is to be released next month by Kaplan Publishing, and is the result of five years of research on campaigns from 36 of the nation's top advertisers. The book, penned by Rex Briggs, a veteran market researcher and founder of the firm Marketing Evolution, and Greg Stuart, CEO of the Interactive Advertising Bureau, may well be the most important advertising research since the "How Advertising Works" study of the early 1990s.

Footnote: On Google there are 296 hits for "Half my advertising is wasted"+Wanamaker, 36 hits for "Half my advertising is wasted"+Leverhulme and the Sydney Morning Herald attributes it to Frank W Woolworth.

Author: Darren Woolley

When Agency.com in the US was asked to pitch for the Subway business, they turned the client request for a 5 minute video on the agency into a viral campaign opportunity that has the the advertising blogosphere talking.

While theatre in a pitch can go either way, demonstrating practical know-how on using channels for your own business is always a winner. This is really worth watching.
Check out the story online at AdAge.

Author: Darren Woolley

Just as digital stills cameras have transformed the way the amateur photographer capture the scenes that were once the exclusive domain of Kodak, Fuji & Ilford. The new generation of HD video cameras will transform movie making. The writing has to be on the wall when the worlds two largest makers of professional movie cameras, Arriflex and Panaflex now make video cameras that produce the same image charataristics and quality of the industry standard 35mm film.

Panaflex are so concerned that old school cinematographers may reject this move that they have included a fake film magazine on top of their new camera the "Genesis" to minimise any "fear of the new" trauma that cinematographers may suffer when asked to use the new camera.

What does this mean to the production of television commercials?

Firstly, what you see on set will be a very good indication of what you will see on TV, no more murky video splits with cross hairs and aspect ratio lines all over them.

Secondly, film stock costs will shrink and lab costs and telecine will no longer be a part of the budget equation.

No more waiting for rushes clearance before dismantling a film set.

And if you as an advertiser embrace the 16 : 9 wide screen format for your TVCs your ads will be future proof, what you make today will be the broadcast standard for years to come.

In terms of dollars, advertiser will be only marginally better off:
1. Camera rental costs will remain the same as for 35mm movie cameras.
2. Colour grading will still take place but now as a tape-to-tape grade on a Flame, which is slightly cheaper than the top of the line telecine machine.

But these savings on stock, lab and telecine will gradually be eroded by post production price creep, as the cost of HD post production equipment is about 10% more expensive than the current standard definition equipment.

The great thing is there should be no extra cost to use this latest technology and that's a refreshing change. In the past days of TV production "new" technology usually meant "more expensive" technology.

To check out the quality of HD video see Miami Vice, shot by the Oscar winning Australian cinematographer Dion Beebe.

P3TV think it won't be long before advertising creative teams across Australia are insisting that their latest TVC be shot on VIDEO, not the almost redundant 35 mm film.

Author: Darren Woolley

When we speak of time sheets, we think of professionals such as lawyers and accountants or business consultants recording and billing their time in 10 minute blocks. The detail of these time sheets is then analysed by the companies these people work for to determine their billing ratios and proftability.

Advertising and the marketing communications category has in the past ten years moved from a commission based system to a time resource form of remuneration. Yet often the culture within this creative category does not support the rigor and detail of the tradional timesheet process.

Creativity in recording resource time is a major issue which undoes much of the analysis done by the procurement professionals involved in the marjketing and advertising category.

Examples are:

1. Overstating - an account director who logged 185% of their billable time on a client because they recorded their time sheet from the time they arrived at work to the time they left each day against the client, even though much of this time was taken up with non-client activities.

2. Understating - a creative director who while attending every client creative presentation and all major TV shoots, recorded less than 10 hours in time on their time sheet for the year.

3. Fraudulent - in a celebrated case in 2005, O&M account executives in the US were charged with defrauding the Government by falsifying timesheets to support their fees.

Unfortunately, the facts are that many agencies are poor resource and financial managers, often due to the unique creative culture that exists within the agencies. The problem with this is when procurement and accounting start to use the resource data provided by the agency, without any benchamrks to check if ths data is accurate then the basis for the whole remuneration model can be flawed.

The other problem for agencies is that, with salaries continuing to represent the majority of their costs, without this accurate data how can the agency have a clear understanding of their cost based and revenue or profit position?

Author: Darren Woolley

When it comes to music, most of the work we do is benchmarking the cost of either creating music for ads or licensing music for ads.
It constantly amazes me that more advertisers do not realise the huge opportunity music can play in advertising, apart from being the sound track to their latest ad campaign.
Then on AdAge this morning I read about Toyota in Japan who has embraced the music industry in the launch of their new car. While they say in the article Toyota were performing more like Apple than a automobile manufacturer, it is clear that Toyota has realised the important role music plays in people's lives and that therefore music is a powerful way to engage their audience.
There is that word, engagement.
Locally, Coke has been embracing the music industry for many years through the Coca Cola Live program.
And if you wanted more examples of how music can work with marketing, I have not seen better examples than the locally grown Mushroom Marketing team.
So what stops marketers using music as more than just the backing track to their TV ad? Is it the ad agency single-minded focus on creating ads? Or is it that marketers are unsure how to engage the music industry?
Or is there another barrier?

Author: Darren Woolley

One of the great misunderstandings between agencies and their clients is the terms of the financial transactions between the two. Most advertisers believe that the agency estimates the costs and then reconciles to the actual cost once the job is complete.

But unless specified in the ageement, most agencies would follow the standard agency practice of estimating and then billing to that estimate. So if the costs are less than the estimate then the agency keeps the difference as profit and if the cost goes over the estimate the agency can either:

1. Wear the cost

2. Provide the client with a revision to the estimate for the increased amount

3. Add an additional amount to the next estimate to recoup the loss

If an advertiser wonders which way their agency invoices, I would recommend checking your agency contract, or by default asking the agency. Or as a final alternative, consider the last time the agency gave you a rebate on a project. If you have never got a rebate on a project then either:

1. Your agency is billing to estimate.

2. They are incredibly accurate with their estimating.

It is certainly worth checking.

Author: Darren Woolley

At last week's Advertising & Marketing Summit in Melbourne there was general agreement that what advertisers wanted from their creative providers was "Big Ideas". The "Big Idea" is an interesting concept, recently discussed in AdNews last Friday

The trouble is that if you ask a range of people involved in the process "what is a big idea?" you will get as many different answers as you ask questions.

Some creative people think a big idea is writing a gag into the script or getting a concept past the client that will make their collegues laugh or be jealous or both.

Some production people think the big idea comes with a big budget that lets them use the latest (and therefore the most expensive) technology.

Some account management people think a big idea is the one the client is happy with and even better happy to pay for.

Lets take the Foster's campaign for Carlton Draught as it was presented at the Summit as a case study.

The much lauded "Big Ad" is seen as a "Big Idea", but what is it that makes it so? Is it the huge production budget, enormous cast and impressive visual effects? Is it the cleverness of the script? Is it the wry humour or the silliness? Is it the idea of ripping-off the British Airways ad from the 1980s to flog beer? Or is it the strategic insight into the beer drinker that recognises that beer is fun and that it is fun to take the piss out of advertising? Or is it all of the above?

In the case of Carlton Draught, the Big Ad is just one execution of a campaign that has been running for two years or more. Each execution is based on the core strategic idea. The problem is that many people cannot recognise a big strategic idea until they see the execution of that idea as either a advertisement or an event or media execution. That's why people really only noticed the big idea in the strategy with the release of the "Big Ad".

Just suppose the big idea is the one that captures the consumers attention, engages them and converts this interest into purchase intention or even better actual purchase.

An idea is worthless unless it is executed. Until then it is just a thought. In the case of Fosters, the case study talked about double digit growth in a flat market.

So when an advertiser talks about wanting the "Big Idea" from their creative providers, do they mean the strategy, the script, the production or the whole box and dice?

Hopefully they mean one that delivers a return on investment. Because then marketers will be justified in paying for big ideas because big ideas will be the ones that deliver big returns.

What is your interpretation of a Big Idea?

Author: Darren Woolley

Earlier this month I lead a team in the Connect Network debate. Arguing in defence of the future of mainstream advertising we were narrowly beaten on the night, but now you can hear the summing up arguements and then have your say.

Check it out. It was great fun.

Author: Darren Woolley