According to the annual American Association of Advertising Agencies’ (AAAA) Television Production Cost Survey, the average per spot cost of the 1,266 commercials in the ‘07 database, the AAAA reports a figure of $318,000. That’s a two percent increase from $312,000 in ‘06.
The average director’s fee in ‘07 was $23,000, up from $21,000 in ‘06 (this figure was also $21,000 back in ‘00). The production company’s average markup on a job came in at 23 percent in ‘07 as compared to 24 percent the prior year. (In ‘00, the average production bouse markup according to the AAAA study was 26 percent.) And the average total production company net costs per AAAA respondents went up 11 percent from $231,000 in ‘06 to $256,000 in ‘07.
For the first time, the AAAA survey contains a chart that compares annual findings over the past seven years. And Perry, who is executive VP/head of broadcast production at Saatchi & Saatchi New York, thinks that looking at average annual costs during that full time frame casts a different light on the statistics.
For example, according to the latest AAAA report, the average cost of producing a national 30-second commercial in ‘07—without agency commission or any other form of agency markup—increased eight percent as compared to ‘06.
Extrapolating from a data base of 799 national :30s as reported by 19 participating ad agencies, the AAAA study found that the average cost of a :30 before agency commission was $361,000 in ‘07. That’s an increase from $335,000 in ‘06.
However, while an eight percent jump may raise some eyebrows, Perry hearkens back to the average :30 in ‘00, which amounted to $332,000 per the AAAA tally. From ‘00 to ‘07, $332,000 represented the low end figure while the highest average national :30 cost was $385,000 in ‘04.
He noted that an eight percent increase from ‘00 all the way to calendar year ‘07 shows how costs have pretty much held, particularly when compared to the skyrocketing price of automobiles, a college education, health care, in fact almost anything during that same seven-year span.
Perry conjectured that the relative stability of TV commercial production costs reflects an industry need and desire to prove or at least reaffirm television advertising’s value.
“Everybody involved in television is aware that runaway costs would be just another reason to walk away from TV as an advertising medium,” he related. “So as a result, I think all of us who believe in television are trying hard to keep it viable on a cost basis. For some clients, cost determines which medium to go into and our industry has a stake in keeping television alive since it is a foundational medium for so many of the other ones.”
This cost stability, said Perry, represents an even greater value in terms of common practice that’s emerged in recent years.
“Half of our shoots or more have some additional footage being shot for web versions, viral spots or other forms of content,” he noted. “So the fact is that we’re getting more out of many shoots with overall costs pretty much holding.”
Yet what’s clearly not holding is the size of the database from one year to the next. In the newest AAAA study, when combining the body of :30s in ‘07 with spots of other lengths, the 19 agencies represented a database of 1,266 commercials. In ‘06 the total was 1,282. But if you go back to ‘01 for instance, the database was 1,741 national TV spots.
Perry said it’s fairly safe to assume that this downward trend over the years reflects that clients are indeed shifting more of their TV investments into alternative media.
In terms of the average per spot cost of the 1,266 commercials in the ‘07 database, the AAAA reports a figure of $318,000. That’s a two percent increase from $312,000 in ‘06.
The average director’s fee in ‘07 was $23,000, up from $21,000 in ‘06 (this figure was also $21,000 back in ‘00).
The production company’s average markup on a job came in at 23 percent in ‘07 as compared to 24 percent the prior year. (In ‘00, the average production bouse markup according to the AAAA study was 26 percent.)
And the average total production company net costs per AAAA respondents went up 11 percent from $231,000 in ‘06 to $256,000 in ‘07.
The AAAA survey showed that in ‘07, 94 percent of the :30s reported were identified as firm bid, while six percent were cost-plus. Also, 38 percent of the :30s were single bid, while 62 percent were multiple bid. This represents a five percent increase in single bids over ‘06.
The average cost to edit and complete an original :30 in ‘07 was $53,000, which is 18 percent greater than in ‘06. Video finishing increased 37 percent in ‘07 and sound recording/mixing increased seven percent. Creative/labor fees showed an eight percent increase.
In terms of lensing locales, international shoots declined from 188 in ‘06 to 86 in ‘07. While noting this was contrary to the trend at Saatchi New York, Perry said that it might reflect a weaker dollar in foreign countries, which is causing more work to stay in the U.S.
Some stats are inexplicable, Miller contended, noting for instance that the AAAA survey found studio shoots to be down 10 percent in ‘07 as compared to ‘06 while location lensing was up four percent and combo shoots held steady. So how, he asked, does one account for the six percent discrepancy when trying to reconcile ‘06 and ‘07?
Also curious to Miller is that the average number of on-camera principals in a spot was four in ‘07, which represents the low water mark over the past seven years yet the talent costs are at a record high during that same span, averaging $17,000 per spot. (In ‘06, the average was also four performers but at a cost of $14,000.)
Opposing POVs On AAAA TV Production Cost Study – ShootOnline
