2004 TV PRODUCTION COSTS UP MODESTLY FROM 2003

Al Stauderman, President

The 4A’s 2004 Commercial Production Cost Survey for 2004 was reported in late 2005. But better late than never for this valuable tool, which has become an increasingly voluntary contribution by the Association and the cooperating advertising agencies.

The bottom line is that average costs for the standard: 30 commercial increased a modest 3% versus 2003, while commercials of all lengths increased only a scant 1%. These small increases are in line with the CPI increase of 2.7% and mark a welcome pause in escalating production costs.

The average :30 cost $385,000 to produce, an increase of $11,200 over 2003. The relatively small increase was driven mainly by post production and talent costs. Post costs were up 6%, with video finishing costs fueling the increase. Talent costs also increased, reflecting a jump in the average number of on-camera principals from 4 to 5 per commercial.

A message emerges to advertisers concerned with cost management: Cut down where you can on video or digital finishing and other completion costs, and strive to reduce the number of on-camera players, particularly if you have to pay them SAG re-use rates on top of their session fees.

For me, encouraging signs in 2004 were holding the line on production costs, and two other findings:

• a decided decrease in the number of single source firm bid jobs, with 58% now being multiple bid versus 48% the previous year

• and an encouraging though slight increase in the amount of cost-plus-fixed – fee work after several years of decline in the use of this cost management method.

One article in the trade press expressed concern over the decrease in the number of commercials in the 4A’s database for 2004 to 1,579 from over 2000 in years past. While admittedly smaller than in the past, this year’s data base is still ample to track major trends, which remains the main function of this annual study. BBS commends the 4A’s for continuing to provide this valuable service to the industry. We also acknowledge and thank the agencies that assemble and report the data at their own expense.