Adweek and Brandweek
Letter to the Editor

Ford’s issuance of new production guidelines (Adweek 10/13 and 10/20, Brandweek 10/13) is a fundamental mismanagement of corporate objectives. Ford and other advertisers have brought procurement advisors into advertising, most recently into the creative area. Creating commercials is not manufacturing. Treating the process or even a portion of it as a commodity illustrates a lack of understanding of the business and of the skills required to execute each project.

A production company’s only source of revenue is its mark-up on the costs of a job. “Mark-up” is commonly misinterpreted as “profit.” It is not. It is the production fee that covers the overhead of running that job and the company, leaving a profit margin in the low single digits—if you’ve bid it properly. The outrage over the Ford guidelines is that they mandate a mark-up, then remove or limit the amount of mark-up on individual items. Mark-up is an average. We all know certain aspects of production have more and less work and risk associated with them. You can’t use a system with an average and then limit certain items to less. That’s just a shell game to get that average to a number that barely covers a production company’s overhead and leaves no room for profit, thus the widespread refusal to work this way.

If the corporate objective is to limit cost, tell producers what you’re willing to spend, and let them tell you if they can do it. Number-crunching production components merely jeopardizes the job you’re paying for.

Matt Miller
President and CEO
Association of Independent Commercial Producers