P&G Rethinks Production Houses


As one source put it, "The agencies are on board with these plans because they have to be. But they hate it."

The P&G representative said the company hoped to set its roster in the fall. P&G's procurement department is leading the selection process.

P&G's creative agencies recommended production companies at the start of the search, but will not be involved in the final selections, according to the rep.

Reckitt is said to be working with London-based MurphyCobb & Associates, a production-cost consultancy, which did not respond to requests to comment.

Sources expect both clients' new roster approach to hiring production companies to take effect next year, after the rosters have been set.

Production-cost consultancies, which also include Ernst-Van Praag in New York, Bird Bonette Stauderman of Westport, Conn., and Admaniax Consulting Group in Los Angeles, have spurred clients in recent years to question what production companies charge for their various services, said Arthur Anderson of Morgan Anderson Consulting, who expects the trend to continue.

Matt Miller, the president and CEO of the Association of Independent Commercial Producers, thinks a focus on commodity costs misses the essence of what production companies provide.

"It's not about what a light costs. It's about how you're going to use a light in a production," said Miller. "The ingenuity of production isn't the cost of the lumber, the nails and the lights. It's about how you approach it and what you do with it. So, the idea of looking at the cost of items and saying, 'All right, we're going to pick people based on that' is [misguided]."

Furthermore, Miller questioned the practicality of setting prices on goods and services whose costs may fluctuate depending on the vicissitudes of the marketplace. "They're asking companies to agree to a cost structure that is not real," Miller said. For example, labor costs may change because of the terms of collective bargaining agreements, he noted.

Some sources also wondered if a shift toward pre-selection by major clients will create rifts within the historically tight-knit production community.

Competitors, for example, regularly recommend each other for jobs if they're unable to take them on. Now, with some companies making client rosters and others not, "it's going to become far more cutthroat," predicted one source.

Miller does not expect that communal dynamic to change. However, given the global influence of a marketer the size of P&G, many sources expect other clients to follow suit.

The heads of production at agencies, said one source, are "just going to have to deal with it."

Nielsen Business Media