NEW YORK -- The average cost of producing national TV spots in 2001 increased eight percent to $358,000 for a 30-second spot according to the annual Television Production Cost Survey from the American Association of Advertising Agencies.
The figure, based on costs before agency commission, marks a dramatic rise in production expenses after a 3 percent decrease in 2000 for national 30-second spots. However the SAG/AFTRA strike against the advertising industry in 2000 accounts for much of the decline in costs for that year, according to David Perry, chairman of the AAAA broadcast production committee and executive vp/head of production at Saatchi & Saatchi, New York. The number of commercials did not decline significantly during the strike, he says, but many productions were forced out of the country where costs were lower.
Perhaps a fairer comparison, Perry said, would be between 2001 and 1999, the pre-strike year. That analysis shows an increase of three and a half percent over two years.
One other statistic to watch, Perry said, is the number of jobs that were single-bid last year: 57 percent. "Commercials are increasingly bid only to one company, which is in violation of purchasing procedures of most of our clients. But we still do it. [57 percent] is significant [number]. And it creeps up every year."
The annual report is based on the responses of 20 agencies, including all of the top 10 U.S. advertising agencies. Of the 1,725 national commercials they reported, sixty-nine percent were 30-second commercials; the rest were varying lengths.
Matt Miller, president/CEO of the Association of Independent Commercial Producers expressed concerns over the survey's validity, as he has done in previous years. "It's very premise--the concept of averaging things that by their very nature are unique--is misleading," Miller said. He also disputed that commercial production costs had, in fact, increased. "Advertisers have been watching their budgets," he said. "It's been a tough year. In tough years the price [of production] tends to be static or go down."
A closer look at those 30-second commercials reveals that the average total production company net costs went up four percent to $236,000 in 2001. Director's fees increased 10 percent to $23,000. Creative/labor costs increased by nine percent to $12,000. The average talent costs rose 14 percent to $16,000 per original 30-second spot. Music costs remained steady, averaging $34,000 per job.
One-post production statistic in the report might seem misleading, Perry said. The average cost to edit and finish an original 30-second spot increased seven percent to $45,000. He thinks the increase is due technological advances that allow the production teams to create special effects in the editing process that they used to do during filming.