The trouble with Ford's production guidelines
Ford's issuance of new production guidelines [Adweek, Oct. 13 and 20] is a fundamental mismanagement of corporate objectives. Ford and other advertisers have brought procurement advisers into advertising, most recently into the creative area. Creating commercials is not manufacturing. Treating the process, 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 markup on the costs of a job. "Markup" 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 markup, then remove or limit the amount of markup on individual items. Markup 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.
If the 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.
President and CEO
Association of Independent Commercial Producers
For the Record: Verizon Wireless' "Test Man" campaign launched in 2002, not 2001 [Oct. 27]. Steve Hardwick preceded John Mittnacht as account chief on the business at Bozell, and Mittnacht worked there 13 months, not "less than a year." Also, Hardwick was not "more senior" than Mittnacht or Andy Ball; all three were senior partners.