6 Steps to Establish a Great Production Spend Management Program ...

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Posted by Robin Seasock on Jul 19, 2020 9:17:32 PM
 
“Improved Advertising Production Management is within Advertisers’ Control” (The ANA)

 

The Pandemic is Forcing Better Production Governance

 

Advertisers were faced with having to quickly pivot their approach to production because of the COVID-19 Pandemic. They were canceling and postponing shoots, adapting production of content, accessing and re-purposing existing assets, and figuring out how to deliver the appropriate messaging to their audiences in an innovative way.

CMOs and Finance teams are now focused on the financial impact of the pandemic to both revenue and expenses.

Marketing Operations and Procurement teams are working quickly to update scopes of work, contracts, and change orders with their agencies. Some industry sectors are pumping the breaks on production (i.e. leisure and hospitality) while others are working fast and furious to address markets that are tentatively re-opening. Regardless of the sector and market, all advertisers are closely monitoring and managing their spending.

So far, how well have advertisers been able to manage their production spend when the crunch hit? Were they able to have a single top-line view of production activity across all of their brand teams, agencies and geographies? Did they have a good handle on their production commitments and spend? Did they know the financial implications associated with canceling productions? Could they assess the impact of budget changes with their agencies? And when production begins to ramp back up again (and everyone is competing for the same resources at the same time), how well positioned will advertisers be to look across their production jobs to optimize the resources available to deliver against new timelines?

Production job by country pm

Illustration 1: Production jobs by country

 

Great Production Spend Management is Within Your Control

 

An ANA report entitled ANA Production Transparency in the U.S. Advertising Industry stated “Improved advertising production management is within advertisers’ control. Advertiser disciplines, accountabilities, and controls for production need to be evaluated, upgraded, and restructured to substantially elevate decision-making quality and enhance disciplines and overall financial management.”

The report also states “Advertisers must develop internal production management disciplines to ensure consistency and reliability in the decision-making process.”

Many advertisers have taken steps to gain greater efficiencies in production spending with, for example 1) decoupled production from creative development, 2) prequalified production suppliers, and 3) sourcing directly with production companies (instead of through their agency). That is, they focused on their third-party sourcing efforts.

However, with perhaps a few exceptions, many struggle to develop an effective, overarching production spend management process to optimize production spend, increase efficiencies, manage vendors, track budgets and maintain oversight.

 

Now is the Time for Advertisers to Reassess their Production Spend Management Program

 

Think about the 4 questions below. As an advertiser, you want to be able to say yes to all of these questions.

1. Is there a governance budget process that provides visibility and transparency into production?

2. Are there controls and information available to manage production policies, procurement, and behaviors?

3. Are timely production spend details accessible across brands, markets, regions, shoot locations, timelines, etc.

4. Is production budget data readily available to see trends and outliers?

 

If the answer is no to any of these questions, then advertisers must ask themselves - why? And for those that said yes, a further question follows:

How robust is the budget governance program? Is there a database and dashboards with consistent data that is readily available for analysis to show trends and outliers or is it in Excel and is the data disbursed and disparate across the globe?

 

Clients access powerful custom dashboards to inform their production spend management policies  pm

Illustration 2: Clients access powerful custom dashboards to inform their production spend management policies

 

Here are 6 Steps to start your journey to build a production spend management program:

 

1. Identify the key stakeholders 

 

• Who has an influence or is involved in production (e.g. marketing, legal, agency, operations, finance, procurement, third-party vendors, etc.)?

• Understand who is making financial commitments on behalf of the company.

• Are there operation teams that oversee production across major markets?

 

2. Document the production process starting from idea/budget creation, to scope of work, to project reconciliation 

 

• Is there one process centrally managed or multiple processes in different markets?

• Consider the stakeholders and their engagement in the process, map the process and touchpoints.

 

3. Understand cost components, cost drivers, and approval points 

 

• Many large advertisers work with cost consultants on individual projects, but who governs the overall cost elements?

• Document and recognize all aspects of production cost components.

 

4. Gather and analyze historical data 

 

• Collect budget and actual spend information.

• Use the data to start to understand trends and outliers.

 

5. Prioritize and agree on the objectives to address 

 

• Ensure consistency and reliability in the decision-making process

• Objectives for consideration may include:

o Visualize and understand where you spend, across all markets

o Optimize production spend.

o Gain efficiencies with shoot schedules and locations.

o Streamline vendors.

o Implement guidelines to help support decision makers.

 

6. Build the business case for change - where the data can articulate the issues and guide the direction of change

 

• Engage marketing leadership.

• Now is the ideal time to begin to take control of production spend.

 

The Journey

 

Over the past 12 months, we have worked closely with very large advertisers and in partnership with their agencies to develop and build-out production budget governance programs.

These programs benefit the clients and the agencies – because they reduce waste. And waste benefits no-one.

In truth, this is a new discipline for many of us and our collective expertise is still escalating rapidly, for the benefit of all the participants.

Decideware has seen that it is entirely possible to start small and secure significant, early gains prior to embarking on a longer program to embed gains in the production management ecosystem.

 

Decideware’s Production Manager

 

From our view of the market, Advertisers that had ready access to data during the recent pandemic were better positioned to pivot their production efforts, assess risks, and make fast decisions related to resources, costs, and schedules.

Decideware technology is enabling large advertisers to better govern their production programs by consolidating and organizing data so marketing leadership and finance have a topline view of all production across all brands and regions. The operations or procurement teams have the ability to analyze historical data for trends and outliers and to identify gaps in the current governance process. By better understanding data, advertisers can improve the efficacy and efficiency of their production programs thus taking time and cost out of the process.

If you are interested in seeing a demo or learning more about how Decideware can help visit www.decideware.com or email sales@decideware.com

 

Decideware Professional Services