THENUMBERSMAN - SILVERSCREEN JUST THE BEGINNING
Thenumbersman said...
Roger,
What you have highlighted in your article is interesting and well put. Your points are also been reflected in agencies. Silverscreen is just the beginning and not alone.
While budgets are being slashed for TV production this is reflected also in agency salaries. They too are going backwards. The creatives and accounts people get paid today nothing like what they use to.
So forget those pumped up recruitment agency surveys. There is no glamour in advertising anymore (along with no benefits). And no big money.
But that is not all. I think your comments are a reflection of the whole wider creative industry. And it's alot bigger problem than the our industry realises. (CAANZ are they doing anything? "Cut the courses back guys") Here are a few areas I think are suffering:
1. Agency Creatives and Accounts staff.
2. Photographers.
3. Illustration.
4. In-house Designers.
5. Studio Staff.
6. People working in film production.
They are all earning less than they did 7-10 years ago - it's just not directors and productions companies. I have highlighted these because I have heard it first hand from pretty much all these groups over the last 3 years on too many occasions.
The simple truth is that "The problem" is one created by agencies. But how can that be? Simple really and it all comes down to selling out their own industry they work in.
1. First they sell out to clients, they cannot say "NO", if they do, they are worried they will lose their client. Industry standards go down as budgets go down.
2. The new "Don't leave us" trend was created resulting in "we can do it cheaper". And this has huge flow on. How many agencies have held clients on cost cutting?
3. The pressure on the global outposts in NZ is becoming greater from abroad, with over the top margins to make year on year. One of our biggest agency's growth strategy is acquisitions. When they should be encouraging their clients to spend more through showing them the success that great creative can achieve. Building small clients into large ones is a start.
The question is then what will pop next? Or who will pop? Silverscreen is an example of one. There is going to be more mergers and more cut backs, rumour has it they were happening in a few agencies around Christmas.
I know the answers but that I will not be telling.
Any thoughts bloggers?
posted by CB at 1/16/2007 08:43:00 am
24 Comments:
OK, here's a thought:
The industry is changing. It's flatter, more dispersed and less linear. Less hierarchical too. The old model depended on big centralised clients giving big campaigns to full-service agencies, who then hired specialist companies to execute.
Remember typesetters? The Mac came along and suddenly you didn't need a big building full of warm bodies and expensive machinery. But type was still produced - in a totally different structure. Something was lost but something was gained too.
Maybe that's what's happening here. It's a YouTube, digital, interactive, experimental world. Agencies and film makers will adjust.
1:33 pm NZDT
I'll second that - and the original post. Big changes are afoot, and we all know that some smaller and mid-ranking NZ agencies are in trouble - albeit quietly at the moment.
We've heard so much about 'ideas' but now it really IS about ideas - not an idea for a 30" TV ad or a glossy mag DPS, but an idea about how to get message A to consumer B.
(And hopefully make a semblance of a profit in doing so.)
9:41 pm NZDT
I think you are missing the real story here. As I understand it Silverscreen invested heavily (as in Titanic proportions) in both technology and its Wellington property - and both were probably bad calls. Plus they were forever lavishing lots of money on entertaining agencies!! It has nothing to do with being a TV production company or in the creative industry - it's all to do with making ill judged business decisions.
6:39 am NZDT
You don't make ill judgement in business after 33 years. Trust me. Buying property is not a bad thing. Assets are good for business and safe.
As for entertaining agencies, when was the last big film production party? It's not the sausage rolls that made Silverscreen close up shop.
We use to do 150k-400k TVCs, those same ads we are now being done for 75-150k. Is it me or is the film gear got cheaper? I know the same clients are not doing much interactive if any, so it's not that (spreading their spend)
I know one thing the local ads are starting to look shitter than they ever have. So where's all the money going? Agencies back pocket? And as the first person said, no one's jumping up and down after pay reviews, just handing in their notice.
Another trend I noticed of late, alot more agency account management are going client side. Why? They got better marketing packages and don't have to work silly hours.
Just a few thoughts to consider. Would be interested if anyone agrees with
any of them?
11:07 am NZDT
I agree, what no-one has said is the fact that Silverscreen was geared for a market that just wasn't there in recent years.
They made the fatal mistake of thinking they were bulletproof and immune from making a wrong decision.
They read the market wrong by two decades.
As simple as that.
11:10 am NZDT
And the new production companies came along..... cutting their mark-ups.
The rest is history.
1:26 pm NZDT
You could argue that other film companies have also contributed to the lowering of fees and mark ups by under cutting each other- So they now have made a rod for thier own back.
Agencies have also not helped by screwing them down through bad practice. A good example of this is that they are expecting high standards with little money to achieve these standards.
And now we are a left with "two pop" production industry producing creative that looks a decade out of date. I know i can pick a overseas ad compared to a NZ ad on the box. Big difference in quality and creative.
And it is starting to show in print ads as well. When was the last time a creative had a photogrpahy budget greater than 10k?
1:41 pm NZDT
Yes people do make bad decisions, even after 33 years. They invested in property - but they are a creative production company! They over invested in technology and yet their primary resource is people. Not only that they invested heavily in technology and read the market incorrectly. A double whammy.
Name one successful ad agency which own their own building, however big or small the building? The only one that comes to mind is Walkers - need I say more. Property is not their business - creativity is. Property adds nothing to the creative process - people do.
3:02 pm NZDT
I disagree with the last comment. How can investing in property in Auckland in the mid 90's and holding onto it be a bad thing for Walkers? Look at the local councils and at the amount of shares they hold in listed companies. Does anyone remember the killing that Waikato council made when it came to sell it's shares in Powerco? The richest student council in NZ is Lincoln Uni in Chch. Why? Because they invested in land in the 1970's which became prime real estate in the 1990's. Business diversification isn't a stupid thing as long as it's done wisely.
6:07 pm NZDT
I have to agree.
The root cause is there is just less money in the industry, and that impacts every link in the process. There are fewer clients doing full service - as opposed to placement - business here, and those that remain pay lower margins. Sometimes absurdly low.
When there is sod all money, there is little margin for error.
Lower margins are a world-wide thing, but it's a double whammy in NZ because there is simply no growth in the market and nor is there any likely.
More clients will import work, need less service abd pay less. More agencies will make no money and more will close. There will be a nice but not wonderful business left for the survivors.
New tech will allow the truly excellent to hook into the world economy from here, but that will be the exception.
In the days of 20% commission creatives drove Porches. Now, not so much.
Given that, there are still quite a few folks in agencies earning 6 figure sums - albeit in New Zealand Zlotys - that wouldn't be whistling Dixie to earn it any other way.
So make the most of it chaps.
And real estate is almost certainly a better investment than advertising.
8:54 pm NZDT
I think you can blame everything on one or two creative directors, who think they can make award winning ads for nothing.
So they stack the Axis jury with their mates and any half decent ad with a budget falls by the wayside.
The ads that have won at Axis in the last 3 or 4 years have been either low budget or freebies.
Those creative directors have been the catalyst for what has happened to our industry and we all know that - we talk about them all the time.
But no one dares mention their names...
9:09 am NZDT
Silverscreen had a lot of money tied up in the disasterous 'The River Queen' and some other pricey project recently. That's what really sank them (as well as the tighter market).
11:25 am NZDT
shit 9.09. you nailed it buddy.
12:55 am NZDT
Not to distract from recent entries that lay the responsibility for fiscal sphincter tightening at the feet of Auckland's top CDs, I submit that Silverscreen's mismanagement in the latter years cannot be explained away by mention of their real estate portfolio. I believe that to be a smokescreen and there is more to uncover. Many healthy production companies own their premises; Sweet Shop, Film Construction, Curious. And of course Mopix who seemed to fish happily for many many years in the budegtry shallows without any of the ostentation and arrogance of Silverscreen, and about who's demise a whole lot less has been blogged despite the pertinence of their kinda cut price attitude in this cut price climate.
9:23 am NZDT
Right on 9:09.
And if the CEO's of the agencies actually took the time and looked at the work they were doing 5 years ago and compare it to the mostly crap these guys are turning out today they might realise that these highly paid CD's are actually fucking our industry.
Then when we can't go any further downwards, they will be off, back to where they came from.
Nice one.
9:45 am NZDT
Some people get $10k for a photo shoot? Shit, I get 2 hours in a photo library.
10:00 am NZDT
I can remember chatting with one of the big four Brit CDs here and he asked me when I thought the advertising scene in NZ became great. I said MacKay King started it, Len Potts in Colenso carried it on and Kim Thorp and Saatchis Wellington in the 90s were the best agency that NZ has ever and will ever see. No, he said, it was in the late 90's when DDB and Colenso (Akl) started winning international awards. That, he said, was when NZ advertising started becoming great. Huh?? As much as I admire and respect those shops, I found that statement a bit arrogant to say the least. Anyone can do an ad that no one sees - and then enter it into an awards show... the amazing thing is to get a big client to buy into one like Potts or Thorp did.
12:51 pm NZDT
12:51
I couldn't agree more.
I rember a taxi ride home from the Axis hey held in a school gym in Orakei for some reason. After finding out what the event was the taxi driver said "Ah I bet that Goldstein win. Is great."
I had to explain that no, Goldstein didn't get much at all. First prize went to a guy in a squirrel suit who said 'fuck' a lot. And no, he wouldn't have seen it unless he visited the production company's web site.
Probably more judges saw it than punters.
Of course, doing ads no one sees is not restricted to NZ.
The contrast between the ads you see on Asian TV and in Asian newspapers and the ads you see from Asia in the award books make NZ advertising seem lily-white.
4:59 pm NZDT
12:51 - Totally agree.
Saatchi Wellington WAS the best agency NZ has ever seen - yet, today, it's shadow of it's former self - doesn't even rate.
10:47 pm NZDT
A week after TV3 News broke the story of the liquidation of Silverscreen's ad making arm,news comes that a boot making factory in Waitakere City is to close,with production to continue in Asia where labour costs are more favourable to the manufacturer.
This internationalism has a lot to answer for.
Regarding New Zealand advertising,I ask if we are missing out on more than just easily proftiable production.
I grew up here and watching the telly I only saw New Zealanders reading the news,wrestling on the mat and being close to home.So it was a neat thing to see Crump and Scotty drive through the Mount Vic bus tunnel.Naively when I first bused through that tunnel I smelt the whiff of importance and legend.And there is something confidence building about seeing ourselves in the media;it gives us pride,offers up identity and maybe some heroes.All while foot tripping the self-important.
As an exercise in comparison do the last few years of Toyota advertising have the resonance of those old classics?I see nothing peculiarly New Zealand in the new,and wonder in my darkest moments if they were made with "us" in mind at all.This blog last year posted proud comments about the international attention the RAV4 spot was getting,although the spot had been pulled from air here.
I lament the passing of creatives who had the down home-ness and wit to have their characters say "bugger" on the telly,and to get away with it.
I'm not wanting to decry the efforts of the internationally awarded,Peter Jackson as a feature film making fr'instance,but merely suggest specifically indigeneous stories like Whale Rider also find a world audience.And perhaps a place closer to our heart.
I've driven through Mangatinoka and I didn't once see Tom Baker in a voice booth.But I have seen Jemaine Clement in the capital city.And he may have been drinking L&P.
8:21 am NZDT
Four Brit CD's - who let that happen ?
Do they lunch together ?
Do they swap agencies for bigger pay packets ?
Are we being duped here or what.
10:27 am NZDT
I find it difficult that two companies can still operate while a large number of crew and suppliers are owed thousands of dollars. I find this unethical. While buildings, cars and boats are in trust some families can't pay their bills.
10:06 am NZDT
12.51 the reason is that all the people left or retired at saacthi wellington (with that and a bit of a restructure).
And lets face it the only thing an agency has is it's people, with out them they are nothing, just a stupid very uncreative name on the door.
If you get the mix right in an agency you will be unstopable. If you don't, you will always battle.
9:36 am NZDT
Lets be realistic... this took no one by surprise.. it was only a matter of time and yes it was bad business management.
Silverscreen has been oin trouble for about 3 years... but we all hoped they would trade out of it instead of denying the reality.
Overheads that were not affordable and that were from the 80s... almost 3million spent on refurbishment of the building last year alone.
River Queen had nothing to do with the demise - it was the business practices of silverscreen productions which have been questionable for a number of years.
2:38 pm NZDT
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