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7. Implement
Decoupling Process
3. Propose optimum process 4. Identify associated savings
6.
The Decoupling Process: Identify and agree on a strategic procurement process. Ensure that all stakeholders are invested in the process.
Production Decoupling
Create clear, demonstrable, and measurable objectives. Bring the agencies with you! Make the agency a partner in reengineering the buying process. Start with the simpler things. A phased approach builds and delivers credibility, provides momentum, and establishes an environment for success. Define the appropriate approach with subcontractors and suppliers. Contact production companieseither directly or via their agencies.
Approach decoupling by: 1. Identifying and prioritizing the production elements you wish to decoupleevery brand is different. 2. Defining the appropriate procurement approach with sub-contractors and suppliers. 3. Deciding whether to contract directly or via agency partners/3rd party management company.
Production Decoupling
Survey Says
The WFA conducted a decoupling survey in April of 2008 among its members, in which respondents were asked, What areas of activity have you decoupled? The survey demonstrated that there is a clear trend towards focusing decoupling efforts on all elements of production. In the chart below, red shading indicates not just the top five most frequently decoupled activities, but are also those areas which have generated the biggest level of savings.
Survey respondents indicated that savings from decoupling come from many sub-areas: Production and post-production are the areas in which most members have decoupled, but as can be seen in the next chart below, bigger savings were generated elsewhere in less commonly targeted areas such as studio/film location. Responses show music and translation get comparatively higher levels of average savings than the rest, suggesting these less creatively sensitive areas are potentially fruitful areas to target. Most clients (three-quarters) do not have incentives in place for either the agency or the production house if they succeed to reduce overall costs.
Production Decoupling
Respondents were also asked to rate how their agencies have responded to this new trend.
How to get agency buy-in: 1. Engage in frank discussions with senior agency management. 2. Stress that the agency can now deliver excellent creative knowing that the back-office is in good hands. 3. Ensure that they are compensated fairly for the work they are doing. 4. Engage the agency production department in the process. 5. Start decoupling with existing agencies before forming new partnerships.
Production Decoupling
Production agencies do not do creative work or strategy. Creative masters are produced by the creative agency, approved by the client, and then supplied to the production agency.
After that, its a three-step process: 1. Produce adaptations and versions. This includes changing tags on ads (e.g., local dealer tags) as well as translation/trans-creation (i.e. making narrative adjustments to film or press ads to respect cultural sensitivities.)
2. Gain agency/client approval. This is largely done online. Agency approval is rarely required because at this stage interaction is most often directly with the client.
3. Supply to media owners worldwide. Most of this is done digitally. All press/print is digital. With television, there is less done digitally as there is still the need to physically ship tapes.
Production Decoupling
Tactic used included: Supply chain visibility and improvements begun via a collection of current rate cards and production estimates. Moved agencies towards using digital workflow and asset management tools. Developed rate cards for production, identifying those attributes that are distinctly separate from the creative process getting the vocabulary straight on rate cards was a challenge. Management of change focus areas included all communications to the production houses were from HP on behalf of HP and their ad agencies and the creation of an internal cross business group team that meets quarterly to share progress, next steps, and obtain ideas.
Mattel
The Mattel Worldwide Creative & Marketing Communications Group is a creative services group that drives Mattel brands and corporate marketing initiatives through creative expertise and intimate brand knowledge. This in-house group was set-up in 2005 and is organized as follows: Account Management, Brand Design, Brand Merchandising, Broadcast Production, Design Services, and Photography. Broadcast production specializes in the creative development and production of TV commercials and videos. The majority of commercial production occurs on-site (Mattel has a sound stage on their premises in El Segundo) with some location shoots added in. There are five staffers in the Mattel in-house group (Fire Drill Productions) and all are producers. There are no on staff creatives; rather, freelancers are used. More than 150 commercials are produced per year. In conjunction with Fire Drill Productions, Mattel has decoupled production under the following scope-of-work scenarios: 1. Seasonal products. 2. Creative for products rather than brands. 3. Pick-up shots. They have enjoyed substantial savings in creative leadership fees and production as a result of this decision to decouple some of their production. The investment/cost to Mattel for this move was low and it was used for brands that required creative support, but didnt have the sales volume yet to support an external agency managed shoot or in situations where the agencys timing did not work with Mattels schedule.
Production Decoupling
Sources
Decoupling: The WFA Perspective. Steve Lightfoot, Communications Procurement Manager, World Federation of Advertisers. ANA West Coast Chapter Marketing Financial Management & Procurement Committee Meeting, 07/29/08. HP Case StudyProduction Decoupling. Renee Reeves, Global Marketing Procurement Manager, HP. ANA West Coast Chapter Marketing Financial Management & Procurement Committee Meeting, 04/08/08. Mattels Perspective on Production Decoupling. Lisa McKnight, VP, Creative & Marketing Communications, Mattel Brands. ANA West Coast Chapter Marketing Financial Management & Procurement Committee Meeting, 07/29/08. Production DecouplingAn Emerging Industry Trend. Steve Lightfoot, World Federation of Advertisers; Richard Woodford, Merck; Pat Murphy, MurphyCobb Associates; Jeff Cobb, MurphyCobb Associates. ANA Production Management Committee Meeting, 12/06/07. Production DecouplingAn Emerging Industry Trend. Facilitators: Steve Lightfoot, Communications Procurement Manager, World Federation of Advertisers; Deborah Morrison, Director, Consultancy and Best Practices, Incorporated Society of British Advertisers. Panelists: Jeff Cobb, Principal, MurphyCobb & Associates; Julian Hooks, Worldwide Marketing Procurement Category Leader, Johnson & Johnson, Europe; Mark D. Hudson, Procurement Manager, Marketing Services, BP P.L.C. ANA Advertising Financial Management Conference, 05/05/08. Production DecouplingPerspective from a Global Production Agency. Simon Toaldo, CEO, hub+. ANA West Coast Marketing Financial Management & Procurement Committee Meeting, 10/07/08.
Related Resources
Need to keep up to date on the topic of production decoupling? Visit the ANA Marketing Insights Center www.ana.net/decoupling. Interested in learning more about production decoupling? Consider joining ANAs Advertising Financial Management and Production Management committees to stay up to date on this hot topic www.ana.net/committees.
Compiled by Susan Burke, Knowledge and Research Specialist, ANA Copyright 2009 by the Association of National Advertisers, Inc. All rights reserved.
Production Decoupling