STUDY SHOWS COST OF TV SPOTS

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Early last month, Advertising Age broke a story based on the American Association of Advertising Agencies' 1993 commercial production cost survey that found a significant surge in the cost of producing TV commercials.

According to the study, the average cost of producing a national TV spot rose 13% to $222,000, the largest rate of inflation since the Four A's began tracking costs seven years ago.

A major debate has sprouted over reasons that might explain the finding, with commercial producers, advertisers and agencies pointing fingers at each other.

But George Bragg, an independent commercial cost consultant based in Darien, Conn., and former chairman of the Four A's Committee on Broadcast Production who conceived the study, said there are several underlying explanations within the study itself.

Mr. Bragg said the 1993 findings can be summed up in four "simple statements":

Overall, production costs went up 13% in 1993.

They went up that amount, because production facility costs also rose 13%.

The big jump in production facility costs was caused specifically by the fact that it took more time to shoot commercials.

It is the "more average" commercials that are requiring more time to shoot.

Mr. Bragg said several "myths" have cropped up to explain the rise, including the fact that only agencies that produce expensive, high-end spots were represented in this year's survey.

In fact, Mr. Bragg said the 1993 survey is based on essentially the same agencies that have participated for each of the seven years the Four A's has been conducting it.

Another myth, he said, is that "very expensive" spots are getting even more expensive to produce. However, Mr. Bragg noted that the portion of the survey represented by the top 20%, the most expensive spots, rose in cost by only 9% in 1993.

By comparison, the 20% comprising the least expensive spots to produce were up 11% in costs.

Mr. Bragg said the main reason for the rise in costs overall is that agencies, advertisers and producers simply are taking more time to shoot spots.

He noted the 1993 survey finds the number of shooting hours for all types of productions is up 13%.

Equally significant is a finding that location shoots are up.

Historically, location shoots take more time than studio shoots; and in 1993, for the first time, the study found more location shoots were done than studio shoots.

Lastly, he noted, overtime increased by 21% in 1993.

Why are commercials taking so much longer to make? Mr. Bragg said there are four possible scenarios:

Commercial concepts have become more complex and therefore require more time to execute.

Production companies are padding the amount of time it takes to shoot spots to compensate for slimmer profit margins and fewer projects.

Agency creatives are employing more extravagant production techniques to cover their bases.

Advertisers are increasing demands on agencies and production houses to develop several versions of spots to choose from.

"Which scenario is it?" pondered Mr. Bragg. "The truth is, all of the above. And the only way it can be stopped is for the advertiser to begin saying, `Stop.'

"It is the advertisers, after all, that sign the estimates and pay the bills. Cost increases are not happening without someone approving them."

Joe Mandese coordinates MediaWorks.

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