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IS SOME PENCIL-NECKED COMPUTER geek from Northern California about to knock Joe Pytka off his throne as the undisputed king of commercials? OK, so that's a bit of a stretch, but now that agencies like Chiat/Day, Leo Burnett and DMB&B have linked up with interactive entrepreneurs, many in the commercials production community are starting to wonder what all this means for them. While no one is expecting television commercials as we know them to disappear overnight, the question of how fast production houses should be racing onto the infobahn-or at least setting up dealerships clustered at the entrance ramps-is far from settled.

True, a handful of commercials production companies not only have bona fide new media arms in place, but also can boast of completed projects under their belts. Crossroads Communications, a division of Crossroads Films, which opened last year to produce long-format advertising projects, has, among other things, created a Stanley Kaplan educational video and a soon to be released infomercial for Norma Kamali's new cosmetics line, as well as projects with Sony, Kodak and Sotheby's that are still under wraps. Last year, Industrial Artists director Mary Lambert, whose feature credits include "Pet Sematary," directed Doubleswitch for Sega, the firstinteractive game to employ live action as its primary element. And more recently, RGA Interactive, a company formed under the RGA Digital Studios umbrella, created an interactive piece for Bozell and Chrysler slated to be included in the Time Warner test project in Orlando.

Of course, there are those who remain mostly tight-lipped about their interactive forays, particularly those projects being created within the more traditional agency-client boundaries. For example, all that Sandbank, Kamen & Partners will reveal about what its interactive division, Persuasion Films, is working on for Nike is that the so-called infotainment piece will eventually air internationally. Propaganda Films' head of sales Steve Dickstein will say even less about Propaganda's current work in progress for an unnamed client, though he brazenly claims it will "change the entire advertising industry."

More often, companies admit to a keen interest, as opposed to any actual participation, in the new media arena. "The fact is commercials production companies, and Hollywood in general, are still pretty much in the dark as far as interactive goes," says Sylvia Kahn, executive producer at the Los Angeles office of Johns & Gorman Films and a member of its new media task force. "There's this question of what to do: Do we hire directors? Hire a Hollywood agent? Make infomercials?"

The somewhat schlocky reputation of the latter genre notwithstanding, the secrecy surrounding many of the projects discussed for this report, coupled with the expectations generated by the much hyped but stalled Time Warner project, has only added to the wariness of some. Says Frank Stiefel, president at Stiefel & Co., "I wasn't the first to start a production company and I won't be the first to go interactive." He adds, almost smugly, "The terms 'CD-ROM' and 'information superhighway' are banned in my offices."

But others are less skittish. "We may not know anything about interactive, but we're smart enough to understand that we don't know anything," explains Kahn, who says that partners Gary Johns and Jeff Gorman are also smart enough to realize that in the future, clients' budgets are going to be increasingly divided among traditional :30s and those that are more direct response-oriented. "To remain viable," she adds, "we know we're going to have to be more accommodating."

But to what extent is still unclear. At this early stage of the interactive game, most production companies are taking a cautious approach, investing more heavily in fact-finding missions than new technology. A representative from the Johns & Gorman task force regularly attends monthly meetings of the International Interactive Communicators Society, events that Kahn notes are mainly frequented by "nerds with pocket protectors." Kahn says the company has also formed an alliance with a decade-old interactive company in Northern California to prepare for future projects. Crossroads president Nick Wollner, who has worked with freelance programmers and designers, is "checking out technology and talent," looking mostly at graduate students majoring in graphic design. Sandbank, Kamen & Partners has gone so far as to add a desktop digital studio for handling multimedia and CD-ROM projects that has, so far, been used by freelance graphic artists and programmers.

Why the reluctance to expand? "There's still a level of skepticism on the part of production companies," says Jon Kamen, who points out that many are dragging their feet not only because interactive technology still needs fine-tuning but no one wants to spend money on spec work that has no place to air. "All the hype would lead us to believe that this multimedia stuff is right around the corner, when actually much of it is in the R&D stages," adds Tony Stern, a creative director at Chiat/Day/Venice who's been working on a Nissan interactive piece that, like Chrysler's, was to debut in Orlando in June.

And there are other practical issues, like compensation. Production companies want to know how they'll make money, and directors wonder how their day rates will be affected by sharing duties with designers and graphic artists. More importantly, with the abundance of multimedia startups and special effects houses like RGA, Digital Domain and Pacific Data Images on the scene, is it enough, as some directors have suggested, for mainstream production companies to position themselves as having a superior understanding of how to execute marketing and advertising strategies?

The answers to this question are mixed. "We're interested in working with people who share our same vocabulary and purpose, but at the same time it's foolish to ignore the new kids on the block," says Ken Yagoda, an executive producer at Young & Rubicam/New York who's involved in several confidential multimedia projects for the agency's clients. Still, Francesca Cohn, executive producer at Team One Advertising, echoes the industry's need to be more accommodating and provide more resources. Cohn, who heads Team One's Team 2000 interactive division, which is looking at both traditional production companies and multimedia's new breed, says, "Production companies are going to have to expand their post services and be willing to shoot more film that can be used for a wider range of projects. And they're going to have to become a lot more savvy about using digital production, as agencies will no longer be able to justify big set construction if computer-created solutions are better and cheaper."

The Time Warner project, which is now scheduled to kick off late this year, may hold an early key to the multimedia production future. In any event, no one plans to be left, like the Bates Motel, standing vacant by the old country road while all the shiny new motels are out on the interstate.

"We're all standing on the edge of a cliff with our parachutes," says Kahn. "We're just waiting for someone else to jump first."

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