LONDON: A growing trend by ad agencies to develop their own advertising post-production expertise is setting a challenge for London's specialist post-production community as are changes to contracts and charging structures.
The Advertising Producers Association (APA), the trade body for independent post-production companies, says major agencies like WPP and Publicis are developing the means to bring the work in-house, the Financial Times reports.
It says the industry is also increasingly seeking to procure its advertising by volume and cost.
Steve Davies, chief executive of the APA, said: "Advertisers are attempting to commoditise what they do and buy by the yard when they're making a bespoke creative product. We're worried about it."
He also warned that the industry faced hard times as it emerges from recession because it had become "over-competitive" after many companies dropped their rates to win contracts without a corresponding lowering of expectations from clients.
"What you find is an industry that's fantastic for the buyer – but for the companies in it who appear to be doing a brilliant job, it's actually very hard," he said.
Hogarth, a post-production company owned by WPP, is an example of the threat posed to the traditional way of working.
Founded in 2008, it has grown into an enterprise with revenues of £60m after adopting a business model that rejected project work in favour of long-term contracts with major clients, such as FMCG giant Unilever, combined with highly automated technology to reduce costs.
"The issue is that advertising clients are looking to achieve greater efficiency," said Barry Jones, Hogarth co-founder and chief executive.
"One of the obvious routes is to not be working through agencies with the kind of boutique businesses that typically operate in Soho," he added.
However, other industry insiders remain sanguine, pointing to the unique benefits of having scores of post-production companies clustered in the creative central London district of Soho.
"There is a cultural vibe here which makes the global creative community aspire to work in Soho," suggested Mark Benson, global managing director of MPC, a subsidiary of film services company Technicolor.
Data sourced from the Financial Times; additional content by Warc staff