Ford Squeezes TV Commercial Producers to Cut Margins

21 October 2003

The Ford Motor Company, itself engaged in belt-tightening to counter eroded margins and stagnant sales, has 'invited' TV commercial production companies to reduce their profit margins to work on Ford assignments.

Ford aims to achieve discounts from producers of up to 50% on their markups, thereby reducing the average profit margin to around 14%-15%. "This is not unique to Ford," spokeswoman Paige Johnson, told the New York Times. The squeeze, she said, is intended to " cut out waste and be more efficient".

And following rumors that some production companies have boycotted Ford bid invitations for fear their margins would be too low, the automaker's global agency manager Sue Markowicz claimed, "at this point nobody has not submitted a bid."

The producers are leery about any public criticism of a major client. But, warnedMatt Miller, president and chief executive at the Association of Independent Commercial Producers in New York: " This is an industry that still works on blanket markups. If advertisers push too hard, production companies that take too many jobs will be out of business and the advertisers won't have the production companies they like to work with."

Data sourced from: New York Times; additional content by WARC staff