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By Anil Noorani
TKM’s Managing Partner outlines the key takeaways from the recent report, conducted in collaboration with the WFA and only made available in full to the WFA membership.
Producing more for less
The weighted average for content production as a percentage of total spend is 17%. This compares to a higher average of 24% in 2018
The full Global Content Production 2021 report was published in December 2021 and only made available to WFA members. The summary of the report, produced exclusively for Producers & Procurers iQ, highlights nine of the key insights to emerge from the research and nine joint WFA / TKM recommendations, moving forward.
The significant investment in ‘digital first’ content and direct to consumer channels, brought on by a clear and obvious shift in consumer behaviour over the past 2 years has, for many national and international brands, been a catalyst to assess and reshape existing production models. This has been compounded by a growing need to develop models built on sustainable practices and processes relating to both people (DE&I) and the planet (eco-friendly initiatives).
Results show that 1 in 2 WFA members are not satisfied with their current production model, while 61% of members agree that Covid-19 has had an impact on how we manage and execute content production. These statistics reinforce the importance of this research, based on the findings of 45 WFA members from across the globe, to better understand the challenges, trends, spend, metrics and success enablers related to central, regional and local production models.
It is evident that there is no one size fits all as companies strive for more collaboration between partners and look to pursue a production vision that will align internal and external teams. With content production spend (as a percentage of total spend) decreasing, members are looking for production models that offer more speed, agility and efficiency. As volumes fluctuate, skills, utilisation, and capacity have become progressively more important in assessing an operating model’s success.
Companies are looking to find a balance between outsourced agencies, in-house teams and offshore hubs, as a result areas of core competency are starting to emerge for each type of partner. Outsourced production specialists flanked by offshore and in-house teams, are becoming more dominant in digital, social, on-line video production, post-production and transcreation – favouring a decentralised model – with growing levels of regional and local activity. Outsourced network agencies are the primary model for strategy and hero content, managed centrally or globally.
Offshore hubs and fully inhouse teams are showing signs of maturity and are the models coming out on top for greatest levels of additional utilisation over the next 12 to 24 months. Automation and centralised asset management will help address the content at scale challenge and contribute to greater cost reduction and speed to market, through asset re-use.
This report also shines a light on the maturity levels relating to sustainability in production. Whilst not looking to bring specific recommendations to the table, we were keen to raise awareness around current practices, barriers, areas of success, defined gaps, metrics, useful resources and case studies, that would both inform and support active sustainability initiatives. This is a topic we will be revisiting in 2022 to build on the excellent insight provided by the members for this report.
Nine Report Insights
1. What are the biggest challenges (if any) associated with your current production model?
The top 5 challenges as defined by WFA members
2. Spend % on content production decreases
Results show that 43% of members spend between 11% and 20% of their total marketing budget on producing content. The weighted average for content production as a percentage of total spend is 17%. This compares to a higher average of 24% in 2018.
3. D2C dominating future production spend increase
Changing shopper behaviour instigated by new buying habits engendered during the height of the pandemic, has made a ‘direct-to-consumer’ strategy a focal point for many manufacturers and product owners, looking to enter the retail market directly without reliance on external retailers. Companies can now connect directly with their customers and own the rich first party data, once shielded by retailers. It is unsurprising therefore, that 63% of our respondents cited ‘D2C channels and e-commerce’ as one of the three channels most likely to have increased content in the next 12 to 24 months.
4. In-housing and offshoring better together
This report reinforces the maturity of in-housing strategies, with 50% of North American members and 41% of European members stating in-housing is now mature or very mature. Perhaps surprisingly, offshore strategies while currently adopted by fewer companies, have also developed a level of maturity, with 31% in North America and 28% in Europe describing their offshore strategies as very mature or mature. 57% agree somewhat and 19% strongly agree that the in-house and offshore production strategies are not mutually exclusive, with only 2% strongly disagreeing with this principle.
5. Fully outsourced models dominate but the gap is closing
The changing shape of the production ecosystem driven by the insatiable demand for content, has meant that brands have engaged several production models to maximise their spend and deliver relevant, timely content for their customers. While planning/strategy continues to be dominated by the fully outsourced network agencies (65%), campaign project management (58%), production insurance (48%) and usage and rights management (51%) are all activities that still have a heavy reliance on the fully outsourced agency model with network agencies continuing to dominate the market. The shift from network to independent agency specialists is most prevalent in postproduction, transcreation and adaptation.
6. Centralised strategy, localised production, and a flexible data/ecommerce strategy
A creative strategy, managed centrally (59%), is the most popular model for WFA members. Creative execution and production are primarily managed locally (39%) or regionally (36%). There is a trend towards decentralised content studios to deliver hyper personalisation, reflect cultural nuance and manage real-time content, providing a backdrop for each location to create content appropriate for the local market.
7. In-housing and offshoring strategies show signs of maturation; with North America leading the way
One in every two North American members now have a mature/very mature inhouse strategy. With Europe closely following. LATAM is at an earlier stage with one in every five members moving to maturity, but most have not yet started or at an early stage. APAC seems to be the most immature with China leading the way. Almost one in three European and North American members now have a mature or very mature offshore strategy. A model seeing considerable growth.
8. WFA members have India in top spot
India will most probably retain the top berth as the primary offshore production location due to its unmatched talent pool (for both advertising and packaging), on-going support from higher education institutions investing in creative and digital qualifications, good value for money, competitive salaries in relation to more traditional markets, consistently high quality, a deep rooted understanding of the international outsourcing market, strong language skills, and they will often run 24/7 shifts to provide local time support.
9. Roles and responsibilities shared across internal and external stakeholders
As the pandemic forces swift and sweeping changes throughout the industry, budgets shrink and models are redefined, one constant is that procurement and sourcing continue to own contract negotiations for both agency (87%) and production companies (60%). While the overarching strategy for content production (70%) assessing performance and ROI (59%) is still primarily owned by Internal – Marketing.
WFA and TKM Nine Recommendations
The best production models deliver creative excellence, efficiently. Understanding consumer, industry and technology trends and aligning them to your ‘must have’ business objectives in relation to your brands, culture, sustainability initiatives and locations, will help define a strategic vision and plan, around which your production model can be built, and stakeholders and partners can align. This includes:
Assessing the skills and capabilities of existing teams (internal/external), technology, processes and talent acquisition/development, against what capabilities your business needs today and, in the future, will help you better understand the gaps that exist to deliver on your strategic objectives. It is about identifying the right resources for the work. Deciding whether these gaps can be overcome, how they will be overcome (internally/outsourced) and whether there are enough diverse skills that can scale appropriately that will determine the shape of the model.
As brands determine the right mix of central v regional v local production (based on the strategic plan), it is paramount that you avoid silos wherever possible and develop transparency. To mitigate this risk, a global coalition with local ambassadors should be established, directed by strong client leadership alongside agency and production representation, with geographical oversight. An optimised model will ensure complimentary rather than overlapping skills. This team operates with well-defined shared practices, processes, and procedures to ensure coordinated progress. This, however, requires strong, active marketing leadership and will only be effective if the vision is agreed up front.
Technology advances in MarTech continue to accelerate at pace and can offer transparency and control, especially global DAM, and project management systems. If requirements are well defined selecting a best-in-class product should be relatively straightforward – adoption of a single product for your brand, across all locations and encouraging partners to utilise the platforms is much more of a challenge. Having the right level of investment, aligning the right resources to own the strategy and a well-defined plan to manage the transformation and behaviour change is crucial. Find the pioneers to lead the change, they will assist in generating short term wins, building new habits, and creating a sense of urgency.
When building project controls and onboarding production partners, ensure the following:
The importance of chemistry to help build trust, develop long standing production partnerships, retain talent, and cultivate the quality of the work, should not be underestimated. Effective teams are more than just a collection of talented members and well-established processes. Being compassionate, realistic, fair, and always acknowledging great work, wherever it’s produced, will lay the foundations for a successful production partnership towards shared goals, and keep everyone engaged and on the job.
If you can’t measure it, you can’t improve it. Clear, agreed, well communicated and consistent KPIs that are collected and appraised regularly, will provide the relevant performance analytics needed to drive improvement. So, we must identify areas to quantify and build fit for purpose KPIs. Baseline metrics should (at least) include:
Bringing content related customer data into the mix, relating to customer conversions, churn, reactivation, and cost per acquisition will also support both your marketing ROI and creative production ROI.
Sustainability should be embedded at all stages of the production model from vision and strategy to design, implementation, and assessment. Sustainable practices for creative production should be aligned to the wider company initiatives to access investment, receive support, build momentum, and share best practice. Sustainability for creative production must include both people and planet and consider the impact in front and behind the camera. Measure progress, reward positive activity across the marketing ecosystem, create company production guidelines that are clear on sustainability, offer training to bring your production partners on the journey and champion behaviour change.
Effective marketing ROI is a strategic imperative for all brands so we can assess the real value of our campaigns and content, as well as justify investments in production – and help protect budgets that have decreased in the past 3 years. Coupled with the impact on sustainability, validating the need for new productions versus adaptation of existing content becomes essential.
Investing more in platform integration to extract better customer data and create a single customer truth is a starting point. Equip your in-house team or select a data partner with the relevant econometric skills to help build the right ROI models. Use lean principles to deliver a streamlined production model that will also contribute to the operational ROI. Avoid vanity metrics and focus on real success factors, relating to sales performance (higher ROI) and brand equity.