One of the hot topics from the World Producers Summit at this year's Cannes Advertising Festival, hosted by the US-based Association of Independent Commercial Producers (AICP) and Commercial Film Producers of Europe (CFP-E), was the recent emergence of the agency-owned production company, as represented by Australia's Plush Films. Owned by WPP Group's Singleton, Ogilvy & Mather, JWT Australia and Young & Rubicam, the company's formation in 2003 created a major stir amongst Australia's independent production company community which was reignited this past August when a report on Australian ad mag Campaign Brief's website stated that JWT Australia and Plush had struck up a deal with Hungry Man USA. The news was subsequently denied by the American production company.

Plush operates as a producer-based company; without a traditional directorial roster, it approaches individual directors and their production companies, if applicable, on a project basis. The news of Plush possibly working with some of Hungry Man's directors resulted in a flood of negative comments to Campaign Brief's story, bemoaning the impact they say Plush has had on the Australian production climate.

According to Bethwyn Serow, television commercials manager for the Screen Producers Association of Australia, Australian media reports have stated that Plush currently "dominates around 30% of the production business in Australia - I'd estimate that's the minimum and its 30% they didn't have just over three years ago." The Sydney Morning Herald reported last December that Plush was pulling in annual revenues of $60 million AUD, much of it coming from productions for its shareholders' clients.

For his part, Plush EP Rob Spencer has heard all of the criticisms, and while he understands the pressures created by scarcity of work and a new global market, he says the circumstances behind the Plush model are A) not that new, and B) part of a natural and necessary evolution of the agency/prodco relationship.

"Change scares people," he says. "The reality is that all good Australian agencies have had their own production facilities for a long time. The difference with Plush was that it was a number of agencies coming together at the holding company level with a view to create scale, a scale unmatched in Australia and New Zealand."

Indeed, in North America and the UK, in-house production capability at agencies isn't news, and tech advances are ramping it up. There are Saatchi's in-house content creation companies (including Vermilion Films); Crispin, Porter & Bogusky has production capability in its new Boulder, Colorado digs; and JWTwo, the in-house production facility at JWT's New York offices, has recently bolstered its production ability with an ultra-high-powered Apple Xsan system.

John Garland, COO of JWT and executive director of its brand entertainment division JWTwo Entertainment (see Monitor, pg. 10), says that while JWTwo functions as a practical extension of agency creativity and a formidable profit center, it's not intended to fully take the role of the production company.

"In an area where production companies normally operate, offering directors, that's not the business I want to be in because there are so many diverse flavors there that trying to cover all those bases in-house is not practical," he reasons. "But in a lot of the things we do, such as revisions to things or testing materials, there's no reason why we shouldn't have that inside."

While Garland calls the Plush model "a very clever one" with aspects that could work in North America, he thinks it would need adjustments due to size of the market and the history of competition between agencies, even within the same holding company.

AICP president/CEO Matt Miller says that while "it's not a new tactic [for agencies] to try to save money that way and access talent" (in fact, the AICP was formed in 1972 in response to agencies creating and using in-house production), it's an inefficient one for both agency and client.

"Part of the efficiency of production companies is they know their directors' styles, how to work with them. That's why it's so important which executive producers they team up with."

"We do not approach, nor have we ever approached, any director who belongs to another production company to 'come work with Plush'," offers Spencer. "If a director works for us, [it's because] he and his company have agreed.

"Also, contrary to popular belief, Plush does not 'split' a director and producer team - they both come as a team and work with us if they choose to work with us at all."

Clearly, media fragmentation is prompting clients, agencies and production companies to re-evaluate their businesses. While the SPAA's Serow says "it's interesting that no other agency group is rushing to emulate the [Plush] model", the Sydney Morning Herald also reported in December that McCann WorldGroup Australia had been reviewing the possibilities.

Says the AICP's Miller: "The concern at the World Producers summit was that if this is an initiative that WPP's going to try to roll out worldwide - that's a problem."

"We respect the expertise of what an agency brings to each project," sums up Anna Fawcett, EP at Australia's Filmgraphics. "The same should be applicable to production houses."

AICP http://www.aicp.com
Filmgraphics http://www.filmgraphics.com
JWT http://www.jwt.com