The Latvian capital Riga turned 805 years old this year, but the tiny Baltic country's advertising industry has only just become a teenager. Raimonds Bricis, client services director at Saatchi & Saatchi's Riga office, remembers those early days. "The first agencies that opened had one fax machine, no computers and there were no studios at all," he says. "We're talking 1992."

As the industry began to evolve, Saatchi arrived and became the first global network to set up shop in 1994 after a half-century of Soviet rule. Riga, a city with a population of nearly 2.3 million, is now also home to six global ad agencies and the largest production centre in the Baltics, serving clients in neighboring Lithuania and Estonia. With no official government support (or official government hassles), entrepreneurial producers have begun pitching the country to the rest of Europe as a budding production services centre.

The two main production companies in Riga are Angels Studio and Vilks - which began serving the local market 14 years ago. Three years ago, Vilks' executive producer Sergei Serpuhov opened a production services division and has since shot 15 jobs for US, UK and Japan-based clients, including BBC, MTV and Nissan. He's preparing to pitch a proposal to give foreign production tax breaks similar to the Hungarian model, in which directors get a percentage of what they spend. "The government isn't doing enough to attract foreign production because they're not informed about the benefit that it can have for investment and tourism," he says, adding a big non-financial incentive is the lack of red tape when it comes to shooting on location.

Low wages and no unions also make Latvia attractive to foreign productions. The economy has recovered from the Russian economic crisis of the late 1990s and more money is flowing in from abroad. "Despite the fact that we joined the EU in 2004, labor is some of the cheapest in Europe," says Serpuhov. "We've seen good economic growth and the GDP is increasing at 10% a year, which is pretty good. Foreign investment is coming into the country and that has a positive impact on foreign business."

Lithuania and Estonia's production infrastructure is less developed. There are only a few production studios in Lithuania and none in Estonia, where local production companies are more likely to shoot abroad.

While growth is largely on the upswing, these territories still find themselves battling against public misconception. "Peoples' idea of what the Baltics are isn't accurate," says Harry Tracosas, founder and CEO of Los Angeles-based Global Production Network, which hooks producers up with production services worldwide. His company recently paired MTV and director Lauren Lazin with Vilks to shoot a Zach Braff-hosted Holocaust documentary in Lithuania. He has watched the local industry steadily work at increasing Latvia's visibility abroad. "In Europe, it's working. The Brits are going in with high-end work but the Americans and Canadians are still doing the touchy-feely thing. There is a whole gamut of opportunities, but people are nervous."

On the plus side, Riga's locations have a pan-European flavor, so producers looking for old world Europe, modern-day France or Italy and Soviet-era architecture would do well to scout Latvia. The industry also has a good reputation for set construction, backlots and soundstages. On the down side, Tracosas says, the country's currency is the pricy Euro and its infrastructure is still developing. "It's not inexpensive to shoot there and it's a [long] way to fly," he says. "They don't have as much depth as the Russian market. How much do you save if you have stunt work and special effects? You have to start bringing things in."

In terms of the local market, Latvian advertisers generally aren't willing to spend the big bucks associated with bringing in a foreign director, so the country's small pool of local talent has had to learn how to direct for many different genres in a short period of time. Latvia's recent admission into the European Union has also meant citizens are going elsewhere to find work, shrinking both the consumer market and creative talent pool. "On one hand, the directors here are flexible," says Saatchi's Bricis. "At the same time, if a specific job is coming, the director might be lacking. We don't have one good director who would be good on a beer or food production, for example, but the advantage is there is a huge willingness to prove ability and sometimes the director will be a little bold."

Creative in the Latvian market often draws on folklore and features good-natured in-jokes poking fun at the country's rural residents. With a few exceptions, the young market isn't yet producing a lot of conceptual work, says Bricis. While directors and producers always want to push the creative envelope, Baltic clients, like many of their Western counterparts, aren't risk-taking types.

As Latvia's market grows through its awkward teenage phase, the local industry is looking towards business from abroad to speed up the industry's creative education. "Clients and agencies are [still] learning how to raise more emotion and come up with more emotionally compelling copy," says Bricis. "Some stuff is interesting but I think there is still a way for our market to go to get to Cannes."

Saatchi & Saatchi www.saatchi.lv
Vilks www.vilks-pro.com
GPN www.globalproductionnetwork.com