Evolving tactical video production- Creative Studios
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1 WHITEPAPER JUNE Evolving tactical video production- Creative Studios
2 Abstract / Business Case 1. Introduction:This whitepaper help pharma clients who allocate lower budgets to their tactical production services to engage with creative studios instead of full-fledged production houses for their tactical production requirements 2. Main:The main objective of this paper is to help client in the lower production spend brackets to leverage creative studios to develop low cost production services like designing, software development, video graphics thus increasing long term cost saving opportunities 3. Recommendation: Clients could engage creative studios for low cost tactical production solutions with low turnaround time in campaigns where the target audience have limited necessities Problem Statement / Introduction Key Issue: Clients in industries like pharma have low spend budgets on their advertising and promotional services since there are regulatory restrictions on the promotions of drugs and the target audience in this space is limited. Global creative agencies and production houses prefer to work with clients like CPG, FBT, Automotive etc. whose promotional budgets and spend on campaigns is high which decreases the bargaining power of low production spenders in this space. Production houses have now developed extended capabilities like content creation, strategic solution designing, pre-production, editing services etc. and prefer to engage clients on a project based model providing end to end production services. These strategic production houses have highly skilled labor and become expensive for clients who would have a well framed requirement which requires only tactical production services. Creative studios are the best fit solutions to these clients since they provide them with an overall effective production solution based on the exact requirements set by the client based on the target audience defined by the client for the respective campaign.
3 Evolution of Creative Studio Services Need for Low-end Creative Tactical Service: In the initial years, pharma clients engaged network agencies to avail end to end creative and production services. However, due to less cost transparency clients slowly shifted to maintaining an in-house team for producing tactical low end marketing communication production services that are targeted at an internal level to promote the products to educate sales force within the company and circulate informative videos to deliver the product knowledge and sales information across the organization at a global level. This helped clients to reduce the cost of engaging a full service provider and also to increase the turnaround time for producing tactical video content for internal purposes. In-house team maintenance helps clients to integrate the brand, to have complete control over process and assures secrecy of high confidential data. Clients maintain 45% in-house staff and engage contract staffing agencies with higher skill sets at lower compensations. Generally, pharma companies in the US region that have inhouse studio facility, mostly manages it with contract staffs with the help of creative staffing agencies. High salary cost has led pharma companies to prefer contract staff over company employment. In-House Full-time employees Contract Staffing 45% 55% In-house Low-end Creative Tactical Service Management Sourcing Local Regional Global Adoption Rate 35% 50% 15% Reason for Adoption Allows rapid adaption and translation Can be highly costeffective in low cost countries Cost effective on a regional basis Short Lead time Ease of Management Lack of suppliers at global level Fragmented regulatory landscape Strong regional bias Although this was an effective practice high salary cost, higher need for training and capital cost& toughness to scale up in quick time made clients look out for substitute alternatives in the tactical service space. Technology up gradation, need for skilled work force and deviation from the focus business objective paved way for niche specialist agencies called creative studios which acted as tactical partners to clients in producing low end tactical works which helped clients to reduce their investments in developing their in-house capabilities. Why engage a creative studio? Companies which prefer to outsource, mostly engage it with creative agency as one stop solution to avail ease of management. But, major pharma companies unbundle their production services and engage with specialist agencies to have high quality of work and to get 5 10% of cost savings in total media spend.creative studios help clients reduce the overall spend of training and staffing of full time employees. Clients can leverage service capabilities such as technology, high skilled labor, reducing turnaround time and leveraging
4 long term cost saving opportunities which help them to increase their focus on the core business objective. Industry Adoption Technique Engagement Strategy Key Insights Current Trends Major Services Clients examples In-house Studio 40% of pharma companies in the US use in-house studio facility for low-end creative tactical services. Mostly, companies who promote branded drugs in matured stage of product lifecycle use in-house studio. The adoption is decreasing, because of the factors such as high overhead cost, higher frequency of technological updates, and quality of service. Marketing and communication strategy Brand management Medical sign-off for all final materials Overall project supervision/project management Budgeting/budget control Novartis, BMS Complete Outsourc e Only few pharma companies completely outsource their lowend creative services. Most of the companies in generic market follow this approach. Adoption rate is likely to remain stable since revenues of the companies adopting this model is small and doesn t have huge impact in terms of media spend. Print and print buying management Photography and photo reproduction Creative design Video production Website design and production App and mobile design and production Teva, Group Health, Genentec h, Alcon Partial Outsourc e 45% of pharma companies in the US follow partial outsourcing approach. This model is been followed by both generic and branded drugs manufactures, and it suits throughout the product lifecycle. Adoption rate is increasing and is likely to reach 55% in The main factors are cost effectiveness, big campaign handling capability, constant monitoring, and control over process. High spend, high strategic importance, consistent, high degree of branded integration campaigns were usually kept in-house Low spend, high volume, more technology involved, high quality campaigns are outsourced to avail maximum benefits. AmGen, Pfizer, Sanofi, J&J, GSK, Eli Lilly
5 Industry Adoption Technique Sourcing Strategy Major pharmaceutical companies are looking at regional engagements with the agencies to optimize and streamline the commercial operations; however, global presence is limited in the creative studio space. Sourcing Strategy Local Regional Global Adoption Level 35 40% 45 50% 10 15% Suited For Focusing on niche specialty products in a specific territory Promoting portfolio of drugs/ products within a brand Primary care drugs, over-thecounter products Client Examples J&J*, Baxter AmGen, Sanofi, GSK, Novartis Abbott, Eli Lilly (managed from Indianapolis), Pfizer* *Sourcing strategy for some products only Clients prefer to engage a regional and local player in the creative studio space since engaging at a global level does not seem to be the most highly adopted model, due to factors like type of products and varying commercial setup and regulatory environment across different markets.also, the service capabilities of service providers and their performance levels vary widely across different markets. Therefore, managing the studio works globally mandates frequent reviews in performance metrics, terms, and scope and rate reviews, according to the regions, which increase the complexity of management. So marketers prefer to sign regional or local level contracts to leverage similarity in markets and reduce sourcing complexity. Analyst Recommendations How could other clients across industries leverage Creative Studio Services? a) Entry into emerging markets: High advertising spenders like CPG, FMCG, Automotive etc. could leverage creative studio services in emerging markets. Marketers who engage their agency of record for their major creative and production services usually adapt the campaigns to meet the regional flavours in emerging markets like Asia, Africa etc. Creative studios could play a prominent role in these markets since the services like interactive displays, digital videos with translations etc. could be developed at low cost and aired in these markets. Also, video works used for internal communication aimed at organisational purposes could help them train their regional sales force better with quick turnaround time. b) Agro clients produce aerial field s videos, events video, educational movies via cartoons or drawn in real time, 3D movies, virtual visits by interacting with the target audience like farmers, wholesalers and distributors. Here the spend allocation is very low which makes these clients, less attractive accounts to large network agencies. These clients could
6 leverage creative studios to develop these video campaigns since they have set framework for their videos with only tactical low end requirements very specific to the target audience who are the end users. Future Scenario Clients in various industries could look forward to decoupling their low tactical services to creative studiosto produce campaign videos with higher cost benefits. Creative studios have the service capabilities to provide services both for commercial marketing production services and internal marketing communication videos. Marketers could partner with a pool of creative agencies, production houses and creative studios and allocate their spend in such a way that they can leverage long term cost saving opportunities without compromising on the quality of works. This could be practiced across all industries based on the type of content required, level of tactility involved and lead time to the markets however the key benefiters of creative studio will be the low spenders like pharma, agro, chemicals etc. Industry Speak/Acknowledgement Marketing director of Leading Advertising Agency Advertising & Production Consultant Pharma Consultant Director of Production house
7 Metadata Industry to be impacted(highlight the industry to be impacted) Pharmaceutical Food, Beverage & Tobacco Metal, Mining & Minerals Chemicals Oil & Gas Personal Products Bank & Financial Services Agro Domain to be impacted Marketing Services Category to be impacted Creative Services Production Services Focus Area(Highlight the Focus Area) Sourcing Opportunity Supplier Intelligence Technology Substitute Opportunity Supply chain Risk Input Cost Price Outlook Sustainability Keywords Used Creative Studio, Low end tactical Services References ttp://
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