7 Reasons Why Commercial Production Accounting Needs a Revamp

Remember that Chewy commercial where the cat inherits the summer house at his dead owner’s will reading? Or the one where Patrick Mahomes says he “pro-fers” Subway sandwiches? Or the insurance-obsessed sales guy and his emu sidekick pimping Liberty Mutual? At least one of these has probably made enough of an impact that you instantly recognized it. Just like film and television, the ad industry spends billions of dollars to create memorable content like this that will attract eyeballs. And just like film and television, commercial production has been operating under antiquated expense management models for decades, meaning wasted time, added costs and lost opportunities. Commercial producers need a platform that will address the specific cost-tracking challenges that plague their industry so that they can focus on memorable creative. Here are seven of the most prominent issues they face.

Smaller Back Office Teams

Production office staffing on commercials is notably smaller than on major motion pictures or TV shows. Many commercials don’t even have production accountants despite the fact that crew size and vendor counts might be similar to a feature film. Production company owners may be amalgamated into some producer/production manager/production accountant hybrid, stretching them thin and all but guaranteeing mistakes will be made, especially if expense management is not their forte.

Compressed Production Timelines

Just like in entertainment, proper visibility of expenditures gives the producing team confidence that they’re making informed decisions. However, commercial production boasts abbreviated timelines, with principal photography averaging anywhere from just one to five days, putting pressure on the back office to curate precise financial information quicker than is often feasible. This efficiency lag can result in costly blind decision-making.

Mistakes Affect Margins

Most commercial productions are based on a fixed cost model, with the production company’s profit margin baked in. Any unapproved overages incurred must be eaten by the production company, meaning a reduction in profit. Only with a powerful, real-time cost-tracking platform can the company ensure that they are operating within budget parameters in order to maintain their intended margin.

Saturation Point

A commercial production company has limits on how many projects it can undertake at any given time based on its manpower and resources. Like a sponge that’s too full to soak up more water, a production company has reached its saturation point when it can’t handle any more work. Commercials are a high-volume business, with one brand often soliciting multiple spots, so opportunities for increased workloads (and profits) are dependent on prioritizing efficiency during prep, shoot and wrap. Especially for smaller houses, the longer the wrap, the longer before they can move on to their next assignment.

High Cost Per Second

Commercials average much higher costs per second of screen time, meaning the stakes are higher when accounting for every dollar. For instance, a $1 million independent feature averages about $185 of spending per second of screen time while a $1 million commercial averages more than $33,000 per second. Such high costs per finished second increase the demand for accountability.

Transition to Post

In entertainment, the producer takes the film or TV show all the way through post to delivery. However, in commercials, once production is complete, the producer usually turns the footage over to the ad agency or client to handle the post. This switch from one company’s accounting platform to the other can create unnecessary disruptions, delays or questions. To keep things seamless, the production company and ad agency need access to the same expense management platform.

High Expectations

Top ad agencies like Leo Burnett and BBDO or major brands like Coca Cola and Nike expect much from their producers because they spend so much. Movie producers may only make one or two films for the same studio, but commercial producers who consistently deliver quality work on time and on budget will find a lot more work in the wings. On the flip side, shoddy expense management could be the arrow that fells even the most capable producer otherwise, costing millions in lost opportunities.

Fortunately, RollCredits was created as a solution to these obstacles, with best-in-class AI designed to save commercial producers hundreds of hours and thousands of dollars by streamlining the entire expense management process. Whether it’s our photo-based data extraction software that virtually eliminates manual entry, our integrated budget actualization and variance tools, or any one of several other time-saving features, you may wonder how you ever produced commercials without us.