By: Lakshmi Jayakumar -- Principal Analyst, Indirect Services
16 July, 2019
Production accounts for 20–25 percent of the total advertising expenditure of clients. Media contributes to the majority of these expenses because it is the channel of communication between the advertiser and consumer. However, since advertisement production is a tactical job, it accounts for a lower share of the overall cost. This whitepaper focuses on approaches that can help reduce the advertising production costs, with major focus on digital asset management (DAM).
DAM can be used for storage of production content by either using software in-house or outsourcing to third-party vendors in order to minimize the cost of production as well as leverage the production decoupling services.
DAM is the way forward for all advertising, including the tactical categories like production.
Advertising is one of the most dynamic industries constantly changing at the supplier land space level and in technology adoption and consumer engagement techniques. Media is seen as the most crucial spending point in advertising since it is the platform that brings the consumer closer to the advertiser in order to understand the brand, and, thus, trigger the purchase decision through improved brand positioning.
Creative advertising was always given priority (with 40–45 percent of the total advertising budget), since creative and art directors were the key persons behind the brand message and content in an ad for a marketer. In the early days, production was considered a part of the advertising agency services, where marketers engaged with advertising agencies for end-to-end concept and campaign development. However, when procurement identified the cost benefit of decoupling production services for production companies, it slowly created a trend in the production space. Thus, more marketers began to engage third-party production houses to cater to their production requirements.
In addition, owing to the reduction in advertising budgets, buyers developed asset management systems to form a repository of their creative works, but since production was considered a crucial category, it was given lower importance owing to its tactical nature.
This whitepaper highlights the advantages of DAM and shows how marketers can use this in the production space and enjoy cost advantage in the years to come.
DAM is a process by which buyers can organize, store, and retrieve rich media and manage digital rights and permissions. The rich media assets include advertising content, ad images, background music, videos, animations, and campaign reports that can be used for future reference
Sources: PE1, Secondary sources (digitalassetmanagementnews.org), Supplier Interaction.
Types of Tools: DAM can be managed by a buyer in two ways, by engaging a cloud-based provider through annual or quarterly subscriptions, and by developing a proprietary tool on a perpetual or term licensing basis customized to the marketers’ requirements
Cost areas in implementing a DAM system
Sources: PE1, North Plains Website, Supplier Interaction
Benefits of DAM System Usage
Another major hidden value proportion that marketers fail to identify is the major boon of helping them in ROI calculation. The ROI of DAM implementation can be classified into both hard and soft dollar costs involving process improvement, cost reduction, revenue generation, new profit centres, and brand protection.
Here are a few cost components and their probable savings that could be created by investment in a DAM system:
Source: Supplier interaction.
Production process flow and DAM’s role
Production comprises mainly three stages—pre-production, production, and post-production—by which advertisements are distributed to their respective formats across various channels.
Apart from these regular production activities, buyers can avail some value-added benefits by using DAM in their production system:
Examples of Production DAM software–Tactic (Free Open Source), Shotgun, and Ftrack (paid sources).
Advertisers are closely looking for ways to save cost on advertisement creation without compromising on the quality of campaigns delivered to consumers. DAM is applied in the creative advertising and digital space, and its use in the production space is comparatively less. By using DAM in the production space, clients can leverage a cost saving of close to 15 percent with content access and leveragability. It can also reduce the lead time to market and facilitate content reusability. A production consultant can be engaged to help the buyer to channelize their production DAM and ensure effective usage of the platform as well as increased cost savings in the years to come.