Why Production Companies Are Eating Up Agency Business!

Why production companies are eating up agency business with new creative services.

- Erik Oster

It’s no secret that holding companies have their backs up against the wall as MDC Partners is up for sale and WPP is mashing agencies together left and right in order to survive and hopefully flourish again. There are a number of reasons behind their struggles, but according to Pivotal Research senior analyst Brian Wieser, the “single most important factor” contributing to the holding companies’ declining revenues might be from brands cutting costs and working directly with production partners.

Brands want content delivered more efficiently and are moving toward more project-based work. That demand is driving new models that bring production and creative services together. Plus, the limitations of the traditional agency model leave creatives and strategists longing for a new approach. The result is a growing number of production companies that have shifted their focus to provide expanded services to clients, often at more attractive terms.

As clients search for efficiency, they “are calling up production companies and saying, ‘Hey, can we just cut out the agency and just do that with you?’” explained Serge Patzak, cofounder of production company 1stAveMachine.

Clients’ in-house teams are facilitating and fueling the trend, as they’re built with former agency people who know they can capitalize on the shortcomings of traditional shops.