How is the market out there?

[Emre Tufekci s.o.a.]

I hear you Shane, Thank for the input. First we lost the Orphanage in SF and then Rainmaker studios scaled back to 3D gaming, whats next Zoic,Belief?

I have a lot of local 600 freinds in LA and they are really dying.

Hmmmmm. Maybe I should leave my shop in DC and lease it to somebody???

Emre Tufekci
http://www.productionpit.com

[Aaron Neitz]

I’m 100% with Shane. LA is a bloodbath. Lots of shops closed or closing. Editors out of work. Budgets are taking a NOSEDRIVE in commercial editorial. Now there’s a ton of very talented artists milling around town chasing after very few jobs.

One thing I’m seeing: the single service houses are suffering most: ust offline edtorial, just finishing, just color correction. Diversity in your company’s services and talent is very important.

I’m personally very busy with several long form documentary projects. Seems there’s a lot of that type of thing going around lately.

[Nick Griffin]

Our business (multiple aspects of B2B, technical industrial marketing communications — including video production) was going strong in 2008 and then began to soften early this year. Most of our existing clients scaled back which left me with more time to pursue new business. By late spring we had several things, with both new and existing clients, in the talking stages. But virtually no one was pulling the trigger on anything new. Several smaller existing projects kept us alive, however the reserves of cash from a great ’08 were fading away.

Everyone wanted to get the pitch, hear the details and get the pricing then it would turn into “We really like this, but we’re not going to do it just NOW.” Or, “We’re not in position to start anything new right now, but plan to in… Q3… next fall…Q 4… after the year ends… early next year… etc.

Well here it is Q3 and all of a sudden, many of these things seem to be coming to life after all. Our biggest fear is having too many things coming in at the same time with everyone assuming that because it had been slow they’re automatically at the head of the line. I guess that’s a good fear to have.

So the next few weeks will tell the tale and we’ll see what we actually have for Q3 and 4 or if the delay mentality is still prevalent. One thing that has seen a serious delay mentality is collections from some, fortunately NOT all, clients. A few companies that used to pay net 20 – 30 first dropped back to net 45 and then to 60 and recently to 75 days. I’m fearful that this could be like gas prices: shoots up quickly but takes its dear sweat gradual time to drop back to normal.

Life’s not great, but not horrible either. Optimism is the order of the day.

[Mads Nybo jørgensen]

Like Michael, my company is in central London too. Our trade is badly down this year on last year, but we are starting to see a recovery. Luckily I’ve done a spread bet offering several services; so with the UK broadcasters being in trouble and the overseas feature film market that we’ve enjoyed killed off by the previous chancellor, I’ve refocussed on production and production services targeted mainly at SME’s with a focus on quick turn around and affordability – we tend to a lot of shoot and edit for mobile, web and DVD. Currently we are doing some (for us) aggressive marketing to drive the name out to new clients.

All the Best
Mads
London, UK

Mac Million Ltd. – HD Production & Editing
Please watch our latest video on Data Protection at https://www.youtube.com/watch?v=CVyv_lTywwc
Blog: https://blog.myspace.com/bigflopproductions

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[Mick Haensler]

[Nick Griffin] “Optimism is the order of the day. “

Indeed Nick!!! That and low overhead. Things aren’t too bad in small town America. My area never really boomed so we didn’t hit bottom too hard either. I’ve diversified my services and kept purchases to a minimum. Paid off my company CC with a 3% interest LOC and saved myself a ton of output. Just trying to be smart and enjoying the down time as well.

Mick Haensler
Higher Ground Media

[Bob Zelin]

Here in Central Florida (Orlando, Tampa, St. Pete), things suck. I have been very very very lucky to have had a great year so far in 2009, but I observed others suffering around me. And now, business for me has taken a nose dive. I have several projects going on, but I am usually flooded with work (which is why I act like such a pompus ass all the time), and now, that is not the case. Am I nervous ? – YOU BET I AM NERVOUS. If my production clients are not working, then I am not working. I am involved in several moves of facilities this summer, but things are definately not cranking. I do not see things “getting busier”. The few exceptions to this are some lucky clients that I have (thank God !) that have unique businesses (and keep me eating), but things are NOTHING like they were this time in 2008. I often say to collegues “gee, what else can we do for a living”.

Bob Zelin

[Chris Blair]

I have to echo what Bob says. We’re seeing the same thing in the midwest. We’re right between St. Louis, Nashville, Louisville and Indy…and our business is off at least 25% over last year. We do have some encouraging prospects for 3rd quarter, but overall, it’s an unnerving time.

The other thing we see is clients coming to us with projects with bids from other companies in-hand that are ridiculously low…and they’re asking us, “what can you do for us considering what we’ve already been quoted.” On most, we have to answer, “nothing…” since doing it for even a substantially more than the quote they have would be a money losing proposition.

There are SOOO many companies that are willing to work for next to nothing that it undercuts everyone. Quality suffers, bottom line suffers (to where it’s non-existent), and it feeds the belief that “anyone can do video and design.”

Chris Blair
Magnetic Image, Inc.
Evansville, IN
http://www.videomi.com

[Kira Hammond]

This video is a brilliant description of what you mention in your post:
https://www.youtube.com/watch?v=R2a8TRSgzZY

To answer the market question. True CA has been hit very hard, tons of freelancers out of work, lots of cut backs and downsizing, a number of big players closing their doors. Folks offering to work at half to a third their normal rate. However, it’s not all doom and gloom.

To be honest the “what can you give me for less” and “this other group said they can do it for less” has always and will always be something you need to contend with in terms of new clients, or as roles change within a company- your new client contact. From the client side it makes a heck of a lot of sense. Think about when you walk into a store don’t you think “Hmm I wonder how much this is at xxy shop? If I go online can I find it cheaper?” It’s the same thing, clients want to make sure they get the value for the money.

What you can do to change that mindset is to show that not all value is a $ figure. The key is to focus on building a relationship, by providing value outside of deliverables- know your client’s products, do proactive pitches to them based on their product line and life cycle, watch your client in the market are there sales up down? What’s on the horizon for them? Spend the time to really walk in their shoes, know their concerns, address them proactively.

This way a client stops shopping around, and just goes to you first because you’ve shown that you know them and their products, you meet their needs and can prove it with stats and facts, and that they feel important because you respond proactively to how the market changes are effecting their business.

Clients are still spending but differently. They want to leverage the same media in more ways (it’s a video, it’s a web campaign, it’s a print ad), and instead of bigger events the interest is in small events with key players, virtual events online, and viral marketing instead of big displays and broadcast commercials.

Budgets are generally smaller, so it’s helpful to walk through a budget with a client and show them where they can make cut-backs and where they can’t spare the $. Make your proposals modular so clients feel like they can pick and choose to save costs rather than having to nix the whole idea due to sticker shock.

For example instead of saying “Oh yeah we can do that 3D spot for you for $500k.” (insert client passing out on floor from sticker shock) Say “Well, we can’t do a minute long spot for that price, but we could do a 15 second spot. We also can’t do 3D for that price, but we can do a 2D motion graphics look with some 3D elements.”

Being flexible is key in this market, what do your existing clients want that you can offer? If you can’t do it in-shop network with folks you know in the community to offer that service to your clients. Example you don’t do graphic design but you know a local agency who specializes, bring them into the fold and team up with them to provide what your client needs.

Staying ahead of the curve in terms of the technology is also key. Broadcast commercials are taking a nose dive due to cost to produce and cost of air time. So think flexible- how else can your client reach their market and what can you do to get them there? You have to think “how can I help my clients sell more?” not “how can I get more business myself.”

If you can work closely with your clients’ sales teams track ROI and sales goals. Did that media campaign actually increase sales? If so how much? Give your client a reason to come back and spend more with your company by giving them hard facts. If the launch wasn’t successful why? What new idea can you pitch proactively to the client to try and hit that goal they have?

It’s not a pie in the sky mentality it’s how the company I work for operates. We’ve survived both the dot com crash and this recession in good shape because we concentrate on building and maintaining client relationships. Rather than focusing on selling a ‘product’ or a ‘video.’

I agree with the other points here not to low-ball just to land a job, if you do there’s no way the quality can stay as high, and you’re more apt to loose that client from an inferior product. Also, then the expectation to do more for less starts and soon you’re burning out your staff for tiny to non-existant profits.

Old and new clients who have gone back to shopping around have actually come right back to us because while the project was cheaper with another company the result was sub-standard. Or the experience was just bad for them. By sticking to our guns of- Let’s look at what we can do while staying within your budget- we’ve made out OK in the market.

One last thing to mention, it is always important for any company to cut their own costs proactively in a down-market: What gear can you donate or sell to make way and $ for more gear? What services are under performing and can you cut them out or redefine them to make them profitable? Cut the slack or overhead whenever possible. Can you recycle or reuse elements? Can you downsize any departments without impacting overall quality?

Hope this helps!

Kira

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[Emre Tufekci s.o.a.]

Thank you for a very detailed response Kira. I just got to read it as I was on a 2 week vacation, trying to see all the sites and states before we head back to CA.

Emre Tufekci
http://www.productionpit.com