Advertisers and their ad agencies owe production and post-production companies more than $200 million for work on commercial shoots that were completed but not paid for when work abruptly halted because of the coronavirus shutdown, according to the Association of Independent Commercial Producers, a trade association that says its members account for 85% of all domestic commercials aired nationally on all media platforms.
The AICP arrived at that figure after polling more than 500 of its members, 28% of whom reported that they were owed more than $1 million; 23% of whom said they were owed between $500,000-$1 million; and 34% saying they are owned between $100,000-$500,000. “Extrapolating across the industry, conservatively, this is well in excess of $200 million,” the AICP said.
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“To keep these receivables outstanding is nothing less than irresponsible and shortsighted for marketers who want to maintain a healthy first-rate creative community and their infrastructure of resources, employees and vendors,” said AICP president and CEO Matt Miller. “Marketers and their agencies need to ensure that production and post partners are paid immediately for work already completed.”
“Cash-flow for most live action production companies is, like work, drying up,” he said, “with post production slowing as they finish recently produced work – which is mostly being done with great ingenuity remotely – so it’s more urgent than ever that these payments are made.
“Bad behavior is now highlighted, as rolling cash-flow is not covering up for scofflaw clients or agencies that have used small business creative resources to bankroll their projects. When we come out on the other end of this global crisis, marketers and their agencies will need the ingenuity of the production and post community more than ever to create communications to reach customers and stimulate the economy. Corporations must step up and fulfill their contractual obligations, so that this industry can stay afloat planning for work to serve their needs and get back into full swing when it is safe and practical to do so.”
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