International companies making more use of SA's ad production sector

The number of local (originated by SA agencies and produced by SA director based production companies) and service (originated by foreign agencies, produced by foreign production companies with the assistance of SA service companies) have decreased. However, the international/South Africa commercials (originated by foreign agencies, which are produced and directed by SA director based companies) market grew, as did the use of South African directors on a year-by-year basis.

The Commercial Producers Industry Survey 2008 is based on income derived from commercial production in the period 1 May 2007 to 30 April 2008. As the survey sample comprises 32 commercial production companies, members of the CPA, it is assumed that expenditure, income and turnover by the entire industry is at least and definitely more than what is presented by the survey results. The total billable value for all commercial productions during the 2007/2008 period was approximately R765 million, while expenditure was a fraction over R555 million.

The respondents produced 727 commercials in the 2007/2008 period, including 13 commercials shot in High Definition, totalling 1603 shoot days, an average of 2,2 days per commercial. The average budget per commercial, for all types produced, was just over R1million (R1 051 460.11)

Interesting trends appear to be developing when evaluating the respondents who have participated over all four years of the survey (a total of 20 member companies). A key finding is that for the first time since the survey, the results for 2007/2008 reflect an increase in international/South Africa commercials.

In addition, more work is being originated from outside South Africa, with the international/South African commercials market growing and South African directors being used on an increasing basis year-on-year by participating companies.

Mostly due to a large increase in international/SA billable value, 2007/2008 showed a notable increase in total billable value for all types of commercials over 2005/2006. This follows the small increases of 2006/2007 from the previous year.

It appears that although the use of other locations outside of the two key audio-visual location provinces - Gauteng and the Western Cape - increased in 2007/2008, compared with the previous year, these two remain the most popular locations.

Overall, the number of commercials showed an increase for the first three years of the survey and then a negligible decrease in 2007/2008, with the decrease attributed to the reducing numbers of service commercials.

Participating companies have on average been producing more commercials each year, until 2007/2008, which shows a 5.32% decrease. However, shoot days and average shoot days per commercial increased from 2006/2007 to 2007/2008, both by about 4%, with a concurrent 17.56% increase in budgets per commercial.

When the total billable value versus total billable expenditure of the 20 participating companies over the four-year period were compared, it is it was found that while the total number of commercials produced decreased by 0.34%, the total billable value increased by 17.17% from 2006/2007 to 2007/2008. The total billable expenditure decreased by 6.87% over the same period.

One of the key findings of the survey is that production companies in this sector must pay more attention to BBBEE as participants reported a below-average performance in terms of ownership and equity.