The New Production Cocktail: How Production Companies and In-House Studios are Mixing Things Up

Even within the audiovisual outputs alone, the production talent needed to make each of those different kinds of video content needs to span many more specialisms now. And those channels beyond video also need production expertise – for real-life experiences, apps, websites (as well as the original flavours of advertising production – design and still photography production for print and OOH).

“The range of demands right now is almost unbounded,” says Matt Miller, president and chief executive officer at the AICP, who has seen his US production company membership broaden its scope at a staggering scale.

Every business model has adapted to account for these changes. When it comes to production, this has blurred the lines between brand, agency and production company in all directions.

“It's very difficult, I think, for newcomers to navigate the landscape,” says POD LDN founder Adrienn Major. “Before, there was the client, there was the agency, there was the production company, and you knew who did what. Now it's like the Wild West. The client might do production, or the client might do creative, or the agency might do production, or sometimes the production might do creative.”

Brands themselves have taken creative capabilities in house, creating a growing sector of in-house agencies that is frequently in the spotlight on platforms such as LBB today. Sometimes production capabilities have been built out from that, driven by the sheer quantity of assets that brands need and the agility at which responsive messaging needs to be produced. Think about a restaurant chain that needs to change the design on its digital signage across hundreds of outlets to respond to the weather – that requires production capabilities.

Agencies' and holding companies' in-house production scope has only grown for the past decade or more, to respond to similar pressures. And we’ve seen holding company and agency in-house production take distinctly varied forms, ranging from replicating a third-party production company model on the agency side, to standalone entities that handle the majority of an agency's production and post needs.

Eliot at the IPA demonstrates this range: “Some agencies, like Black Sheep Studios at BBH, replicate the third-party production company model on the agency side. They’re highly creative and have earned the respect of their creatives and production departments. They handle everything from digital content to TV commercials, working with major clients like Burger King. Other models, like Girl&Bear within VCCP, operate as standalone entities. They handle VCCP’s production work across post-production, motion graphics, and traditional graphic design. They might use third-party production companies, collaborate on co-productions, or handle projects entirely in-house with independent talent.”

Some argue that agency in-house production is a simple response to brands reducing their budgets with agencies and the decline of the agency-of-record model – a way to keep client budgets flowing into agencies’ and holding companies’ balance sheets, rather than seeping out into the open market.

“One of the biggest trends we have seen in the last five to ten years is the rise of in-house production, both at the client and the agency. This has had a material impact on ‘traditional’ production models,” says production consultant Claire Randall. “We have seen a shift away from agencies of record to project-based relationships which, together with greater scrutiny on agency fees, has resulted in holding companies looking to production, as a means of increasing revenue streams.”

“We’ve always had a bit of push and pull,” says Matt at the AICP. But in the last few years the production companies in his association have felt it ramping up. “Recently, holding companies have taken this to a larger scale—it’s not just a little tension anymore. They’re investing heavily, throwing all their eggs in one basket. Is it desperation, or is it true innovation? Time will tell. Some of it is a bit puzzling to me,” he says.

Tinygiant's Sara Eolin, like many of the production company EPs we spoke to for this story, is critical of the in-house production that’s only motivated by a revenue-grab. “For the larger projects that agency holding companies are clinging on to only for the sake of making a profit, I think that’s a disservice to their client and to their own brand,” she says.

Clancie Brennan, managing director of production company OB42 has seen this take a disheartening toll on the best collaborators she has within the agencies her production company works with. “The souls of the agency producers and creatives are slowly dying after spending months crafting a creative idea to be told ‘it's going in house’,” she says. “What once was a career you got into so you could work with some of the best directing talent in the industry, now feels like it’s just to churn out ads and revenue for the agencies. Budgets are smaller, yet expectations are high.”

But many people at agency in-house production units will tell you that the majority of growth in these businesses is coming from areas supplementary to work that agencies do with independent production companies. Speaking at LBB’s recent Better Together summit, Victoria Keenan, head of production at creative agency BBH London, dispelled the misconception that agencies like hers want to produce everything in house. “Straight forward, we don't want to,” she said. “There is a layer of work that works to produce in house, because we have these internal makers or creators that can jump on the back of bigger TVC shoots or out of home shoots. We do want to work with external production partners.”

Instead, agency production leaders maintain that their focus is in response to brands’ demands for fast, digital, and personalised content at scale. “There’s considerable disruption toward the legacy model,” says Dave Rolfe, global head of production at WPP and Hogarth. “Whereas the supply side of the talent market steered a great deal of the creative and business process, it has swung toward the demand side of the market. And there may be misunderstanding as to how we got here—numbers crunching, effectiveness in job management, marketplace consolidation, etc.—but it’s most important to recognise the seismic shifts in consumer habits, media and means of production that’ve reshaped marketing over the past decade.”

He maintains that Hogarth is “well-poised to continue in its position to bring solutions and delivery-at-scale for its clients,” that the WPP production studio has “remained true to its roots in post-origination delivery and craft-at-scale, and done so at the highest level of creative quality—embedded with blue chips across technology, CPG, beverage, luxury, health and auto.”

 

Meanwhile, Dave maintains that scaled delivery is Hogarth's anchor, while bespoke client-based systems is its approach, meaning it can move upstream in client’s content needs: “From connecting across the end-to-end journey, sourcing and evolved open-market strategies, client-centric and/or market-appropriate studio making models, to platformed automation, the goal is to bring a holistic approach to content experience.”

Technology, and most specifically, AI, is playing a crucial role in transforming how content is created faster and cheaper. And agency in-house studios are committing to innovation in this area. “AI will absolutely reshape how we can more sustainably build content experience, through greater rigour around the assets in our brand and product system. It is in the truest sense wasteful to ignore what we can do with a both literal and figurative inventoried asset system,” says Dave.

That’s not glamorous, but as Pat Murphy, founder and CEO of production consultancy MCA pointed out at Better Together, it is something that brands need if they are going to ensure they make efficient use of their production budget, both for their bottom lines and for the planet. “The production of the content is one part of an asset’s life cycle,” Pat said on the LBB-hosted production panel last month. “We try to optimise that part of the cycle in the best possible way. 60-70% of all assets that get created don’t ever get used. If you have the option to use AI to metatag the assets that you have in a really smart way, then you can leverage that as best as possible.”

It’s clear that production companies are feeling under threat, with budgets for more traditional TVCs shrinking. But production companies are also increasingly finding ways to work directly with brands, carefully dancing around the relationships they want to continue to nurture with the agencies, who are still their major clients.

“All gloves are off,” says Claire Randall. “The independent production companies, who were previously reluctant to ‘bite the hand that feeds them’ are now going direct to brand. Many agency producers are now working for the holding company, versus the creative agency, and every holding company has its own production offering. The result is that there is no ‘one way’ of producing content, which is both exciting and daunting if you are the brand. (Or, the result is that there are conflicts of interest at play, which make it more complex for the brands to navigate.)”

Post houses are also slotting in with all of this. For many years, the border between post, VFX and production has been fluid. Despite practically every other type of company being a client of theirs, post companies have found ways to provide production services without stepping on too many toes. “In the third-party sector, it’s inspiring to see how many post-production companies are thriving,” observes Eliot at the IPA. “Many have split off from big post production concerns and started up their own thing, and are thriving. There’s plenty of room for everyone to do excellent work, which has created an ever more open ecosystem for collaboration and production.”

For Max Murphy, managing director of post house Covert, the changing landscape is “becoming more compact, more agile and demanding. It requires different thinking, making top class content in less time, with less, and it drives innovation in utilising new tools, new techniques and workflows.

“It also has meant this landscape, I feel, has created a wonderful breeding ground for collaboration between the many more boutique entities that have sprung up in recent years, including ourselves. It's become a beautiful game of coming together, sharing the work to each other's strengths and finding the best way to win it, rather than driving up walls and barriers against one another.”

Both agencies and production companies are evolving and specialising to find ways to service the fast, digital- and social-first content that brands need. Very few brands are content with just a 30- or 60-second film anymore. “It's rare to see fully fleshed ideas without social and/or innovation at the core, to go along with the myriad of video and still assets,” says Joe Calabrese, chief production officer at McCann New York. So agencies and their production units are beefing up capabilities to deliver those assets at speed and at scale.

McCann NY and its internal studios – McCann Content Studios, and McCann Design – are constantly seeking and partnering in specialty areas of tech, AI, fabrication, high-end CG/VFX, and real time production and automation, says Joe. “We believe in housing that core knowledge internally for ideation, R&D and execution, while flexing to bring in specialists as needed. In the end, it's about producing the best work for our clients, by any means. We’re often producing work that’s ‘never been done before’, so we’re constantly on the hunt, seeking specialists. We have no ego about reaching out to our trusted production partners if we feel there’s a specialty we don’t house internally.”

Some production companies have focused on broadening their talent to service jobs a world away from big traditional TVCs too. The Sweetshop – a production company that years ago only really focused on TV commercials – now has a roster of AI creatives. And production companies like Stink have been going beyond their roots for many years. Jon Chads boils it down to a simple line: “What do you need? First question. We have adapted to deliver whatever a brand needs. At the one end you have film, stills and social content all the way through to digital toolkits, activations and experiences when we partner with our sister company, Stink Studios.”

Meanwhile, other production companies are doubling down on what they have traditionally done best, choosing to nurture relationships with the agencies who understand the emotional staying power that filmmaking craft can deliver, even if agency studios might be handling content outside of that remit.

“I think the in-house model is well suited for smaller briefs and budgets or helping emerging directing talent build up their roster,” says Clancie at OB42. “It makes sense if you have the talent in-house. But you can’t compete with an established commercial director and production company if you want to make stellar work.”

Jim Huie, managing director and EP at alkemy x, explains the expertise that his production company is laser-focused on, such as VFX-heavy films, dynamic camera work and high-profile talent performances. “For example, the trend of docu-style, interview-driven content, which is simpler and less cinematic, has largely shifted to in-house agency teams,” he says. “These more straightforward formats are increasingly handled internally, while we focus on delivering the complex, high-end productions that demand a deeper level of specialisation.”

Other production companies are going long, focusing on branded entertainment that can thrive in whichever ecosystem it’s created for. Some are even moving into entertainment that you might call ‘unbranded’ – just TV and film where the entertainment is the product itself. RSA Films, which was originally the commercial arm of Ridley Scott’s filmmaking enterprise, launched its unscripted division in 2023 and has found success in documentaries such as ‘Robbie Williams’ for Netflix and ‘Oasis: Knebworth 1996’.

For Steve Davies, chief executive at the UK’s production association the APA, his admiration for his membership stems from production companies’ ability to flex like this. “When it comes to production models, people often say they need to change,” he says. “However, the production model is already one of the most flexible in the business. We can scale up or down as needed. Becoming less adaptable wouldn’t make sense.”

It always comes back to staying focused on the marketer’s needs, agrees Steve’s American counterpart Matt Miller. “That’s why this industry has always existed and why it will continue to endure. By aligning with marketers and understanding their changing demands, we can adapt and thrive.”

Claire Randall is in no doubt that the proliferation of in-housing has deprived production companies of certain opportunities, but the plasticity of production means that many are navigating it. “In-housing has created a vacuum in a specific area,” she says. “But production companies are adapting and by broadening their client base and creating a more diverse range of work from short form content to features and documentary.”

The production companies that stand the best chance of surviving and thriving through this period follow two broad principles, as Pat Murphy put it speaking on the Better Together panel: “The ones that are agile and learning about deploying technology in the best way.” Secondly, the ones that are “listening to clients and what's changing.”

Ultimately, brands will end up with a production ecosystem that supports the scale and diversity of production that they need today. That’s Dave Rolfe’s belief. “Value always searches for a more direct path,” he says. “The point is to keep your product or service focused and tuned. There’s great value in strategic management, scale and systemized approach and there’s ample context for speciality services.”

But those speciality services often have to compete with agencies to prove they’re more right for the job than the agencies’ own production offerings. It’s a delicate dance between competition and collaboration that some argue is still off balance. 

In a sense that’s always been the case in business. “In an industry constantly in flux no shift is absolute and there is no one model – so competitors for one job can just as easily be collaborators for the next,” says Mollie Rosen, president of member experience at the 4A's.

Jon at Stink has little time for complaining about his clients trying to offer what his company does too. “Get over it and get on with it. Production companies compete against each other week in, week out, and we’re still friends after a project awards,” he says.

For many post-production offerings like Covert, working with an agency studio is no conflict of interest. “For us it's no different to any other production partner. We're here to make great work, with great people and enjoy ourselves in the process,” says MD Max. “So far, we've found people wanting to do exactly the same whether they're from a production company or in-house agency production. “

But there do seem to be real concerns about transparency. Reports commissioned by production associations in both the US (AICP) and the UK (APA) have recently pointed to brands experiencing opacity when agencies are the sole mediators between them and their various production partners. 

While some brands have the utmost trust for their agencies and their decisions around craft, others revealed they needed a more complete picture of the options available on the open market.

“I don’t think there’s equilibrium yet in the dual role of agencies acting both as agents and potential competitors,” is the assessment of AICP president Matt Miller. “There needs to be a sense of truth and management as a check and balance. Marketers need to step up and ensure their agencies aren’t diluting what they deliver by prioritising their own interests over the client’s. When agencies look out for their own bottom line ahead of their client’s best interests, it creates a fundamental conflict.”

His UK counterpart agrees. “We need to ensure clients understand their choices, as there can be a lot of smoke and mirrors,” says Steve Davies. “Sometimes clients receive bids from what appear to be separate companies but are actually in-house entities using different names. It’s essential that clients get the full picture to make informed decisions.”

John Spary knows that brands often aren’t given the full picture. “It's common that clients are presented with a budget without a comparison,” he says, suggesting ‘a fairer solution’ where clients receive a quote, showreel and treatment from the agency in-house company but also receive this independently and directly from two other production companies. “If sent independently then production companies won’t feel their proposals have been passed onto the in-house route and clients will have a true comparison to decide who they wish to work with,” he suggests.

On the topic of transparency and mediation, brands’ and agencies maintaining rosters of preferred supplier production companies is also a point of tension, with many on the independent production side arguing that they fail to provide the value that they promise to brands, even if they help make things faster and cheaper. “Rosters can sometimes lead to assumptions that certain companies are less qualified simply because they’re on the list, which can result in less favourable outcomes for everyone,” says Steve.

For ‘traditional’ work, the triple bid is held up almost universally as sacred in order to reach the best creative approach and to harness competition. But while the production pitch process allows for the greatest craftspeople to demonstrate their creative value, some shapes of project seem to be more hindered than helped by it. In off-the-record conversations, several production companies have spoken to LBB about how for fast, lower-budget work, a full bid with three directors’ premium-produced treatments feels out of step with the on-the-ground realities. Having a close relationship with a brand and agency where ideas can flow freely and move fast sometimes requires a differently shaped collaboration, they say.

This is something that the APA’s report offered interesting perspectives on. Challenges such as time constraints and budget limitations showed up as points of frustration, with some marketers believing that the system is outdated and inefficient. In fact, a number of brands have now shifted to a double bid or even single bids, it was revealed

Independent production companies loaning their directors to agencies' in-house production units is anathema to some production companies, who invest in and manage those careers. RSA Films, for example – one of the most established heritage companies in this space – is firmly against this practice. “I've had to be honest and upfront,” says global MD Kai-Lu Hsiung, “when an in-house agency producer calls one of our rostered directors up to offer them a script, I call them straight back to question why they did this. They know how it works.”

Jim at alkemy x takes a similar position to Kai and many other production company leaders, explaining why he believes it's crucial to upholding the value the company delivers: “We do this both to preserve the integrity of our business model and to also ensure that we're not inadvertently supporting talent who ultimately undercut our own efforts.”

For many leaders in these businesses, the role of a production company is not simply that of an agent or diary service – the party through which you can book talent – rather, production companies develop directors through the various stages of creative maturation that they need at different points in their careers.

“Production companies have scoured the Earth to find the best of the best,” says Tinygiant EP Sara Eolin, “and the best directors have also sought us out as we create the necessary support needed to insure their career success.”

Kai from RSA is confident that in-house studios can’t do what a production company like she runs can for craft talent. “An agency is not interested in developing a director’s career path,” she asserts. “Of course, anyone can find talent in so many different places now, but I do think that to build a relationship that is truly beneficial takes time.”

For other companies, having more of an easygoing talent model can work. Agency in-house studios rarely keep directors on a roster of their own, but frequently need a director to helm work they are producing. And if a production company is repeatedly denying its directors work, they won’t hold on to that talent. There is a clear split emerging between production companies of two types. “While these two models have coexisted for many years, the distinction between them is much more pronounced today,” observes Jim from alkemy x.

Samy Mosher, founder of the production company STADIUM has embraced this evolution by always striving to be true creative partners. Having started from his garage with a DIY mindset, companies like his have the flexibility to engage at all levels of the process, from early creative development to final execution. “Whether it’s working with agencies to co-create or stepping into roles traditionally held by them, our goal remains the same: to produce exceptional work,” he says. “At Stadium, we often step into roles traditionally held by agencies when they lack the bandwidth or expertise to concept and execute creatively. Our focus is always on being a true creative partner—not just in production.””

John Spary, founder of John Spary Associates, helps put agencies and production companies together with directors. “Talk to most UK directors and they will tell you that this has been one of their quietest years,” he says, adding his theory as to why: “The currency of a production company is its roster, but with [so many] jobs now being produced by agencies in-house they face an impossible dilemma. Release their talent for a nominal 'loan out' thereby losing mark-up, producer fees and availability or potentially succumb to watching their directors go freelance.

“Of course the very top ‘names' will always prevail and their desirability will dictate the path of the production but for many rostered directors their loyalty is also being tested by additional factors.”

With competition so fierce, John has seen many UK production companies go ‘off roster’ to propose ‘freelancers’ if their own talent isn’t a perfect match. “Directors become aggrieved if told they can't entertain in-house jobs when their own company is engaging freelance talent,” he says. “JSA is a natural resource for both in-house companies and directors as we specialise in this area and so we have seen a huge increase in enquiries.”

But while it might be good for JSA, this situation is still troubling for John. “This said, I have enormous respect for London production companies who have supported and nurtured the very talent that is being enticed away from them and so want to stress the disadvantages that agencies and particularly clients face by realising their jobs in-house.

“Firstly, they don't have the relationship with the director – they remove them from the very team that helped create the showreel they are selling to their client and all-too-often make it a condition to work with their in-house editors, post / SFX. Also, they have no knowledge of their crew, studio preferences, or working methods.”

With all of the various business models overlapping more than ever, relationships are the key to working better together in production today. And managing the different specialists needed for a brand’s production requires close attention.

“Production used to be viewed as a service department, but smart agencies always kept it hand-in-hand with creative work,” says Eliot at the IPA. The role of the head of production (and increasingly even chief production officer) at agencies is crucial then. Eliot frequently hears about these kinds of demands on UK agencies. “Client budgets are spread across many different channels, and sometimes they want ‘matching luggage’ campaigns, where everything follows the tone and style of a central TVC,” he says, which means that whoever is managing production across a campaign’s various partners needs to have a clear understanding of the whole picture. That might make sense to be an agency production role.

As chief production officer at McCann New York, Joe Calabrese knows the value of his department. “Strong relationships are crucial now more than ever as we navigate an increasingly complex landscape where there is no precedent. Trust and transparency will always garner the best results,” he says. And, indeed, the APA’s recent report included multiple perspectives from brands reporting that they are most comfortable with their agencies making decisions around production partners.

But there may be other ways. The AICP’s recent report highlighted that rather than an agency being at the centre of production decisions, the brand may be better served by dedicating focus to production inside its marketing department, with a dedicated point-person who can liaise with all production partners as the hub. 

“The linear model is disappearing,” says Matt from the AICP. “Marketers and agencies used to simply decide what was needed and tell their partners, ‘Give me this, give me that.’ Now, marketers are becoming more of a central hub, connected to all the different spokes of creative input. They’re sharing what they need more openly, allowing creative ideas to come back to them in a more organic way. It’s no longer just about the agency fulfilling an order; it’s about a collaborative process where everyone can contribute to a bigger vision.”

The sheer volume of content brands now need to produce, in multiple formats and lengths, means that they require a full suite of partners, who can offer a range of services, underpinned by the right technology. “The key to delivering quality content, at scale, is and always has been good up front planning and communication, in order to drive efficiency and avoid duplication,” says Claire Randall. “Brands need to start with understanding what content they are producing and then design the right ecosystem of agencies and production partners, to produce the right content, at the right price point. Innovations such as virtual production and AI have changed the landscape forever. If brands take the time to step back and assess what’s out there, there is a wealth of creative agencies, content creators, production partners, platforms and tech which they can leverage.”

Many large brands and brand owners like General Mills, Unilever and Reckitt have all set up production departments of their own in recent years, or have hired experienced agency producers of their own to manage external partners. And it’s easy to see them acting as the production hub between their partners effectively – especially as most of the leaders in those departments come from production backgrounds within agencies.

The ‘U’ word must be deployed with caution, but the change the production world has seen in the past decade is unprecedented. However, there are fundamentals of production that are evergreen, despite this world being turned upside down.

It’s a significant part of Matt Miller’s job, representing the US independent production market, to remember that. “Delivering value through communications has always been essential, and that core value stays the same,” he says. “What does change is the way we get there – whether it’s the media landscape, the tools we use, or how marketers try to reach their audiences. There’s a static element to that foundational idea. If you keep pointing back to it, you can stay true to your course while experimenting with new ways to reach your goals, depending on what those goals are.”

The IPA’s head of production Eliot Liss thinks the sheer scale and range of video assets that brands now need makes for a golden age for his groups’ members. “The good news is that AV advertising is still highly effective, and there’s more demand for it than ever. That creates a dynamic environment for us to work in,” he says. Looking at research by the likes of Thinkbox and WARC, it seems that video is still punching above its weight when it comes to making an impact on audiences.

“The art of craft is why production people got into the business,” reflects Sara at Tinygiant on what continues to drive the makers of advertising, no matter what shape of company they’re in. “The art of commercial production is about making films that make people feel something that inevitably makes them compelled or comfortable to buy a product or feel good about the brand itself. An ad can’t be successful if it doesn’t live up to that goal. But how you make people feel something isn’t manipulation, it’s art. All great art makes you feel something. And great ads make you feel something. 

“People LIKE good ads. People watch the Superbowl FOR the ads, because traditionally that’s where the best ads were shown. Let’s give the people what they want – great pieces of film that they’re happy to watch because it makes them feel something and be a part of something bigger than themselves.”