OPTIMI$ING

PRODUCTION
EXPENDITURE
AND
CREATIVE
ASSETS

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 OGILVY & MATHER - WE SELL - OR ELSE

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 Optimising Production Expenditure
and Creative Assets

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 For further information, or to discuss how Ogilvy can help optimise your CONTENTS
budget and marketing plans, please contact:

Toni Lee, North America (toni.lee@ogilvy.com)

Paula Bernasconi, Latina (paula.bernasconi@ogilvy.com) Introduction 2
Serge Nicholls, Europe, Middle East/Africa (serge.nicholls@ogilvy.com) or
Soames Hines, Asia Pacific (soames.hines@ogilvy.com) How to save up to 5% of your ad spend now without 4

Other Ogilvy & Mather Booklets available:

cutting your marketing plan
Optimising the marketing budget in recession Don’t cut — create efficiencies to reduce costs 8
Digital in a downturn: smart strategies for tough times
How to get more effective advertising
The new PR – leveraging digital influence to drive sales and reputation Ogilvy’s Redworks delivers it all 14
Turning shoppers into buyers
Improving sales force performance The Benefits of Redworks are provided by... 16

Here is how Redworks can find you 10 ways 17

of saving money

Published in 2008
by Ogilvy & Mather

© Ogilvy & Mather 2008

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 INTRODUCTION
“It is not the strong, nor the intelligent who survive,
but those who are quickest to adapt.”
Charles Darwin
How to increase your profit when times
are tough
We face one of the most challenging business
environments for years. Recessions caused by liquidity
problems are particularly severe. In recent months we
have seen major financial institutions and the world’s
stock markets collapse. Your company needs to take
urgent action to win through.
Who this booklet is for
CEOs, CFOs and CMOs. Your marketing department
must estimate the profitability of marketing spend. This
booklet shows how to do it.
How to use this booklet
Your company needs to estimate, even roughly, the
consequences of cutting or maintaining or increasing
marketing spend. Averages based on what other
companies have done in recession are useful guides, but
you do not manage an average business or an average
brand. You need to know about your specific case.

Some companies do succeed in recession. They see it

as an opportunity for growth. While competitors panic,
they stick to a plan.

This booklet is based on Ogilvy’s experience of winners

in recession together with research into best practice.
Optimising production expenditure and creative assets
is only one of the issues that confront you. Ogilvy also
offers practical advice on other potential pain/gain
points in your company, including:

– Optimising the marketing budget in recession

– How to get more effective advertising
– Digital in a downturn: smart strategies for tough times
– The new PR — leveraging digital influence to drive
sales and reputation
– Turning shoppers into buyers
– Improving sales force performance

These booklets are available on www.ogilvyonrecession.com

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 HOW TO SAVE UP TO 5% OF YOUR AD
SPEND NOW WITHOUT CUTTING
YOUR MARKETING PLAN
In times of recession, the first reaction of a CEO or
CFO is to look at ways to cut costs. Cuts in training
programs and the introduction of a travel ban may buy
time. A reduction in the workforce will probably provide
the quickest result and the most logical way to save
money. Actions such as these, however, can be viewed
as politically sensitive and, in most cases, a last resort
if there is to be any chance of maintaining continuity
— let alone morale. Yes, an economic downturn is
always an opportunity to clear out the dead wood.
And most prudent companies review resource plans
on an ongoing basis and include contingency plans
to be implemented in times of economic downturn.
Shareholder demands, however, have already forced
companies to be leaner, meaning that there is little
buffer left in the system. So when recession hits, it often
means biting into the very talent you want to retain.
This comes at a heavy price. If you are forced to let your
best talent go, you have to be mindful that the saving
of a monthly salary is only part of the cost. What about
the years of training you have invested in ensuring the
company’s future and the staff member’s loyalty? Once
gone, the chances of them returning are extremely slim.
So, whilst reducing a workforce may be an immediate
and logical step in cost reduction, it may cost more in
the long term.
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The next, and probably easier, way to save money is
through indirect cost. The marketing plan usually
becomes the first target for cuts. Media expenditure,
due to the large numbers involved, is a likely choice,
but it has consistently been proved that a cut in this
area provides a short term solution with long term
ramifications. It is a fact that reduction in marketing
spend makes no difference to a company’s profitability.
There is also compelling evidence that companies who
continue to spend through a recession recover faster
than those who reduce their budgets. So, cutting media
budgets may not be the answer.
Another big number is agency production cost.
How much of a marketing budget is media and
communications production? This obviously depends
on your marketing mix, what ever it is — it is not an
insignificant number. Many companies do not know
the answer to this question — since it has traditionally
been handled locally and may be hidden within the
advertising agency’s creative fees. So what are we
talking about? Production covers anything involved in
the final delivery of creative ideas to selected media. It
includes TV commercials, press ads, strategic design,
point of purchase material, print buying and all digital
applications, including hosting creative assets and
database management — in short, anything relating to
the roll out of an initial creative idea.
“Unilever now spend about 10% of its $3 billion in
ad budget on production on production.”
Campaign 27 July 2007.
Add to this the hidden costs managing the process as
well as inefficiencies in creating assets across multiple
markets and you will see there is a huge opportunity to
reduce costs by making all this more efficient.
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 For some years, companies have looked to make
immediate savings on certain projects by handling
negotiations direct with third party suppliers. It started
with large print runs, but more recently companies’
procurement teams have been tasked in getting
more involved with agency contracts and marketing
expenditure. The assumption is that creative agencies
are inefficient and, due to a lack of internal specialist
technical expertise, are required to outsource parts or
all to specialist organisations. Clients perceive this as a
costly and unnecessary tier in the process. More often
than not, the procurement solution has been to strip the
agency of part of its production delivery role in favour of
cheaper sourcing options. These have included the use of
local bucket shops, multiple vendors or even proposing
an in-house facility. Whilst, superficially, ‘decoupling’
options such as these may appear to make sense, more
often than not it proves a false economy and could be
ultimately damaging for a brand.
Take the bucket shop approach. This option may provide
a cheaper cost but jeopardises quality and consistency
of the brand image. In a regional or global campaign,
it cannot work. A global campaign can rarely stand on its
own without the support of a local market. Most print
ads and commercials rely on adaptation once they hit
the local market. This could be as simple as translation
but, more likely than not, involves ethnic talent casting
and editing. In addition to the numerous costly
iterations across different markets, liabilities remain
where quality may suffer. A bucket shop does not have
the network to provide consistent multimarket delivery.
The use of multiple vendors also becomes a threat
to consistency and offers little advantage in terms
of the economies of scale achieved by concentrating
work through one company. In addition, it requires
a team of buyers; each a specialist in very different
communication disciplines, to manage the process.
They in turn will have to interface with a similar team in
each end market to deal with all the local
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adaptations requirements, talent rights etc. Suddenly
your organisation has incurred large additional costs
through attempting to become a communications
procurement specialist rather than concentrating on your
key business competencies.
Thirdly, there is the in-house option. Many times, clients
(usually prompted by a procurement manager) have been
heard to say, “I could set up my own organisation to handle
all this work. It would give me more control whilst saving
cost”. Yes, you could set it up and hire a team, but the
likelihood is that the staff would not stay long. Good people
involved in agency work need a creative environment. Only
companies such as Apple, Microsoft and Nike and a few
others born out of the innovation culture can provide this.
Secondly, an in-house operation automatically saddles a
client with fixed costs — easy to get into, but slow and
costly to unwind. It takes time to downsize staff and, with
a demotivated workforce, how will you ensure a seamless
transition from in-house to outsource?
Whilst all these options may show superficial cost savings
up front, they mask hidden costs and difficulties for
the long term. In addition, they are difficult to control
and deflect focus away from the client’s core discipline.
Remember, whilst deciding which is the best option for
your company, the work still needs to be done.
This booklet shows you how to reduce costs by
creating efficiencies in production and creative
services and, in doing so, how to create a winning
formula that will give your organisation an advantage
over your competitors.
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 DON’T CUT — CREATE EFFICIENCIES
TO REDUCE COSTS
For a company to survive a recessive period of the
economic cycle, it is essential that they take stock and
look at ways of streamlining processes and saving
money whilst maintaining quality and consistency of
their brand communications.
Handling agency production in the right way can
create up to 50 percent efficiencies whilst creating a
competitive advantage. How? Consolidation of agency
production can provide greater efficiencies, better
quality and faster speed to market.
Here are 10 ways to achieve savings
through greater efficiency
The key to efficiency does not rest entirely on the
ability of a client to outsource to lower cost suppliers
from low cost locations. More, it relies heavily on good
management, established work practices, specialist
skills and a highly efficient production system
supported by a proven technological platform. A good
production company should be capable of providing
ongoing project information in ‘real time’, including
volume and resource reports by brand, by product or by
individual staff member.
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1. Consolidate all your production
in one place
“Putting all your eggs in one basket?” No, quite the
opposite. This measure is putting your trust in one global
network with the depth to ensure any potential risk is
minimised.
Global consistency is essential to brand equity. Only by
consolidating all your agency production work under one
roof will you be guaranteed consistent quality of execution
of a creative idea across all media applications. You will
also benefit from the efficiencies of getting work to market
faster and savings achieved through economies of scale.
2. Save money by managing your
creative assets
How much control do you currently have over your
creative assets? This is a big area and a mostly overlooked
source of wastage. With every country developing its
own version, there can be countless duplication. Design
guidelines, TV commercials, digital imaging and artwork
templates should be easily accessible to all markets and
archived in one central asset bank with search engine
access by brand, country or category. This reduces
duplication, provides access rights and makes it easier to
ensure adherence to brand guidelines.
3. Reduce workflow costs
Faster output means quicker speed to market. An agency
should be working to a clearly defined set of deliverables
coupled with key performance indicators. With a
sophisticated on-line production management system,
projects can be pre-planned with progress visible to
all. Built-in approval processes ensure accountability at
every milestone. You need to be sure your production
company has a system with built-in flexibility to be
tailored to your company’s needs.
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 4. Outsource to more cost effective
markets
If you decide to consolidate all your production under
one roof, make sure your agency has the flexibility and
depth to handle not only the large campaign work, but
also local work as well. Does the agency already have an
infrastructure with key hubs in low cost centres?
Is the network wide enough, and is it used to operating
across a number of key markets at one time on a 24 hour
time zone? If not, you really could be putting ‘all your eggs
in one basket’.
5. Hand over in-house production
We have already highlighted the problems related to
fixed cost and the difficulties and timing issues related to
unwinding an in-house facility. If your company has an
in-house production unit, you may consider handing over
the management of this department to the agency.
The operation can still continue to operate from the
same premises — but adopt the agency’s management,
systems and technology platform. This approach causes
minimal disruption to on-going work whilst releasing your
company from its fixed cost liability.
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6. Optimise buying power
You have obviously considered your own purchasing power
when it comes to buying marketing services. Have you
ever considered how much that value can be enhanced
when bundled into the consolidated buying power of one
specialist sourcing unit? In the ’80s and early ’90s, clients
moved the management of their media spend to specialist
media shops in the knowledge their budgets could be
optimised by more than 25 percent. The same rules apply
to any client who consolidates production budgets into a
specialist production unit. Large savings can be achieved
through central buying of print with the capability of
sourcing from low cost countries.
All dealings with the agency and its suppliers should
be totally transparent, with part of the KPIs including a
bonus on savings achieved. From a corporate governance
perspective and to ensure the integrity of your own staff,
it is sometime better to make sure that these larger supplier
negotiations take place at arms length.
7. Manage print more effectively
Make sure you have a collateral strategy. Economies of
scale usually dictate the larger the print run, the lower the
unit price. The tendency for a print buyer is to estimate the
highest quantity required, probably a year’s supply. Seems
to make sense, but does it?
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 Not necessarily. When the order is placed, little attention is
paid to the fact that the contents and pricing may already
be out of date within 3 months. A year’s commitment
will buy brochures at a cheaper price, but an average of
20 percent will end up being thrown away at the end
of the year. In addition, did anyone take account of the
warehousing and distribution costs?
A production agency should provide you with
recommendations on the best way to handle your
collateral material. A proper inventory system based on
a series of smaller print runs can be as economical as a
large one. It allows for brochures and print work to be
regularly updated whilst cutting out the waste at the
end of the year.
8. Effective use of digital AND print
When we think of brochures, we usually think of printed
paper without considering the intended end use. A lot of
unnecessary money is spent on print production, postage
and delivery of collateral material. But consider that most
of the recipients have portal access and can check the
contents of any brochure on the internet.
An agency should be advising you on the effective use of
both digital and print. Hard copy brochures will always
be needed for certain brands and audiences. In most
cases, however, they serve as a reference and are then
thrown away. To this audience, a digital solution could
have been just as effective. For some applications, a digital
solution serves much better. Setting up data and response
mechanics in the right way can result in digital copies
being sent online to the right people and at a fraction of
the cost of a printed brochure.
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9. Ensure fewer mistakes
Reworks are expensive and can be a major source of
wastage. Consolidation of assets and better production
control systems can ensure more accuracy in the final
output. Whilst the agency’s asset management system can
store creative images, it also has the capability of uploading
all the technical specifications for every one of your
company’s creative outputs. This automated approach
means accuracy in sizing for artwork, retention of statutory
information and notices as well as colour matching for the
differing individual media issues.
10. Do what you do, smarter
Often, workflows and processes have evolved over time
and consist of ad hoc solutions which individually may
address certain matters, but collectively may be inefficient
or obstructive. It may be time to assess which areas
need changing or fine-tuning, and propose effective,
viable solutions for enhancement of cost management,
productivity and efficiency. Only an independent audit
covering all aspects of your company’s internal and
external production procurement processes can determine
the right course of action for the future. The brief to
the agency should provide for recommendations for a
better way of operating whilst achieving savings without
compromise to quality or speed to market.
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 OGILVY’S REDWORKS DELIVERS IT ALL
To deliver these efficiencies, we have built a ‘beautiful
factory’ around the world. RedWorks is Ogilvy’s specialist
online production management company. It provides an
efficient high quality, but low cost solution for clients’
‘Above Market’ implementation models.
Established in 2005, the company has become one of
Ogilvy’s fastest growing companies, working hand in
hand across 3 continents. In Asia we have 12 offices
working in 7 languages. We are involved in both global
and regional production delivery programs for clients such
as Kodak, Amex and IBM.
RedWorks’ services include high quality, fast turnaround
work for TV, Press, Retail POP and Digital advertising
and communications. We provide adaptations for all
media and design layout, finished art, and specialist
services such as pre-press, colour management,
retouching and DI. In addition, we offer colour proofing,
Digital Asset Management, on-line project management
and on-line approvals.
We offer high-end design implementation services in the
major centres across the world, as well as high quality,
lower cost implementation services in off-shore hubs.
“RedWorks has also opened a new production hub
in Dhaka,in a bid to improve outsourcing
cost benefits.”
Media 27 November 2008.
We are already operating client specific production hubs
in Shenyang, Kuala Lumpur, Singapore and Bangalore.
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“In a global first, PC manufacturer Lenovo is moving
its entire global advertising portfolio to WPP Group
agency Ogilvy & Mather’s Bangalore branch. Account
planning, servicing and creative — all will now be
handled out of the Bangalore hub, which will work
closely with other O&M branches all over the world
to customise the advertising for different regions.
The ‘Lenovo Hub’, as it’s called, has been on a test run
over the past week or so and has been fully operational
since Friday, June 1. The team in the hub will work on
global print, television as well as Internet advertising
for the Chinese PC maker, which could potentially go
out to 160 countries where Lenovo has a presence.
Though China might have been the logical destination
to set up a hub for Lenovo, O&M’s experience with
the IBM account in India swung the deal in favour
of Bangalore. In the past, according to sources,
O&M has been used for some work at the Asia-Pacific
level by IBM”.
The Economic Times: June 05, 2007
RedWorks creates efficiencies in production as well as
reducing the time our clients have to invest in producing
advertising and communications.
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 THE BENEFITS OF REDWORKS HERE IS HOW REDWORKS CAN FIND YOU
ARE PROVIDED BY... 10 WAYS OF SAVING MONEY

Simplicity 1. Can we save you money by consolidating

A single resource to create, adapt, deliver branded
on-and-off-line communications.
Savings
Up-front and competitive pricing to control and
monitor costs centrally, economies of scale and asset
management.
– 13,000 projects, 31 markets, 26 languages
“Pricing for standard deliverables is 7 – 10% below
the industry average.”
Bird, Bonnet, Sauderman,Inc. — independent cost
consultants findings based on competitive RFP and
22 year database of rates.
all your agency production into RedWorks?
Many of our clients certainly think so. We are currently
handling major regional, global and local production
assignments for: American Express, Unilever, DHL,
Kodak, Motorola, Lenovo and Rehau.
Kodak
“The global network is now operating as efficiently
as possible.”
Pierre Schaeffer, CMO, Kodak CDG
(the Consumer Digital Group)

Speed 2. Can we save you money by managing

An efficient and nimble workflow process which
guarantees fast and efficient turnaround times.
Strength
A guaranteed, high quality product through collaboration
between creative and production services. A highly skilled
and motivated workforce focused on delivering a market-
leading product.
your creative assets?
Yes. RedWorks is built on and supported by its own
technological platform. It uses Xinet to provide online
access to all creative assets, templates, finished art and
images. We have the capability to post all material online,
for whoever has access privileges. We can allow for layers of
authority, giving different people access to different areas.
We can post all finished artwork, working files, images and
pdfs. This provides easy access for anyone wishing to refer
to the library and place orders, or understand previous
design solutions. Coupled with Xinet, we also handle
extended property rights for image and talent usage.

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 A global financial services client
– 1500+ projects, delivered to 22 local markets,
$2.1m in client savings
3. Can we reduce costs through workflow?
Yes. RedWorks is an end-to-end solution, but can engage
at all or any of the creative and production stages. Our
internal processes and communications are designed
to ensure maximum productivity, with a minimum of
agency red-tape. We review the clients’ work and adapt our
systems to mirror client requirements.
The nature of our work requires flexibility and speed to
enable quick communication. It is especially appropriate
for adaptation work where the instructions are specific and
a meeting isn’t essential.
RedWorks is a specialist production organisation,
a team of specialists performing closely interconnected/
interdependent tasks, tied together by:
– Clearly defined roles and responsibilities
– Clearly defined responses/actions
– Clearly defined processes
Our company is made up of client teams, not discipline
teams. They are headed by Project Managers, unlike
traditional creative companies led by a creative lead or
Studio Manager. Our focus is on service, and this is the
primary task of the Project Manager. Creative quality is a given.
Using our on-line project management system, which
can be seen anywhere online, annotations can be made
and fed directly back to us. The full history of the project
is retained, and reports detailing the project can be
generated. This allows us to zoom in on problem areas and
effectively smooth out bumps in the workflow.
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4. Can we outsource to more cost
effective markets?
In Asia we already have established hubs in Dhaka and
Shenyang with a China hub currently under development.
These are, in turn, part of a wider infrastructure of low cost
centres within our global operation. In support of these
hubs, we have offices in most countries to handle more
complex or localised projects.
Our RedWorks offices provide a one-stop-shop for centrally
managed high quality work — at highly competitive
rates. RedWorks works on a 24 hour time zone with the
flexibility to allocate work where it is best suited, as well as
absorb surges in work. Therefore, volume can be shared
across the globe without any reductions in quality or
increases in turnaround times.
5. Can we manage your in-house
production unit?
Yes, and this is an area in which we are heavily engaged
during this recent recession. Clients now looking
to unburden themselves as part of their emergency
reconstruction plans have been amazed how much more
competitive we are. Quite simply, better management,
systems and an inventory and ratecard pricing for
each output has, for one client, reduced the number of
renditions by one third.
6. Can you benefit through our optimised
buying power?
We are currently one of the biggest buyers of marketing
services in Asia. This covers print and TV editing, as well
as digital. All transactions with third party suppliers are
completely transparent. Financial exchanges on large
projects are between client and third party suppliers and
are handled direct based on RedWorks’ negotiations.
We are in business to save YOU money. The more we
save you, the more we are rewarded.
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 7. Can we manage your print Our audit team would cover:
more effectively?
a. Current internal processes:
We are already advising a number of clients on the ways
they should manage their collaterals to reduce wastage – Requests for material
whilst ensuring minimal stock. Our advice not only
covers larger print runs, but also better ways to reduce – Briefing documents
regional costs by uploading local specifications so that
outputs are automated in advance. – Cost management

8. Can we advise on the most effective use b. External processes:

of digital AND print?
– Agency management
Yes. We think of output, not paper. We can advise clients
on the best medium for their brochure. We can even – Production management
set up the digital strategy to ensure the correct data and
response mechanism for your brand. – Warehousing

– Inventory management
9. How can we ensure fewer mistakes?
– Logistics
There are inbuilt mechanisms within our operating
procedures and online approval systems that
– Customs and import taxes
automatically reduce the number of reworks. In
addition, we expect to be judged and rewarded on our
success through fixed KPIs. As such, mistakes and errors
in production outputs are simply not in our interest.

10. Can we find smarter ways for you to do

what you already do?
Yes. RedWorks can assist in a full local or regional audit
of agency, production and delivery specific processes.
We can assess which areas need changing or fine-tuning,
and propose effective, viable solutions for enhancement
of cost management, productivity and efficiency. We
will undertake a full production audit and give you a
proposal as to how you could reduce costs without a
compromise in quality.
For further information contact:
Toni Lee, North America (toni.lee@ogilvy.com)
Paula Bernasconi, Latina (paula.bernasconi@ogilvy.com)
Serge Nicholls, Europe, Middle East/Africa
(serge.nicholls@ogilvy.com) or
Soames Hines, Asia Pacific (soames.hines@ogilvy.com)
Alternatively, why take our word for it? We can also give
you the names of clients to contact who will tell you how
using RedWorks has benefited their business.

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