Amid coronavirus, advertisers reportedly owe $200M to producers

COVID-19 has shut down the commercial production industry, which has equated to late payments

The advertisement industry reportedly owes production companies more than $200 million for commercial work done prior to the global coronavirus pandemic, according to the Association of Independent Commercial Producers, as noted by Deadline on Monday.

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The trade association has said pre- and post-production workers have not been paid for 85 percent of all domestic commercials that have aired across media platforms. This figure comes directly from the association’s member poll that included more than 500 producers.

More than a quarter of the AICP’s members reported they are owed more than $1 million for completed commercials, while nearly a quarter say they are owed between $500,000 and $1 million. Over a third, however, are owed smaller amounts in comparison that range between $100,000 and $500,000.

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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’s President and CEO Matt Miller in a formal statement. “Marketers and their agencies need to ensure that production and post partners are paid immediately for work already completed.”

Cash flow for production companies is “drying up,” according to Miller, which is mainly due to the coronavirus pandemic. Over 372,560 have been infected across the globe outside the 100,927 recoveries, according to the Johns Hopkins COVID-19 tracker. More than 16,380 people have died from the virus.

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Productions across the world have been halted as a precaution to minimize the spread of the virus as seen with popular TV and streaming series such as “Survivor,” “American Ninja Warrior,” “The Witcher,” “The Handmaid’s Tale” and several others.

With commercial post-production work slowing down, Miller argues that “it’s more urgent than ever that these payments are made,” especially since so many producers are completing their duties remotely.

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“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,” Miller continued. “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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Global advertising spending in 2019 was estimated to be around $563.02 billion, according to the online statistics aggregation resource Statista. The market was expected to grow 4.3 percent for 2020, however, those projections were determined before the coronavirus outbreak.