Behind the Orange Curtain

As Washington continues to dole out billions of dollars to every possible financial institution, insurance company and automaker, I thought we should look at how some of those companies are using those taxpayer funds – or in some cases keeping them.

As the economy’s slump continues, GM has raised an uproar among production companies by playing hardball on payment terms.  GM, who has received billions in tax dollars from Washington to “bail them out,” has offered to pay ad-production firms 50% of a commercial’s production costs 60 days after the first day of shooting and the remaining 50% when the ad is finished. That’s a major departure from the standard practice set by the AICP of paying 50% or 75% of the cost before production starts.  Mind you, GM spots range between $500,000 and $1 million each in production cost.

GM has been trying to persuade production companies to accept its new payment terms by suggesting it is looking to have a few “preferred vendors.” In order to be on the list, the production company would have to agree to the new payment terms. That reminds me of all the times that I have been asked to work on a pilot for free and if the series sells then I would get that contract and lots of work.  Guess how many times that has happened?

I don’t know of many, if any, production companies these days that could do this even if they wanted to.  Credit (and cash too for that matter) has become almost non-existent for all companies regardless of their size.

Even Anheuser-Busch (InBev) is trying to overhaul its advertising-related deals. The world’s largest brewer by sales recently told media outlets that they will now be waiting 120 days after an ad runs to receive payment versus the typical 30-day standard.  I guess that means that not enough people are going home and getting drunk on Budweiser after getting laid off from their jobs.  Perhaps this plan will help them in that regard, as I can guarantee you that this move will cost people jobs.

As it has been evidenced that Washington has no ability to solve this crisis, let’s hope that people will turn away from Washington and the plummeting stock market and just get back to work.  The best thing for the economy is for everyone to go back to leading normal lives; shopping, buying cars and homes, marketing and advertising.  Now, of course all these things must be done responsibly and irresponsibility is how we got into this mess in the first place, but at this point everyone, both those affected by the downturn and those who are not, has just stopped doing anything.  In our industry, the economy will not turn around until people start buying again and they are not likely to do that until companies begin to advertise again, not like GM and InBev’s plan, but decide to put legitimate dollars into marketing their products.