Costly TV ads get double take from concerned execs

A year or so ago, O.J. Simpson went dashing through a busy airport terminal for Hertz Car Rental - and when he reached the outdoors, he went hurtling through the air, landing in the driver's seat of his Hertz car. It was all captured on film for a 30-second TV spot, whose production costs alone are reported to have reached nearly $500,000.

This illustrates a phenomenon that's troubling many advertisers: the rapidly rising cost of producing television spots. One advertising industry spokesman estimated that an advertiser's production costs for a typical 30-second spot could range anywhere from $100,000 to $200,000.

One further example shows why these costs pile up: Last year, a TV advertising campaign introducing Pan American's new ''You Can't Beat the Experience'' theme called for shots featuring one of its original China Clippers. When none could be located, the TV production crew commissioned by Pan Am's advertising agency, Wells Rich Greene, constructed an authentic full-scale model for filming.

Some observers feel that $60,000 to $75,000 in production money should cover the production costs for most 30-second spots. Pointing to the many variables involved - such as number of days needed for filming, music and talent fees, and added costs for celebrities - most professional commercial TV producers don't like to be pinned down to typical or average production costs. Some concede that it's not at all unusual these days for an advertiser to run up a bill of $250, 000 or more in production costs.

To make matters worse, a top TV producer at one of New York's largest advertising agencies estimates that production costs for commercial spots have been rising over the last 10 years at an average of 10 to 12 percent a year - more than doubling over the last decade.

William O. Allbritton, management supervisor on Iroquois Brands at Weiss & Geller advertising in New York, defends commercial production costs: ''With advertisers committing themselves to many millions of dollars in national TV media schedules, they want to make sure their product or service is clearly and effectively presented and that their message is understood,'' he says. ''So if it takes thousands of dollars in production costs, it's worth it. It's good insurance to protect their media expense.''

But more and more advertisers, and in some cases their agencies, are balking at this one advertising cost they feel they should somehow be able to contain.

''Every dollar you put into commercial production costs is one less dollar you have available for putting the commercial on the air,'' says Miner Raymond, an independent commercial production consultant in Cincinnati. Mr. Raymond has made a career for himself by acting as a watchdog for TV production costs. For over 25 years he supervised Procter & Gamble TV production for its food and coffee products, packaged soap, and paper division. Three years ago he started his own firm.

Mr. Raymond's Friday afternoon seminars on how to cut television production costs draw crowds of attentive listeners from the hundreds of advertising professionals attending from all parts of the country and 44 countries from around the world. ''When it comes to a discussion of how to cut advertising costs,'' he says, ''it's not hard to draw a crowd.''

Recently he gave an example of a client who has a home-appliance product. ''The advertising agency had estimated a 30-second television spot at $100,000, which should only have cost $65,000. . . . We and our client are reexamining all the production costs to eliminate waste. When we're through, we expect to bring it in at between $35,000 and $65,000, and it will be well done.

The average viewer won't see one dollar's worth of difference in the final product.'' He figures his service can save clients 5 or 10 times its cost.

Ralph Cohen, executive producer of Bob Giraldi Productions, a New York commercial TV production house responsible for the production of Paine Webber and award-winning General Electric spots, disagrees:

''You get what you pay for,'' he says. ''If you're not careful, the advertiser and his product end up looking cheap when you try to cut too many corners. Most advertisers want a quality television commercial to reflect favorably on their image. So they want the best that's available at a price that's reasonable.''