Brands may be putting more money toward branded content, but many of those dollars end up going to distributing that content instead of producing it. In the latest in our Confessions series, in which we grant anonymity for honesty, a digital studio executive whose company creates videos for brands says agencies’ expenses often take away from content production.

As a digital studio that works with brands to produce digital videos starring influencers, what’s one of the bigger, more regular challenges you face?
All the marketers feel like they have to work with their agencies, but they don’t know why they’re doing it. The agencies move slow. They’re not experts in the things they need to be experts in. They’re unbelievably expensive in covering all their crazy overheads.

Does that affect how much of the brand’s budget goes toward the work?
Absolutely. The brand’s investment is going toward, if the agency’s built a name brand themselves that gives credibility to the brand, it’s going to a staff that’s probably two times as big as it needs to be, offices around the world. It’s not going into the work.

Does that compromise the work?
No, because we run a lean shop. We don’t overhire.

What if the brand wants to do something cool that costs X dollars, and because of the agency costs, the brand says, ‘No, we can only pay Y instead?’
For sure. Their budgets are tied up in the high cost of doing business in agency world. And also it’s much easier to get approval for things they’ve been doing for the past 20 years than things that are new and experimental. We’re always fighting for more budget. But there are macro trends that are so much bigger than our individual battles: How much of the spend is going from traditional to digital, or to new and emerging media? How much of the spend is locked at the agency?

Are there financial pressures from the brands directly? They might see you run a lean shop and think they can pay less because you can squeeze more out of a dollar.
I don’t think there’s an inherent undervaluing of working with creators or digital content. I think there’s just pressures with how much money is docked in other places. What I’m seeing is that brands are coming up with creative solutions to reallocate budget.

Like what?
Like even if we’re doing a creatively driven campaign, there would normally be a fund for content, but they’ll take their media budgets and slice them up so that they can put more money toward content.

I would have thought they’d do the opposite, and put some of the production costs toward media because it’s easier to attribute that spend to performance.
No, it’s like, instead of buying X dollars in media, I’m going to put those same dollars working with YouTube creators and reach the same or more audience for the same amount of dollars.

Do the agencies get involved and say, ‘Hey, there are working dollars and nonworking dollars. You’re forcing more money to go toward the content costs that are nonworking dollars. Knock it off.’
I’m, for better or worse, not part of those conversations. But I hear echoes in the hallway all the time of agencies saying, “Stay with us. Don’t go with them. No need to try something new. We can do that, too.”

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