Agencies pressured to beef up VR capabilities as brands turn to production companies

As more and more brands try their hand at virtual reality, many are working directly with production companies. Agencies, for their part, are feeling the need to beef up their own VR capabilities.

“Brands are absolutely continuing to reach out to and work directly with production companies,” said Jonathan Shipman, head of integrated production for Framestore. VR is still in its early days, said Shipman, and current brand briefs tend to focus more on the practical applications of VR — something in which production companies have “incredibly strong expertise.”

The heightened competition is pressuring agencies — especially those that are located in Silicon Valley and Hollywood — to refine their own in-house VR capabilities. Saatchi & Saatchi’s Team One recently built an on-site VR Lab to keep abreast of the VR space as well as train a number of experts in-house.

The team created a VR episode for ABC’s hit drama “Quantico” and automaker Lexus in March of this year. 360i, on the other rand, created a one-minute-long VR video for Oreo called “The Wonder Vault” this past January, which has had more than 5 million views to date.

And yet, agencies and production companies offer different skill sets to a brand. For starters, agencies are good at ideation while production companies have an edge in execution, said Boo Wong, executive producer for digital and emerging technology at VFX and creative content studio The Mill.

While The Mill is able to draw upon a hugely diverse talent pool — ranging from VFX artists and filmmakers to creative coders and game engine developers — which enable the studio to solve complicated creative problems fast, it is not at its core an agency.

“Our expertise lies in solving complex creative and technical problems for our partners. But at the same time, we don’t have a lot of things that agencies can bring to the table, like media planning and account management,” she said. “Most of our VR projects still come from agencies.”

Skipping agencies to work with production companies could make sense for brands that want to test the waters of VR but don’t have budgets that allow for service fees to handle strategic planning and oversee VR production. But over time, agencies and production companies will likely collaborate on VR the same way the two manage web and TV production, said Brian Edelman, CEO for full-service digital agency Rain.

“VR is an emerging technology, but its production process involves lots of traditional video and TV creation skill sets. So if agencies’ partnerships with production companies in TV prove efficient, VR can follow the same model as well,” said Edelman.

Virtual reality is on the cusp of a huge boom. Jupiter Research predicts that VR headset shipments will reach 30 million globally by 2020, compared to more than 3 million in 2016.

Curtis Rose, svp and director of creative technology for agency Erwin Penland, used the word “co-opetition” to describe the relationship between agencies and production companies: cooperating in order to meet the broader needs of brands while competing to draw the line of when to use agency in-house versus go for external expertise.

“This extends to social and e-commerce content,” said Rose. “Agencies will continue to evolve their roles to extend their resources and broaden their expertise, while leveraging top-tier production expertise when the idea warrants it.”

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