The economics of advertising was linear even a few years ago. Brands hired a creative agency to develop the campaign idea, the strategy was shaped, and the script brought the creative vision to life. But, once the concept was approved, the biggest commercial conversation started brewing elsewhere.
The focus moved from the idea itself to who would execute it, how it would be produced and, ultimately, how much it would cost. Production houses pitched their interpretation of the script. Directors presented their vision. Budgets were negotiated. The final production partner was selected only after rounds of discussions over costs, timelines and execution. While the creative agency remained the force behind the idea, it was often the production house that walked away with the larger share of the campaign budget. As advertising grew more content-intensive and brands demanded films across multiple formats and platforms, agencies found themselves watching a substantial revenue stream pass into someone else’s hands.
That imbalance triggered a strategic ploy. Instead of handing over execution to external partners, agency networks began building production capabilities of their own. Some acquired established production companies, while others launched dedicated studios offering everything from filmmaking and post-production to content creation at scale.
The proposition was simple. If brands wanted speed and consistency, why not deliver: strategy, creativity and production and post-production through a single integrated offering? The model not only streamlined execution but also allowed agencies to retain a larger share of the campaign value. But the tables took another turn. Generative AI has now come into the picture, altering the economics of production. Work that once required elaborate shoots, specialised crews and weeks of post-production can now be completed in a fraction of the time. AI-generated visuals and automated editing are also reducing the costs while accelerating delivery. So, with faster and cheaper production, the barriers that once justified large production investments are beginning to weaken.
This then spotlights a doubt in the industry. If AI turns production into a more efficient and commoditised function, does owning an in-house production arm still create a competitive advantage?
For a lot of leading agencies, the answer has been a clear yes. Even as AI compresses production timelines and lowers costs, agency networks continue to double down on in-house production capabilities. What began as a way to retain a greater share of campaign budgets has evolved into a strategy centred on integrated delivery. Today, production is no longer viewed as just an execution function. It has become a strategic capability that allows agencies to respond to an ecosystem where brands demand more content, across more platforms, in less time than ever before.
The whole market now shows this change. Havas India has partnered with Banijay Asia, Publicis has expanded its AI-powered content studio, and Sociowash has built SW Studios. Rather than treating production as a support function, agencies are reorganising themselves around dedicated production verticals that are becoming the backbone of modern advertising operations.
Anadi Sah, National Creative Director, Chief Innovation Officer & Founding Partner, tgthr highlights that this kind of move is less a creative indulgence and more a structural necessity. He says, “This change has created a fascinating, two-tiered production model. When agencies establish their own content studios and production verticals, they gain immediate speed, control and efficiency.” Agencies are now perfectly set up to handle the full spectrum of content production, ranging from high-volume, low-budget digital production to platform-specific content and real-time response videos.
For marketers too, the shift is closely tied to how fragmented media consumption has become. Raja Chakraborty, CMO, Continental Coffee, says, “Earlier, only one TVC was made with a lot of money. But today, just one creative person won’t do it. You need thumbstopping creatives with strong hooks. What works will be scaled up and what doesn’t work will not be used further.” Calling it Creative Optimisation, he notes that this constant cycle has increased demand for low-budget, high-frequency content, pushing brands towards agile production partners that can combine AI-led capabilities with physical shoots.
“Advertising is no longer campaign-led—it’s continuous. And that’s why media agencies are stepping into production,” says Rishabh Verma, Head of Marketing, Havmor. He further explained that agencies, being closest to data and platforms, are now able to create, test and optimise content in real time, significantly reducing timelines.
Creative today is far more iterative and performance-driven, making the system faster and more efficient. However, Verma adds, this constant focus on optimisation also creates the risk of content beginning to look uniform, with very little truly standing out.
“Client needs have changed massively. Five years ago, brands needed a fraction of the content they need today,” explains Satish Nair, CEO, WPP Production, India. He adds that brands now require content across more channels, more markets, more formats and endless versions, while traditional production models were never built to handle those demands. The economics no longer add up and the timelines simply do not work. That gap, he says, is exactly where WPP Production comes in.
AI has also fundamentally reshaped production through agentic AI, hybrid pipelines, automated workflows and real-time optimisation. According to Nair, these developments have changed production workflows significantly, with the industry moving away from older production models.
Vineet Bajpai, Founder & CEO, Omnicom Production / Magnon (India), believes the decoupling of production from creative mandates is creating real value for clients, who now recognise that marketing success hinges as much on on-ground content execution as it does on big creative thinking. According to him, from vernacular content at scale to analytics-driven dynamic optimisation, today’s landscape demands super-specialisation that production networks are uniquely built for.
Agencies, hence, can no longer survive on media leverage or classic account relationships alone; as production itself becomes a key driver of marketing effectiveness, building specialised production verticals is helping agencies reclaim greater control. And this is now pushing agencies to evolve from communication partners into end-to-end content ecosystems.
While partnerships like Havas–Banijay represent how large networks are scaling integrated production ecosystems, others are taking a more technology-led route. Publicis Groupe India, for instance, has launched a new content studio under Publicis Production, designed explicitly for what it calls ‘Intelligent Content’. The studio brings together creative talent, streamlined production workflows and AI-powered tools like Leona to help brands produce personalised, contextual and real-time assets at scale.
Varun Shah, Managing Partner, Publicis Production, explains, “Our studio is built to create transformational ‘Intelligent Content’. While entertainment is a layer of what brands need today, it is only one of them. It’s also worth mentioning that ‘entertainment’ doesn’t always mean the same thing to every audience; it shifts by mood, moment, platform, and cultural context.”
The production vertical for Publicis functions as an integrated strategy-creative-production-tech engine, not just a shoot house, built around content people actively choose to spend time with rather than one-off marquee pieces. But while large networks are institutionalising these systems through AI and centralised studios, many independent agencies argue they began adapting to this model long before it became industry-wide.
Harikrishnan Pillai, CEO & Co-Founder, TheSmallBigIdea, recalls how his agency took the decision years before the current wave of entertainment-talk. “We started creating content for entertainment platforms years ago, and by 2022, we made a strategic pivot: along with making content for entertainment brands, we began creating entertaining stories for brands. That shift has given us a clear edge.” He says that the move wasn’t about following an entertainment fad but about building a stronger internal content engine—a production vertical shaped by years of creating stories for entertainment platforms, now repurposed to help brands tell more relatable and integrated narratives across formats.
Another independent agency that walked down the same road is Sociowash. They launched SW Studios as a dedicated production arm offering scriptwriting, video production, animation, photoshoots and post-production edits under one roof. For Mayank Gaba, Creative Director, SW Network, this is a direct response to the way video sits at the centre of modern brand-building. “Consumption of video first content is at an all-time high. Opening their own in-house production studios helps agencies in acquiring these opportunities and scaling their model.”
The integrated setup also helps strengthen client and partner relationships by enabling end-to-end management of shoot-related projects from ideation to post-production under one roof. With fewer stakeholders and points of contact involved, the process becomes more seamless and efficient, allowing SW Studios to handle everything from BAU Reels to large-scale branded series with reduced operational friction.
Beyond agencies, digital publishers too are moving up the value chain by building full-scale content and entertainment ecosystems for brands.
In 2025, RVCJ Media and Salt Media announced Salt Media Entertainment, a joint venture positioned as a holistic media solutions platform that can build IP, branded content, web series and even full-scale film projects for brands. Farhan Zamma, Founder & Creative Producer, Salt Media Entertainment Pvt Ltd, says, “Traditional advertising formats were limited to a few creators driving the narrative on TV or radio. But today, with creator-first brand engagement, brands want makers and publishers to take full responsibility for both reach and conversions.”
Collaborations like their campaign for TECHNO Phones featuring Gulshan Grover’s return as the ‘Bad Man’, he notes, are judged on reach as well as how effectively the campaign performs across real-time engagement metrics.
Taking a more sceptical view, one agency head dismisses many in-house production units as ‘a complete sham’, arguing that they often operate as lean coordination teams rather than end-to-end production outfits. According to the person, they typically comprise a handful of executive producers who oversee projects and outsource the actual production to external partners, rather than maintaining the directors, cinematographers and large crew structures required for film production.
In the person’s view, owning an in-house production unit can also limit agencies’ ability to work with independent directors who are aligned with specific production houses. Rather than replacing the broader production ecosystem, the person says, these teams often act as intermediaries that manage execution across external partners.
The person argues that many independent agencies have consciously stayed away from building in-house production units. He points out that several marquee directors, including Prasoon Pandey, Vinil Mathew, Bob and Amit, are closely associated with established production houses, making it difficult for agency-owned production units to collaborate with them. In his view, this flexibility to choose the most suitable production partner for each brief remains one of the biggest advantages independent agencies hold over integrated production models.
But marketers are seeing the ecosystem evolve into a collaborative rather than consolidated one. They are welcoming the speed and alignment that these production verticals bring, but they are not abandoning independent production houses. Vikas Iyer, Head of Marketing, Lenexis Foodworks, describes the emerging model as fundamentally collaborative. “In my experience, in-house production units within media and creative networks bring speed, scale and alignment—something brands value today, especially when content cycles have become so fast.”
Sharat Kumar, Director, Crazy Few Films, points out that agency-owned studios have altered the competitive field. “The advertising industry has been seeing this shift for quite a few years now. With budgets crunching and profit-margins reducing, it’s become imperative for agencies to explore different streams and production or content just happens to be one of them. It has definitely affected the production process because it no longer is a level-playing field.”
He also adds that, marketers today are far more aware of production processes, while the freelance model for directors continues to grow amid a rise in the number of production houses pitching. Even within this evolving landscape, the larger focus remains on consistently delivering quality work at efficient costs.
“We do far less work today with certain agencies than we once did,” says Bauddhayan Mukherji, Founder & Director, Little Lamb Films. The reality is, he adds, agencies today are operating in an ecosystem where revenue generation has become central to survival, leaving little room for alternative choices. As a result, the impact is being felt on both sides of the industry, even as some AOPHs are beginning to adapt by exploring newer models of collaboration with independent production houses.
The conversation also takes a different toll, when AI comes into the picture. The impact of AI is evident in production economics. An advertising filmmaker and producer said AI has significantly reduced costs across both pre-production and post-production, with tasks such as scripting, storyboarding, presentations and portions of VFX increasingly handled through AI tools.
The person mentioned a recent commercial where VFX work that would earlier have cost `7-8 lakh was completed for `1.5 lakh. Pre-production costs have fallen by more than 80 per cent and post-production costs by 60-70 per cent. As clients and agencies become more aware of these efficiencies, production budgets are being recalibrated to reflect lower execution costs.
An agency head echoes this view, estimating that production budgets across most large agency networks have broadly rationalised by nearly 50 per cent. However, he argues that the shift predates AI, driven by brands moving away from single high-budget campaigns towards multiple lower-cost, platform-specific assets as content lifecycles shortened. AI, he says, has only accelerated this transition by making production faster, leaner and more cost-efficient.
Yet not everyone believes external production houses are losing relevance altogether.
Lower budgets have not necessarily translated into lower profitability. While margins on individual projects have narrowed, the industrial shift towards always-on content has significantly increased the volume of work. Preeti Singh, Founder and Director of PS Productions, mentions that instead of relying on a handful of large television commercials, production houses are now creating a steady stream of product videos, social media content and BTL campaigns for brands. “Earlier I was making one ad. Now I am making 10 ads,” she says, explaining that although each project commands a smaller budget, the higher frequency of work has helped sustain profitability.
Sah sees production houses gaining some new leverage. As agencies internalise basic content production, larger studios are being pulled into the process earlier, often helping shape scripts, characters and emotional arcs rather than just shooting pre-decided boards. The only thing that protects them now, he suggests, is the quality of work at the premium end, where the best production houses remain essential as highly specialised partners for entertainment-led, cinematic projects that truly elevate the creative craft. The expansion of in-house production ecosystems is also influencing the nature of brand storytelling itself, with advertisers experimenting with more immersive and narrative-driven formats.
Tarun Menon, Senior Director, Marketing, Urban Company, sees long-form storytelling as a high-commitment creative choice reserved for deeply held themes. “We’re very consciously using long-form as the ‘mother narrative.’ The longer films, in that 1.5–4 minute zone, are where we earn the right to go deep, deal honestly with uncomfortable themes like dignity and prejudice, and show real journeys.”
For many practitioners, however, long-form remains only one part of a much wider content mix. Harikrishnan cautions against overstating the rise of cinematic storytelling, noting that audiences ultimately respond to quality rather than duration. “The same audience that rejects a dull 30-second ad will wait hours for a concert,” he says. For him, modern production ecosystems must be capable of delivering across formats rather than relying entirely on long-form narratives.
Yet audience expectations themselves are rapidly evolving. Jaunty, Director and Producer, SW Studios, notes that viewers today expect the emotional depth, pacing and payoff they associate with streaming content and films. “Audiences have evolved faster than formats and they now expect the emotional depth, pacing and payoff that they get from streaming shows and films. Longer cinematic brand films are no longer exceptions but a real creative direction for the industry.”
His experience across TVCs, branded micro-dramas and digital films reflects how in-house production verticals are changing not just execution, but also collaboration itself. Production partners, he explains, are now being brought in much earlier in the process, often shaping narrative arcs, casting and world-building in ways that resemble streaming content development more than traditional advertising workflows.
But, as agencies and brands continue building in-house production ecosystems capable of handling everything from always-on content to long-form narratives, the debate around who is best equipped to produce them is coming to the surface.
Gaba frames the future as coexistence rather than replacement. While agencies like SW Network are building in-house production capabilities that can handle everything from everyday social content to large-scale ad films and series, the broader industry sentiment suggests that external production houses will continue to remain important for projects that demand specialised craft, scale and cinematic storytelling.
Verma similarly notes that while media agencies are driving speed, optimisation and real-time content production, production houses continue to play a critical role in delivering ‘craft and breakthrough storytelling.’ Chakraborty, too, believes that even as integrated agency models become more common, outsourced production partners will continue to hold relevance through marquee campaigns and high-craft storytelling.
For Iyer, agencies’ in-house studios will handle agility, scale and volume, while specialist production partners will continue to be brought in for briefs where the ambition demands greater creative depth. “The ecosystem, I think, will stay collaborative, not consolidated,” he emphasises.
What emerges instead is an industry that is steadily reorganising itself around production. As brands demand faster turnarounds, platform-native storytelling and always-on content pipelines, agencies are no longer functioning only as creative and media partners, but as integrated production ecosystems.
Whether through entertainment partnerships, AI-enabled studios, creator-led ventures or in-house production arms, the race now appears to be less about simply making campaigns, and more about building systems that can continuously produce culture-shaping content at scale.
