If you’re of a certain age, you probably recall Schlitz beer. What would later become the Joseph Schlitz Brewing Co. was founded in Milwaukee, Wisconsin, in 1849. By the 1950s, it was the largest brewery in the United States. Two decades later, it still held the No. 2 spot. 

Then Schlitz made what would prove to be a fatal error in judgment. In an attempt to increase profit margins, the company switched to lower-cost ingredients and adopted a cheaper, faster brewing process. Customers noticed the dip in quality, and sales plummeted. The brand never recovered and was retired in May 2026. 

What’s known as “The Schlitz Mistake” carries lessons for procurement and marketing leaders evaluating their advertising production spend. That is, squeezing vendors and agencies on pricing won’t always save money in the end. In fact, it may ultimately drive up costs while degrading creative and harming the brand. 

A lot of moving parts

Over the past few years, advertising productions have become more intricate affairs. Developing a campaign often means creating assets for broadcast, social media, online videos and e-commerce. And don’t forget about still photography for traditional print or digital out-of-home ads. There are a lot of moving parts. 

“Productions have become all-encompassing,” says Cheryl Ward, President of BBS Worldwide. “Instead of having multiple shoots for different deliverables, you have these multitiered productions where you have to balance the needs of the motion team, the photographer and others. This involves much more handholding and leads to additional costs.” 

More recently, the prioritization of social above even broadcast in some cases has complicated matters further. In years past, social assets may have been derived from footage for broadcast. Now, many advertisers are looking to create unique content for social. That calls for more sets, more equipment, longer shoots, more crew members and more people to manage all the work streams — all of which can result in overages. 

“Many advertisers are looking for ways to gather more footage to create more assets from one production while also getting pressure from procurement and marketing leaders to spend less,” Cheryl notes. “It’s a tough needle to thread.” 

Cheryl cites a case study that illustrates the realities of the current environment. A BBS client put out a project for bid that called for more scripts and more talent than a previous project — but with a 20% decline in budget. A situation like this puts potential production companies in the unenviable position of meeting the price but knowing that overages and compromises are sure to follow. 

How a bareboned bid can erode quality

Vendors that are compelled to bid to the bare minimum can’t build in any margin for error. Every unexpected development — an extra review round or edit day, a new stakeholder emerging in the 11th hour with new demands, a bad-weather day — becomes either a billable overage or an absorbed cost. 

In addition to pushing costs upward over time, this scenario quietly erodes the quality of the creative output. Here’s how … 

Casting: Agents won’t send their best talent into casting calls for jobs that don’t pay well. “They say, ‘It’s not worth my client’s time. I can have them auditioning for projects that pay three times as much,’” Cheryl says. “So, now you’re drawing from a shallower talent pool, and that comes through in the final product. It’s one example of why cheaper isn’t better when it compromises the execution.” 

Directors: Pinching pennies can also scare off premier directors. “A lot of directors will turn down the opportunity because the budget makes it impossible for them to deliver on the project as they would like,” Cheryl says. “They don’t want something on their reel that puts them in a bad light. They’re going to ask, ‘Do I really want to be attached to this project if I can’t execute it to the level it deserves?’” 

Visual cues: An extremely tight budget could require vendors to make do with pre-existing set dressing and props. Or, it could force them to purchase things from Target rather than Pottery Barn or clothes from H&M rather than Prada. That won’t do if the campaign is targeting high-end, luxury customers. “Whereas with an adequate budget, the art department can shop and dress a location appropriately based on the quality of your products and who your customers are,” Cheryl says. 

Shooting at locations abroad to make the numbers work can also prompt visual incongruity. “Now you’re shooting with talent and in locations that don’t read ‘USA,’” Cheryl notes. “That’s a problem if, for example, your customers are middle-America Walmart shoppers. When they see those spots, they’ll say, ‘That’s not us. That’s not how we dress or what our house looks like.’” 

Footage: Overzealous cost management can necessitate compromises like shorter shooting days and fewer cameras. Since the agency captures less footage using fewer angles, they have less material to work with in post-production. “When that happens, you risk a stale or boring edit because you don’t have that flexibility,” Cheryl contends. 

Relationships: A budget-strapped advertiser might luck out the first time they request more for less. Maybe your agency creative team can call in a favor to get an A-tier director to do the project on the cheap, for instance. Constant nickel-and-diming on the part of the advertiser, however, eventually will poison relationships. 

“That can bring a sour disposition onto the set,” Cheryl says. “Then the client starts asking for coffee runs or blankets because it’s a little chilly — but perks like that have been cut out of the budget. In this case, you have two choices as the vendor: Tell the client ‘no’ or eat into your markup to appease them. Things like this can destroy what should be a collaborative and collegial vibe.”

And on the next project, you can bet that vendor won’t be so accommodating. 

More strategic. More efficient. 

As The Schlitz Mistake demonstrated 50 years ago, recklessly cutting costs may generate short-term savings but at the expense of long-term outcomes. If you’re a procurement or marketing leader, don’t make that mistake with advertising production. 

In part 2 of this mini-series, we’ll show you how to be more strategic and efficient with your advertising production spend.