{"id":1605645,"date":"2025-12-12T14:15:19","date_gmt":"2025-12-12T19:15:19","guid":{"rendered":"https:\/\/observer.com\/?p=1605645"},"modified":"2025-12-12T13:57:59","modified_gmt":"2025-12-12T18:57:59","slug":"california-creative-economy-commercial-gap","status":"publish","type":"post","link":"https:\/\/observer.com\/2025\/12\/california-creative-economy-commercial-gap\/","title":{"rendered":"Why California\u2019s Future as a Creative Capital Depends on Commercial Production"},"content":{"rendered":"
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As competing states expand incentives, California\u2019s lack of support for commercial advertising is weakening its creative infrastructure. Unsplash+<\/span><\/figcaption><\/figure>\n

California\u2019s creative economy is at a crossroads. Gov. Gavin Newsom\u2019s recent decision to <\/span>double the state\u2019s Film and Television tax credits<\/span><\/a> to $750 million has reinvigorated long-form production, while commercial advertising\u2014a sector employing thousands of local crew members and sustaining production companies throughout the state\u2014remains largely overlooked.<\/span><\/p>\n

This policy gap is slowly eroding the state\u2019s broader creative infrastructure. Commercial production trains emerging talent, supports local vendors and brings economic activity back into neighborhoods on a rapid cycle. Unlike features or TV shows that can take years to develop, commercials bring work and revenue home in a matter of weeks. Without targeted incentives, California risks losing a sector that fuels both cultural output and jobs. And at a moment when production costs are rising, interest rates remain high and brands are under pressure to produce more content, more often, the state\u2019s lack of targeted incentives leaves crews and companies increasingly vulnerable.\u00a0<\/span><\/p>\n

The stakes are high. Recent industry shifts, such as Marvel moving major productions from Georgia to the U.K., putting roughly 20,000 Georgia film jobs at risk, demonstrate how tax policies can directly influence where creative work is produced and which local economies benefit.\u00a0<\/span><\/p>\n

This trend isn\u2019t limited to long-form productions; commercial production, a vital yet often underestimated sector, is facing similar pressures. States like <\/span>Illinois<\/span><\/a>, <\/span>New York<\/span><\/a> and <\/span>Texas<\/span><\/a> have aggressively expanded their production incentives, making them increasingly attractive to advertisers and production companies on tight schedules and tighter margins. For commercial production, the absence of similar support in California has already pushed countless projects\u2014and the talent behind them\u2014out of state, with long-term implications for workforce retention, creative leadership and economic growth.<\/span><\/p>\n

The overlooked economic engine<\/b><\/h3>\n

The exclusion of commercial and advertising projects from tax incentives undermines the state’s vision for a competitive creative ecosystem. While Hollywood\u2019s <\/span>$40 billion production spend<\/span><\/a> garners significant attention, the U.S. advertising production and creative market, valued at an estimated $85 to $100 billion (applying the rule of thumb that 20 percent to 30 percent of ad spend is allocated to production and creative), represents an even larger opportunity\u2014one that California is failing to fully capture.<\/span><\/p>\n

According to the Association of Independent Commercial Producers (AICP), California is home to more than <\/span>160 live-action commercial production companies<\/span><\/a>. They\u2019ve been loyal to the state\u2019s economy and deeply rooted in its culture for decades\u2014and want to stay\u2014yet many are now, with increasing frequency, forced to relocate projects to states with dedicated incentives for commercial production, including Illinois and New York.<\/span><\/p>\n

Failing to reward this sector\u2019s commitment to the state has direct consequences. As more companies find it financially necessary to film abroad or in other incentive-rich states, California\u2019s experienced crews, from grips and gaffers to drivers and production assistants, lose out on steady work. The rippe effects extend to other sectors of the economy like local restaurants, hardware suppliers, prop vendors, florists, and carpenters that depend on high turnover, short-cycle productions.\u00a0<\/span><\/p>\n

A rapid-cycle contributor to sector and state<\/b><\/h3>\n

Beyond selling products, commercials and branded content are key to sustaining thousands of jobs and keeping California\u2019s infrastructure alive between larger projects. Each commercial shoot fills hotels with agency staff and clients, keeps sound stages active between film and TV projects and provides consistent work for local caterers, rental houses, carpenters and drivers.<\/span><\/p>\n

This fast-paced production cycle helps crews maintain continuous employment and preserve their union status, an increasingly important consideration as the industry faced prolonged uncertainty following strikes, A.I.-related disruptions and tighter studio spending. Commercial work is often the glue that holds the ecosystem together.<\/span><\/p>\n

Letting this work drift away means allowing a critical piece of our creative infrastructure to erode. The talent and crews that power Hollywood’s blockbusters are the same people who work on global advertising campaigns. Supporting one sector while ignoring the other is a missed opportunity to strengthen the state\u2019s entire production pipeline.<\/span><\/p>\n

A way forward: targeted, high-impact incentives<\/b><\/h3>\n

Even a modest incentive could make a significant difference. Allocating a small portion of California\u2019s existing $750 million tax credit\u2014for example, $150 million\u2014toward qualified commercial projects could generate hundreds of additional productions each year. If an average project spends $750,000 in-state, this allocation could translate to roughly 200 new shoots annually, directly supporting local workers and small businesses. A 10 percent to 20 percent sub-pool within the existing program could dramatically boost job density and keep more of the vast advertising economy within the state.<\/span><\/p>\n

Defining “qualified commercial production” can be achieved with simple, transparent criteria, such as requiring a minimum in-state spend of $750,000. This approach isn\u2019t about subsidizing brands; it’s a strategic investment in protecting the people who animate California\u2019s creative economy, and in the infrastructure that supports its long-term health.<\/span><\/p>\n

Gov. Newsom has shown a willingness to think big and expand initiatives for film and television. Now it\u2019s time to extend that same vision to commercial production, perhaps with a phased rollout and a two- to three-year review to evaluate trade-offs, adjust caps, and consider full integration.<\/span><\/p>\n

By directing the California Film Commission and the Office of Business and Economic Development to explore and implement tax credit eligibility for this sector, the state can affirm its support for every storyteller from the thirty-second spot to the feature film. Doing so will keep California competitive and reinforce its status as the world’s premier creative capital.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Darren Foldes, Emmy-winning producer and partner at the commercial production company Sibling Rivalry, examines why California\u2019s decision to expand tax credits for film and television while excluding commercial production represents a critical gap in the state\u2019s creative strategy. Foldes argues that commercial advertising is a fast-moving economic engine that employs thousands of Californians, and that without targeted incentives, the state risks losing a foundational part of its creative ecosystem to competing markets.<\/p>\n Read More<\/a>","protected":false},"author":177935337,"featured_media":1605716,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"apple_news_api_created_at":"","apple_news_api_id":"","apple_news_api_modified_at":"","apple_news_api_revision":"","apple_news_api_share_url":"","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"post_tag":[423808383,423982741],"company":[28454],"channel":[186,423806427,423868938,423874676,423875639],"location":[],"nyo_column":[423982261],"person":[423911963],"nyo_post_hidden":[],"coauthor":[424005875],"class_list":{"0":"post-1605645","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"tag-hollywood","8":"tag-media-experts","9":"observer_company-marvel","10":"channel-business","11":"channel-finance","12":"channel-media","13":"channel-policy","14":"channel-economy","15":"nyo_column-expert-insights","16":"nyo_person-gavin-newsom","17":"style-expert-insights"},"acf":{"homepage_position":"","homepage_title":"","homepage_excerpt":"","alternative_og_image":"","headline":{"seo_headline":""},"subheadline":{"optimized_seo_description":"","optimized_social_excerpt":""}},"apple_news_notices":[],"parsely":{"version":"1.1.0","canonical_url":"https:\/\/observer.com\/2025\/12\/california-creative-economy-commercial-gap\/","smart_links":{"inbound":0,"outbound":0},"traffic_boost_suggestions_count":0,"meta":[],"rendered":"","tracker_url":"https:\/\/cdn.parsely.com\/keys\/observer.com\/p.js"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/observer.com\/wp-content\/uploads\/sites\/2\/2025\/12\/zyanya-citlalli-bdaw57eOkZI-unsplash.jpg?quality=80","coauthors_byline":"By Darren Foldes","display_channel":"","thumbnail":"\"repeating