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How to Avoid Hidden Costs When Using Talent in Your Ad

By Michael Palmer, SVP Business Development, Mediaocean
March 20, 2014

When an agency or advertiser is working out a budget for a particular commercial, they generally allocate the bulk of their ad spend on media and production costs. But what can sometimes get forgotten are the hidden costs associated with talent – whether the talent is actors, music, footage, etc. So in other words, if campaigns are not tightly managed, unexpected budget-busting expenses can be incurred. When this happens, the agency has two equally unappealing options: bill its client the difference or pay for the overage themselves.

Consequently, anyone looking to contract and manage talent for a commercial should be aware of these three “hidden costs” in the process.

1. Holding Fees. Although it is one of the most critical components of working with actors on an ad, it’s likely that many professionals involved in creating an ad have never even heard of it. The holding fee contractually binds an actor to a commercial, and must be paid to the performer every 13 weeks – whether the commercial is actively on air or not. If the holding fee is not paid, the performer is no longer bound to the commercial by the contract, and can either work on something else, or, in the more common scenario, can ask to renegotiate the fee. At that point, a decision must be made to keep the performer on contract for the ad or release the actor from the commercial. Let’s say, however, that a holding fee deadline is missed a week before a big budget commercial is about to air – then there may be no choice, as the performer holds the leverage. Going forward higher holding fees are often required to be paid to the actor. This is a payment that everyone must be aware of and proactively manage their talents’ holding fees.

2. Commercial Expiry. Another scenario arises from older commercials that remain in a database. For example, someone comes across an old shampoo commercial and wants to air it again without altering the talent. If there is no system in place to tell them if the contract with the performer is expired, they could potentially run an expired commercial with no rights in place to air.  Again, resulting in costly re-negotiations or even more costly (and embarrassing) running of the commercial with a performer who is currently in a competitor’s commercial.

3. Maximum Period of Usage. The MPU for every commercial is 21 months. At the end of 21 months, the contracts for all talent involved (actors, music, etc.) automatically expires. This expiration information is absolutely essential when scheduling creative rotations. For example, if you want to air an ad on TV for one month, you need to be sure the talents’ contracts don’t expire during that time. If the folks buying media and running commercials had the contract information for everyone in front of them while buying airtime, they could make game-time decisions on how much airtime to approve or know that they needed to re-negotiate an extension of rights.

Of course, these are just a few things to manage when it comes to talent. Outside of actors, there are both broader and more granular issues to be aware of in real-time, such as usage rights for music or stock footage.

As the world becomes more connected, it becomes increasingly easy for performers to hold responsible parties accountable for meeting their contracts at all times. In order to stay in budget and maintain a good reputation for maintaining talent, agencies and brands need to ensure that they have a real-time system in place, such as Optica, the world’s first system to combine media, talent, and ad delivery on one platform, that gives them these capabilities.

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