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Understanding the Maximum Period of Use Provisions in the New Commercials Contracts

It’s been a few months since the 2019 SAG/AFTRA Commercials Contract between the performers union and the ad industry’s Joint Policy Committee (JPC) was ratified by a near-unanimous vote. That the contract—which includes the most significant changes in decades—earned such widespread support from an often divided voting body indicates how eager performers, producers and advertisers have been for a contract that better addresses the realities of today’s complex, fragmented media market.

As we’ve covered here before, the new provisions in the Commercials Contract are designed to address the growing prominence of digital advertising, level the playing field between signatories and non-signatories and simplify the talent payment process for advertisers.

But this is Hollywood so it’s not surprising that a funny thing happened on the way to the quorum. The effort to make talent and rights management more streamlined has, in practice, become more complex—and burdensome—for advertisers, especially regarding the Maximum Period of Use (MPU) provisions. Here’s a few things advertisers should know as they plan their campaigns going forward.

New Options Create New Opportunities—and Complexities
The contract provides new payment and use options for advertisers, while preserving existing approaches. For commercials made after April 1, 2019, advertisers can choose between the traditional compensation approach—which other than the 6% pay increase for actors is mostly the same as previous years—or they can opt for the Alternate Compensation Structure (ACS), which includes three new flat-fee payment packages. We’ve covered these here, and further details can be found here.

As welcome as the changes are, ER has seen advertisers struggling with the additional responsibilities associated with the new agreement, particularly around the MPUs and the renegotiation of contracts.

A Shift In Responsibilities and A Loss of Control
Up until now there has always been one MPU of 21 months from the date of production. If an actor or other performer in the commercial wanted a change to the agreement (most frequently relating to a wage increase), they (or, most likely, their agent) would send a letter anywhere from 60 to 120 days before the expiration of the MPU to renegotiate the terms. Over the years that process has become a well-oiled machine with agents programming MPU notifications to agencies and the union as part of their talent management duties. But now, that notification duty falls to the producers, ad agencies and/or brands. And if the actor cannot be located—a common issue—the agency has to give the union 30 days to try to locate the talent. All in all, the new approach to notification adds yet another administrative burden to campaign planning and execution.

And that’s not all. The ACS offers a new payment model with an MPU of 12 months from the earlier of the first use of the commercial or 13 weeks from the first day of production. This change is designed to offer advertisers more certitude in the cost structure and also bow to the fact that fewer commercials run for 21 months than in decades past. The shorter option makes good sense but it condenses the notification timeline thereby compounding the aforementioned administrative burdens for advertisers. And finally, the new contract incorporates a whole new category of performers that advertisers have seldom had to negotiate with including singers, puppeteers, stunt persons and other nontraditional actors that figure prominently in commercials.

A Bridge to Sanity
This, of course, is just a basic overview of the new MPU and payment structure. In practice it’s far more complex—and our advertising clients are just learning of all the new intricacies and responsibilities. The good news is they don’t have to get mired in the new demands. ER’s AdBridge™ platform can manage the performer notifications and MPU timelines as part of its overall creative asset management solution. And our Talent & Rights team can offer the agencies and brands the counsel they need to choose the appropriate payroll model – traditional or ACS, to best meet their campaign needs.

The near-unanimous vote underscores the benefits of this new contract—the modernization is long overdue. But advertisers have enough demands on their time and reaping the rewards of the new structure shouldn’t require a slew of new responsibilities. With ER as your partner, it doesn’t have to. Talk to your ER rep today for detailed information on how AdBridge can help streamline the critical Talent & Rights process in the wake of these important new provisions.

For additional information, the JPC has posted an FAQ document on its website that provides additional detail on the new specifications.