Understanding the New Commercials Contracts

Bei Huang  | 

Every three years, SAG/AFTRA, the union representing performers, and the Joint Policy Committee (JPC), representing the membership of the two largest ad industry organizations, 4As and ANA, sit down to rework the provisions for paying talent in ways that best accommodate all the shifts of an ever-evolving industry. This year, in recognition of just how dramatically technology and innovation have changed advertising, the memberships voted in favor of a “landmark” approach to compensation that offers different flat-fee payment options designed for advertising’s “next era.”

New Options for Employers and Talent
The new alternative payment structure is a significant departure from previous contracts and has sparked a plethora of questions. As we did in the spring with our blog post on how to prepare for the new contracts, our internal talent team is again offering help, this time in understanding the new payment options, as well as how our AdBridge creative asset management platform can help streamline the new work that will be required.

Three Ways to Predictability
The traditional wage structure of the SAG-AFTRA Commercials Contracts are still available for advertisers who prefer to keep things the same. But for advertisers who want to lock in costs before commercials are made, there are three new options from which they may choose:

  • Upfront Plus For an upfront payment of $20,000, plus session fees, advertisers can use the spot on all media covered by the Contract for one year (vs. the 21 months of the traditional model). The $20K includes 10 free Class A uses. Beyond that, performers get $100 per each additional Class A use.
  • Upfront Flex This model has an upfront $8,000 payment plus session fee for one year of use. As advertisers place their media, they credit flat fees and Class A use payments at $100 each against the $8K until it is exhausted, after which performers are paid for each type of continued use. There are flat fees for five different use categories purchased in 13 week cycles.
  • Upfront Digital Internet and new media payments are now combined. For one year advertisers can use this spot on the internet, OTT and new media for $3,825 plus session fee. There is no exclusivity, so if an advertiser wants to move a spot to TV, they will need the performer’s consent.

Prudent Planning
Determining how to use the options for the Alternative Compensation System requires some estimation and forecasting and the JPC has developed an ACS calculator to help employers figure the pros and cons of each model. But the calculator comes at a cost after a few initial uses. ER clients, however, can make use of AdBridge for such estimating purposes and avoid the added fees—which can reach $500 per request once the free allotment has been used.

New Commercials Contracts tend to prompt ongoing questions from advertisers and agencies as new use cases arise over time. ER, with its long experience in managing talent and rights issues, is here to help. Please tap into our many resources—in-person client sessions and webinars among them—and send us your questions. We’re here to help.

Bei Huang

Director, Talent Account Management
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Bei Huang

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