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What Advertisers and Agencies Can Do to Prepare for 2019 Commercial Contracts

Every three years, the Agreements that dictate the payments and provisions required for talent in TV, radio and digital commercials are renegotiated. 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, meet to negotiate the terms that will be in place for the next 36 months.  While both bodies expect a successful conclusion to the 2019 talks currently underway in New York City, advertisers and agencies should also be preparing for anything and everything. Based on our years of experience managing Talent & Rights and the JPC’s “prudent planning” recommendations, here are some steps advertisers can take between now and March 31st, when the current contract expires.

New Urgency for New Productions
With rate increases for actors and changes to broadcast terms pretty much a given, advertisers and agencies should be focused on scheduling as many commercial productions as possible before the March 31st deadline, particularly if they are big campaign launches or feature expensive celebrity talent. Where schedule changes are not possible, advertisers should be adding 10% to current rates for productions that will occur after April 1, 2019. While the across-the-board rate hikes will likely top out at 6% – 7%, specific provisions—such as for Class A or cable use—can push the increases up 2% to 6% more.

And while budgets are one thing, moving up new productions is also wise in the unlikely event there’s a work stoppage.

Protect Existing Commercials
If a work stoppage were to occur, once it begins advertisers will not be able to bargain for renewals of commercials that reach the end of their Maximum Periods of Use (MPU). As a result, ER and the JPC advise advertisers to start negotiations for new MPU’s as soon as possible to ensure that broadcast rights are maintained regardless of what happens. While it’s been nearly two decades since the last strike, that one lasted a long 6 months so it’s advisable to secure rates you and your client can rely on in any eventuality.

Keep Your Stars on the Screen
Again, as another protection against an unlikely work stoppage, Stacy Marcus, chief negotiator for the JPC, has advised negotiating certain terms into new celebrity contracts and renewing or amending existing term agreements that would give advertisers more control in the event of a strike. For example, advertisers will want a contract that provides for quarterly payments throughout the term of the agreement, with suspension of payments possible in the event of a work stoppage or other interference to production. Marcus also recommends negotiating an extension into celebrity agreements by the same period of time as any work stoppage as well as language preventing celebrities from withdrawing permissions to air previously produced commercials.

Preparing for new Agreements with talent is no easy task. Doing as much as possible to ensure adequate budgeting and anticipate new terms will help to mitigate transition challenges. In that spirit, ER is offering webinar trainings for information on how to utilize our AdBridge platform to manage estimates. Visit our website for a course schedule or email [email protected] for more information. And the JPC is, of course, planning Town Hall meetings once the new contracts are ratified to cover the changes in detail and to answer any questions that may arise. To receive updates from the JPC, sign up here. Extreme Reach will post additional information as it becomes available.