Technology means it is time to rethink advertising talent fees

This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

I am sitting on a plane watching in-flight advertising, while next to me a guy is watching a television show he’s downloaded onto his tablet with ads he can skip through. On my smartphone I can watch ads on YouTube and in the boarding lounge there are ads running on the big television screen.

An article in USA Today proclaims that television networks in the USA have hit the tipping point where viewing of the content they produce is so fragmented due to technology, that they need to look for new sales models for advertisers.

Interestingly though, despite this rapid shift in the media environment, advertisers are still paying the talent that appears in the ads in the same way they have for more than 20 years.

It seems that while technology is driving change and providing more and more ways to view content, including advertising, than ever before, the commercial arrangements behind the advertising have not changed in response to this new environment.

In many cases, and in most countries, there is a very traditional view of the media landscape underpinning the way actors are paid for appearing in commercials.

Now this is not about paying actors less money. Not all actors appearing in television commercials live in Beverley Hills mansions or appear on the cover of glossy gossip magazines. But it is about simplifying the process of determining and then managing the fees paid to actors for their talent, ability and exposure.

For clarity, I am talking about actors and not celebrities. I know the two are not mutually exclusive. When I use the term actor, I mean someone engaged to perform a role or part, selected for their abilities to deliver the required performance and not because of the celebrity or reputation they bring to the role. Celebrity endorsement is a very different and distinctive value proposition.

There are a number of common factors currently used in determining an actors’ fee for commercials:

  1. The Role – such as lead, featured support or non-speaking or extras.
  2. The Number and Duration of the Performance/s.
  3. The Channels on which the finished product will appear – free to air television, subscription television, cinema, internet, etc.
  4. The Exposure – including number of showings and the timeframe.
  5. The Geography – being one market, multiple markets or global.

There are also two further components to be considered when discussing actors’ fees, and although they are often rolled into one, it is worth highlighting them as the performance and the rights to that performance.

These are the two parts of the value chain for the actor’s performance. There is the ‘work’ that they bring to the performance and deliver on the day and then there is the ‘performance rights’ that they effectively licence to use the performance that they delivered.

Lets look at the relevancy of each of these factors in the current marketplace and the possibility they hold in achieving a simpler and more manageable system for talent fees.

1. The Roles

Of all of these factors this is the only one still relevant. The idea of an actor being required to carry the whole performance in the lead or supporting other actors in the performance or in fact providing a performance without a speaking part or as an extra is a reasonable categorisation of a performance.

2. The Number and Duration of Performance/s

Most talent agreements look to the number and length of the “commercials” and here is the issue. The idea of 15-second, 30-second, 60-second performance is very television centric and paid media based. In the digital world the duration is largely irrelevant, with longer forms commonplace and multiple edits and versions increasingly popular.

Linking the amount paid to the actor based on the length of the execution and the number of executions was a way of trying to get a measure of the exposure that actor’s performance would garner. But in the world of DVRs, downloads and online viewing, the number of executions and the frequency of viewing is no longer related to the number of spots or the length of the spots.

In actual fact, the performance work is more directly related to the time taken to capture the performance in the first place. The performance work is an important factor and can be directly correlated with the performance time. Think of the time it takes to shoot a simple talking head delivering a single line to camera, compared to performing either a long form monologue or performing for a complex CGI integrated spot. The time and effort expended in delivering the performance is an important consideration in the value the actor brings to the value equation.

3. The Channels

This is where technology has had a huge impact on exposure. There are increasingly more channels and more devices to view content, including advertising, than ever before. Beyond television there are computers, tablets, smartphones, gaming devices, point of sale screens, cinemas, venue screens, out-of-home sites and the list continues to grow. And at the same time the audience grows on one channel, it is falling on another.

Additional screens do deliver some additional opportunities to view, but that does not guarantee larger audiences. All of these options are screens, opportunities for the audience to view, but without the delivery of a larger audience there is no additional value for the marketer. Perhaps a better and simpler approach would be to consider screens and not platforms, as the distinction is becoming increasingly irrelevant.

4. The Exposure

The approach of linking actors’ fees to the size of media budget or the number of spots planned is definitely based in the broadcast world. Online, the audience chooses to watch the content. If an ad is served to them through online display advertising they click to activate or click to close if they do not want to view it.

Likewise if it is embedded in the site, like YouTube or a company site, then they click to view. The audience and not the advertiser determine the number of views. The reason for these views is one of any number of things including performance, but it is rarely performance alone that determines views.

5. The Geography

This is a tough one, because while the advertiser may want to promote their brand in a particular geographic area to a particular audience or a particular size, the internet makes it next to impossible to guarantee the delivery. Some mechanisms are in place with digital downloads and ad-serving and the like for copyright reasons. Of course broadcasting did not have this problem, but within reason, the marketer (and their agencies), can limit the exposure where they have the control and mechanisms to do so.

However, I do find it ironic that actors and their agents will threaten prosecution because someone put the ad on the internet outside of their current contractual arrangement, therefore turning a blind eye to agencies and production companies doing the same thing for self promotion and award shows. In fact the content of award shows has become a popular channel in its own right with many websites earning income using actors performances in commercials as the content.

The Need for Change

Technology is changing the media landscape radically and the actor’s fee calculation has not kept pace, making the process complex, time consuming and difficult for all involved.

We must simplify the process and the ideal starting point is identifying where actors deliver the value in the process. There are two clear parts, the first being the delivery of the performance required and the second being the rights to use that performance for an agreed period of time and geography across multiple screens.

Without some sort of simplification, marketers and their agencies will increasingly look for alternative ways to achieve their needs including using non-union actors or turn to markets where the requirements are less restrictive and cumbersome.

D0 you agree?

This also ran in the December edition of Compliance Review. You can subscribe to this here.

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About Darren Woolley

Darren is called a Pitch Doctor, Negotiator, Problem Solver, Founder & Global CEO of TrinityP3 - Strategic Marketing Management Consultants and a founding member of the Marketing FIRST Forum. He is also an Ex-scientist, Ex-Creative Director and a father of three. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com
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4 Responses to Technology means it is time to rethink advertising talent fees

  1. Bart Pavlovich says:

    A very well written and thought out article that presents with great clarity and insight the complexities advertising agencies, clients and talent agents will, or are, having to confront with the explosion of 'new media' platforms and devices.

    Very helpful indeed…!!!

    And yes, I agree…!!!

    • TrinityP3 says:

      Thanks Bart. It is a topic that comes up on a daily basis, but it seems no-one wants to address it. Thanks for the support.

  2. Arun Mistry says:

    Or not to use actors at all and go CGI and graphics only – ref the bulk of Telstra How We connect campaign.
    The web certainly has made it more complex in negotiating talent fees because Geography suddenly became "Global" if usage is via web.
    Great article Darren.

    • TrinityP3 says:

      Hi Arun, thanks for the feedback. It is not just the web that has created complexity, but technology generally. Mobile, multiple screens, screens at POS and out of home and the like means there are more channels than ever before. We went to the AANA with a discussion paper almost 3 years ago to suggest a change to the talent payment system that took this increasing array of screen options and reduced it to one – SCREENS – a payment for use across all screens in a particular geography for a set period of time. To date it has gone simply into the too hard basket. Meanwhile the problem just gets worse.

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