Although I normally focus on Production/Post, many potential clients are approaching me to buy time for spots they already have, in some cases statewide.

I understand there's a standard mark up of 15%. I've heard in some cases the client pays the agency which marks up the price and then pays the local cable provider/station. In other cases the client pays the cable provider/station and they "kick back" 15%.

How do you recommend I handle the above on buys around the state? What would be a typical contract with the client and/or the cable provider/station depending on the above two circumstance? Seems there's a lot of "trust" involved when the client pays the station and you get" kick back."

Would it be easier still to have the client pay the rate for the time to the cable provider and then pay me as consultant to arrange the buy?

Here's an idea. Pay the full price for airtime and you'll be first in line for fire sales!

Here's an idea. Pay the full price for airtime and you'll be first in line for fire sales!

I don't get it...

Locally, I've done cable spots. Sometimes the cable company send me business on spots that are unprofitable for them to produce. When I've done local cable spots I either send them to the sales rep or I help them do the buy and simply add that to my package price. I haven't gotten a percentage since it's been part of my price as I'm producing the spot.

Recently some people have been contacting me just to help with the buy (they usually have "self produced" ads (one might imagine the quality). I had been turning this business away since the buy was often small (on par with the fact that they "self produced" the ad) and taking any percentage wouldn't amount enough to make it worth the phone call and paperwork time.

I have been approached recently by someone who wants to advertise statewide. It was through a recommendation (we know word of mouth works). It's a lower budget client of course but higher budget than the others I've mentioned above. They can certainly afford a targeted statewide buy.

I'm curious about being a "recognized" ad agency though. Ultimately the cable companies want to sell their time so I can't imagine them saying no to a buyer (unless it's unprofitable of course). Obviously the bigger the volume (as "recognized" agencies can do) the greater potential for discount/markup. This is a candidate ad. Keep in mind that political candidate ads are already "discounted."

Wouldn't worse case scenario would be that I get the client the "book" rate and charge the client for my services based on the buy?

Additionally, does one create a contract (and what does it look like) if the cable company gives you the percentage vs a contract with the client.

I see three business models (maybe more?).
1) Client pays me and I write check to cable company, taking my cut.
2) Client hands cable company check and another check made out to me for my fee and I hand check to cable company (assuring I get paid).
3) Client hands me check for cable company and the cable company writes me a check for percentage (how the "kick back" - I hate that phrase - works?).

It seems that since I'm not a "recognized" agency and this is not a local buy (those folks know me and certainly want me to bring them regular business) that (2) seems to make the most sense. In this case I would assume the client signs contract with cable company, I do the administrative work, and have a separate contract with the client for such consulting work.

I guess not many have gone this route (buying time for spots one hasn't produced) given the response. Anybody done this?

Craig, this is my 22nd year owning an ad agency. What you're asking about is a business of it's own. Here's the way it works:
1. As a recognized Agency you are entitled to buy the media at a 15% discount.
2. The client then pays you the full amount 100% and you keep the 15%. i.e.
the advertising run is $10,000, you pay the media $8500 and you retain $1500. The client pays $10,000 either way. The terms used are Gross and Net.
3. If the client pays the full amount to the media, you probably won't see your money for many many months and you will run the risk of now involving a 3rd party (the media) in your business. By the way, media doesn't like to pay out money, only received it. Oh and I would avoid calling it "kick back" that is a term many attorney's would love to work with.

So, it all sounds pretty simple and lucrative huh?
Here's the reality:
1. When you become the Agency of record you are accepting the responsiblity of the all of the billing. You become the client to the media and your client is responsible for paying you. If that client doesn't pay you, guess what?
2. it's imperative that you become incorporated so the you have what they call "a vail of protection or security". You must also have an iron clad agreement with the client that says he is responsible for the payment. This will only be helpful when you go to court. The media still considers you their client.
It's a serious decision and one that can be very rewarding.
Good Luck.
Gary

Let's discuss what the producer's have to do. Having produced a TV show, submitted to 4 channels and awaiting replys, how does one find an agency to work with? I have show sponsor, 4:30 of commercial time, 3 segment sponsors, and billboards to fill and do not have a clue where to begin. Obviously I don't want to try and accomplish the feat myself, but without an approval as yet and an expected air date of 1st qtr 2007 what does one do?

Jim

Craig, I'm a little confused. I'm not sure if your second post occurred before or after my post.
By "recognised agency" it means that you fill out a credit application with banking info and other media companys as references. As you can see they're looking for a responsible party if the client doesn't pay you (the agency). The contract from the Cable Company you will sign, if you're acting as agency.

Thank you Gary. Very informative. I've heard others mention the risks involved.

Given the current circumstances and the client involved, what I may do is arrange the buy, present the contracts to the client to sign and they can pay me and the outlets separately. Might mean a higher price but I can't take the financial risk and the client may not be in a position to do this any other way.

Apparently the client and no one in the client's organization has experience with media buys and they need to buy statewide. They actually don't have much money as statewide buys go so it'll likely be a couple of thousand dollars in a bunch of markets in a very targetd buy.

If it happens (not sure of this), the numbers may be equal to or greater than what you mention and this small business can't take the financial risk.

For my more frequent local clients where the dollars are smaller and the clients may repeat and the local cable reps know me the situation is different.

How does one confirm the spots air on a state (or even regional level)?
I've bought locally, get a air sched from the cable company and spot check.

Craig, The only problem with the procedure you're suggesting is that if you have the client sign the contract there will be no agency commsion involved. He'll have to pay the gross amount. That would mean you would have to add an additional 15% and I'm not sure the client would like that. You can only get the agency commision if you sign the contract and take the billing.
One of the services that an ad agency provides is central billing for the client. When you have to deal with multiple cable systems, as in a state buy, there may be as many as 8 or 10 reps, contracts and bills involved. By having an agency, the client needs only to deal with one person, the agency.

As far as tracking when the spots ran, there are 2 methods. You can request a traffic schedule, from each cable company, that will tell you when the spot is scheduled to run. They usually are only good for 1 or 2 days in advance. The other method is at the end of the month and along with the bill is an affidavit, a computer printout that shows where each spot ran, on which network, at what time and in what program. The affidavit must be notorized before it goes out, so it's very accurate.
Gary

Jim, I'm not sure I understand your question. Do you have a 4 minute 30 second segment that you produced or are there 4 30 seceond spots?
When you say 3 segment sponsors, are they advertisers in the your segment?
And what type of billboards?
Gary

...
As far as tracking when the spots ran, there are 2 methods. You can request a traffic schedule, from each cable company, that will tell you when the spot is scheduled to run. They usually are only good for 1 or 2 days in advance. The other method is at the end of the month and along with the bill is an affidavit, a computer printout that shows where each spot ran, on which network, at what time and in what program. The affidavit must be notorized before it goes out, so it's very accurate.
Gary

The affidavit is sent by the agency to the broadcaster with the bill attesting where each spot was SUPPOSED to run, or the affidavit is sent from the station back to the agency with their payment certifying where the ads actually DID run??

Steve, The broadcaster must accompany their bills with a proof of run. So the broadcaster sends the affidavits to the agency/client with the bills.
One of the additional benefits to the affidavit is if you purchased a specific program (Larry King Live on Wednesday the 24th) it will show that you got what you paid for.
Gary

Steve, The broadcaster must accompany their bills with a proof of run. So the broadcaster sends the affidavits to the agency/client with the bills.
One of the additional benefits to the affidavit is if you purchased a specific program (Larry King Live on Wednesday the 24th) it will show that you got what you paid for.
Gary

Duhhhhh - my post was a senior moment to end all senior moments - for some bizarre reason I got it into my head that the broadcaster was paying the agency's bill and the affidavit accompanyed the cheque, not the other way around. I'll just go sit quietly in the corner now and mumble to myself ... ROFL.

Steve,
Always remember what Vice President Dan Qualye Said, " A mind is a terrible thing to lose".
Gary

Gary, regards tracking, that's exactly what I've done in local buys (getting the scheds printed and end of month printout. Usually I can spot check the accuracy by leaving a TV on in the background. Primitive I'd admit. The issue is having a viewer watch to confirm the spots actually air at the times claimed. Overly caution but I don't want client calling with complaints that viewers watching at a given time didn't actually see the spot.

I understand the advantage of centralized billing and yes there'll be about 9-11 reps in this case. I'm thinking the client would simply sign the paperwork and I'd actually take care of the rest.

I don't know if I want to take a check, wait for it to clear and then pay the cable providers. I certainly don't want to risk fronting the money while waiting for the check to clear.

Basically it's a question of acting as more of a consultant doing the leg work vs actually acting as the buyer/agency. I'd have to cut the mark up doing the former. Cut profit to cut risk basically. It's not a long term model but something circumstancial.

Thanks for you advice Gary as I think about this.

Craig, The only problem with the procedure you're suggesting is that if you have the client sign the contract there will be no agency commsion involved. He'll have to pay the gross amount. That would mean you would have to add an additional 15% and I'm not sure the client would like that. You can only get the agency commision if you sign the contract and take the billing.
One of the services that an ad agency provides is central billing for the client. When you have to deal with multiple cable systems, as in a state buy, there may be as many as 8 or 10 reps, contracts and bills involved. By having an agency, the client needs only to deal with one person, the agency.

As far as tracking when the spots ran, there are 2 methods. You can request a traffic schedule, from each cable company, that will tell you when the spot is scheduled to run. They usually are only good for 1 or 2 days in advance. The other method is at the end of the month and along with the bill is an affidavit, a computer printout that shows where each spot ran, on which network, at what time and in what program. The affidavit must be notorized before it goes out, so it's very accurate.
Gary

Client called to ask about radio buys. Now that's somethng I have no experience in (I've done local TV buys). As Gary states, the number of reps is about what I'm dealing with.

Since there are so many radio stations and they're not linked to a single providers, like cable, It seems like a mountain of work.

With Cable, a single provider (and its rep) covers a region and covers the choice of many major cable networks and offers to cover the entire region or a targeted area. All this in a single region with a single rep.

I'm not sure how it works with radio. The thought of having to contact scores of individual radio station reps around the state seems prohibitive given the speed at which this will have to be done.

Can someone explain any efficient way to do radio buys?

Your Welcome.
Gary

Gary

I need to fill 8 30 second commercial spots, find a show sponsor, place segment sponsors (those who would sponsor one of the for segments, and billboards (5 second spots). It is a full 28:30 show, that has yet to be approved by any of the channels it was submitted to. The question is, I guess

1) Do I continue to pursue sponsors myself or find an agency
2) If an agency, do I wait for approval from the channel(s) or start looking for the agency now.
3) And last but not least how does one find an agency to begin with?

For general information

Show Sponsor $20,000 per quarter
30 second spot $12,000 per quarter
Segment Sponsor $1,800 per quarter
Billboard $1,500 per quarter

Thanks

Jim Montgomery

Ok Jim, as the producer of the 30 minute show you are in fact the owner. That means you can offer advertising within your produced show. In essence you have become a media outlet. Let me give you an example.

There is a local comedy club that has a live show every Tuesday night, you video it and produce it into a 30 minute show to be aired on leased access or Cable's LOC (Local origination channel) on Cable TV in 4 cable systems.

You then can sell advertising within your show to local advertisers. You might have different advertisers in each cable system or they may want to be more than one system. Each 30 second slot has a price assigned to it.

The reason I'm giving you this example is to answer your original question and that is you will have to approach it like the Radio Stations, Newspapers and Billboard Companys. You will have to sell it yourself by approaching local customers and/or their advertising agency as a advertising product.

If you sell your production, you no longer have the ability to do this, the new owner will want to make the advertising money.
Gary

Craig,
Radio is not a difficult as you imagine. The first thing you have to determine is what is your clients target audience. Let's say it's women 25 to 54 years old that are homeowners, because your client sells kitchen cabinets.

With Cable TV a good choice would be HGTV. In this state buy your talking about (I don't know what state your in) let's say there are 30 cable systems, they will all carry HGTV. That's why you will need to contact all of the systems with all of their reps.

Radio is quite different. Each Radio Station has it's own personality. A rock station may target men 25 to 49 years old. An Oldies station might be too old. At any rate the listener on these stations are not your client's target audience.

Within one state there aren't many radio stations to pick from and very few would be the right choice for your client. Even if your client's trading areas is the NY Metro area.

Of course homework will be needed to find what station and coverage area is right.

If I stay on this board much longer, I'm going to have to fire myself.
Gary

Cable companies around the state immediately accepted me as an agency since I was bringing a client.

They all included 15% agency discount.

The client had no problem issueing two checks (one for cable companies and one for my company) and I gave them a further discount for that.

I'm already talking to my next potential client.

Just to clarify, I did not produce these spots. I suspect there are many small production companies that produce lower budget spots and leave it to the client to figure out the buy.

Now you're Golden.
Gary

Client called to ask about radio buys. Now that's somethng I have no experience in (I've done local TV buys). As Gary states, the number of reps is about what I'm dealing with.

Since there are so many radio stations and they're not linked to a single providers, like cable, It seems like a mountain of work.

With Cable, a single provider (and its rep) covers a region and covers the choice of many major cable networks and offers to cover the entire region or a targeted area. All this in a single region with a single rep.

I'm not sure how it works with radio. The thought of having to contact scores of individual radio station reps around the state seems prohibitive given the speed at which this will have to be done.

Can someone explain any efficient way to do radio buys?

I can only say that radio has become just about as homogenized these days. Check with the major media groups and they can put you in touch with or give you demographics and market info for the stations they own.

I'm talking about folks such as ClearChannel, Infinity Broadcasting, etc. The days of locally O&O are rapidly vanishing (to me it's a shame.. JMO).

-gb-

I'm finding that out too. Whether it's AirAmerica or "Jack" it's a chain.

I can only say that radio has become just about as homogenized these days. Check with the major media groups and they can put you in touch with or give you demographics and market info for the stations they own.

I'm talking about folks such as ClearChannel, Infinity Broadcasting, etc. The days of locally O&O are rapidly vanishing (to me it's a shame.. JMO).

-gb-