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Handling ad placement as a production house?

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Damein GreenHandling ad placement as a production house?
by on May 5, 2012 at 3:09:03 am

Hello all. I don't post much, but I read the forum fairly often. I'd like to pick a few of the great minds here. For those who operate creative production houses, how exactly do you handle ad placement? Particularly when acting as an agency on behalf of the client? Do you have to register(?) with the desired media outlets? Do you take a cut of their ad buy?

The reason I ask is, im looking into starting my own production house at some point, and while I have experience at the broadcast level, I'm not exactly sure how production houses handle this.

Any help is greatly appreciated. Feel free to ramble and vent too! :)


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Todd TerryRe: Handling ad placement as a production house?
by on May 5, 2012 at 5:08:46 am

We do a little bit of that, but not a lot.

While we consider ourselves a "creative agency," we do not really pitch ourselves as an ad agency, per se. We haven't really moved too far in that direction because most of our clients already are advertising agencies, so they place all the media themselves, of course.

Sometimes though we do work with clients who do not have ad agencies and need their media placed. For those we work in one of two ways... for bigger ones, we have a small agency/media placement firm here in town that we partner with that places the media. They know a lot more about demographic research and gross ratings points and all that jazz than we do (it's just not our specialty), and are more suitable for our clients who have a substantial media budget to spend or need some really good target-specific advice.

For smaller clients who don't have big media budgets, or already know exactly when and where they want their commercials placed, we handle that for them.

The usual line that ad agencies spout to their potential clients is that it doesn't cost a client any more media dollars for an agency to place the media than for the client to do it directly... and you have the expertise of the agency as to where/when to place the media for the best result. So, as an agency how do you make money off that? Well, it's because an ad agency will get an "agency rate" from a media outlet that is a lower rate than a direct non-agency advertiser can get (usually about 15%)... but the advertiser gets charged the same. Lets say an advertiser has $50K to spend on media... he could write those checks to various TV stations and cable outlets himself... or could write one check to the ad agency for $50K. He'd still get $50K worth of advertising, but those media outlets would only charge the ad agency $42,500 for the media. That $7,500 difference is the agency's cut.

It sounds super easy, but it's more than the one phone call to place the media. There's demographic and ratings research, bargaining and bartering for the best rates and placements, keeping up with the insertion orders, monitoring traffic, collecting and reviewing affidavits after airing, keeping up with co-op dollars (where applicable), and all that stuff.

Still, there's a lot less heavy lifting than in film production, so we might be moving more into that direction in the future.

T2

__________________________________
Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com



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Nick GriffinRe: Handling ad placement as a production house?
by on May 6, 2012 at 2:05:59 pm

[Todd Terry] "The usual line that ad agencies spout to their potential clients is that it doesn't cost a client any more media dollars for an agency to place the media than for the client to do it directly"

I'm reminded of the "3 greatest lies" because one of them invariably is "everybody gets the same deal." For the most part, nowhere is this less true than with the purchase of media time and space. Yes, in theory if a spot on late night sells for $1,000 and the agency gets its typical 15% agency discount that the advertiser cannot get for themselves, it would be true that it costs no more to go through the agency. But what happens when the TV account exec decides to entice the client directly by helping them set up a "house agency," thereby earning the 15% WITHOUT going through a "recognized" agency?

The inverse of this is when a large agency is buying a lot of time, for many clients, from a lot of outlets, knows the market(s) extremely well as therefore is able to wield their buying clout. They can get not just better rates, but also any number of sweeteners thrown into the mix, ie.- no charge bonus spots, spots billed at the "run of station" rate which, in reality, are run 6am to 11pm instead of at 3:45am, sponsorship bumpers ("brought to you by"), etc.


[Todd Terry] " They know a lot more about demographic research and gross ratings points and all that jazz... and are more suitable for our clients who have a substantial media budget to spend or need some really good target-specific advice."

Todd is right on the money here. Buying advertising time and space is a learned science. It's the knowledgeable balancing of reach and frequency (the numbers of people watching at the times your spot airs and then the numbers of times your spot needs to be seen by them to sink in). For what it's worth unless you have a remarkably brilliant breakthrough spot, the required frequency can be fairly high. Media buyers use ratings services to which they subscribe as well as receive detailed, computer-prepared specific proposals from media outlets which cite these highly specific and segmented ratings.

If you're selling maternity wear your target audience is likely women 18 to 34, probably, but not exclusively in daytime. How do four spots in Ellen compare in cost and reach to twelve spots in a mix of soap operas? Does Morrie Povich have a problem pregnancies theme once a month? If so would it even be possible to generate enough reach with his show to match what you could get with Ellen within the same ad buy budget?

If you're selling motor oil your target audience would likely be men 18 to 49, probably best reached on weekend sports. Common sense would tell you that a Nascar watcher is more likely to change his own oil than most other men in that demographic, but is it worth paying a premium to be in the last break of the race or in the beginning? Analysis of past quarter hour ratings for Nascar races should show you this.

There's more to it and I could go on and on, but hopefully you get the idea.

In summary, there's a LOT more to being in the media buying end of the agency business than most outsiders would ever recognize. It's kind of like an outsider thinking that all we do in production is turn on a couple of lights and hit the record button on the camera.

(And, for what it's worth I've never watched even a minute of Ellen, Morrie Povich, daytime soap operas or even Nascar. If you want to reach me buy spots in The Daily Show or The Colbert Report.)


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Nick GriffinRe: Handling ad placement as a production house?
by on May 8, 2012 at 3:00:48 pm

Oh… and I forgot to mention that usually time buys can be bidding wars. The majority of TV buys are attempting to hit a target, ie.- reach X number of people in X to X age range and gender, X number of times in a timeframe of X. Therefore specific programs are often not as important as is hitting this pre-defined target.

On the local level if you HAVE to have a spot in the middle of 60 Minutes or Modern Family and aren't willing to accept just reaching the same number of people, you are going to pay a steep premium. You also may be able to buy a specific show at a good rate, only to have another buyer come along who is willing to pay more for it and you lose it. TV time is very fluid that way.

One of the things that Todd mentioned in his post was using an outside media buying service. They usually work for a small percentage of the overall budget, but always less than the traditional agency 15%, so if you want to act as an agency you can still make money while having knowledgeable professionals do the dirty work.


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Bill DavisRe: Handling ad placement as a production house?
by on Jun 2, 2012 at 2:33:16 am

You want a quality video done?

Hire a video production professional.

Want quality media placement with an eye to efficiently reaching the required demographic all while getting good rates and the discounts that the "insiders" get?

Hire a media placement professional.

End of story.

"Before speaking out ask yourself whether your words are true, whether they are respectful and whether they are needed in our civil discussions."-Justice O'Connor


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