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Buyers and Clients Agonize Over Costly Ad Integration Fees -Mediaweek.com

Hitting The Wall
Costly ad-integration fees put buyers, clients on edge

A random polling of agency execs and their clients during the Association of National Advertisers TV and Everything Video Forum on Feb. 28 found no one willing to say that if the networks balk at participating in formal discussions or flat out refuse to eliminate the fees—which are said to cumulatively cost clients $125 million a year—they would take some type of drastic steps during the upfront, such as a boycott. 

MARCH 03, 2008

Advertisers and media buyers insisted last week that the May 1 deadline set for the Big Three networks—ABC, CBS and NBC—to join them in a task force to discuss the elimination of network ad-integration fees was not intentionally done to turn the screws on the networks before the May 12-15 upfront presentations.

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The ad community is fed up with what it calls "a legacy charge with no justifiable basis" and is not going to be so forgiving if the network sales departments try to slough off the complaints as they have in previous years.

Integration fees were instituted when there were only the three broadcast networks and commercials had to be manually inserted into programming. Decades later, only ABC, NBC and CBS continue the practice. Newer broadcast networks Fox and The CW, as well as all the cable networks, do not collect them.

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ANA president Bob Liodice said now that the ball is rolling on some other issues of concern to advertisers, like commercial ratings and year-round buying, he believes the time is right to again visit the integration fee issue.

"We've had a good collaboration with the TV networks on these other issues, and we hope to reach a common ground here," Liodice said. "This is not an ultimatum. We are just trying to find a way to compromise."

Mark Kaline, global media manager for Ford, said, "We're hoping that as the broadcast networks continue to innovate digitally, they will be able to get rid of some of the old ways of doing business. Integration fees are almost like a tax, and in today's digital world, it is not necessary. I hope they see that."

But one agency exec, who did not want to speak for attribution, said the advertisers should not overplay their hand. "You have to pick your fights," he said. "When advertisers are willingly paying 50 percent more than upfront prices to get into broadcast shows, and the networks are sold out, advertisers have no leverage. This may be the wrong time to raise this issue."  

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