I recently feel like I was burned and taken advantage of by a "Regional" ad agency during the Primary Election Season.
They asked for my lowest political rate earlier this year, which I provided.
However, when buying they took 30 percent off the top.
I asked our state radio association and the FCC allows Ad Agencies to skim 15 percent off political sales for a commission.
However, this same "Regional" ad agency, took another 15 percent for an "AGENCY FEE" - so basically they're getting 30 percent commission.
I told them it was only fair for me to add 15 percent to my lowest rate and they threw a fit and said that wasn't legal, etc. etc. and they would never buy on my stations again.
What's fair for the goose surely is fair for the gander.
Has anyone else experienced this?
When Radio and TV is the only industry held to give their lowest rates for political advertising, newspaper, billboards, etc. can jack up their rates to maximize profits during political season.
Definitely not fair that agencies are allowed to add fees and commissions to already low rates.
Their "fee" IS their commission!
But they're taking a "fee" and a commission. So instead of 15 percent they're getting 30 percent, which is over and above what the FCC allows. They just avoid that by not calling it a commission. Like cell companies taking more out on the bill and calling it a "fee" or a car garage getting you for an extra $20 by calling it a "shop fee."
If it was a "Rep" firm, they took the 15% for the agency's commission AND 15% for their own commission (fee). That is pretty standard.
Adjust your prices accordingly.
In their online paperwork, it says they will take a 15 percent commission and we will receive 85 percent of the rate.
Oh well, next year when they ask for rates I'm going to increase it by 30 percent so we still get our rate. I'm sick of getting cheated out of our rates when other media pile it on during election season.
Your station management should provide a Political Rate Card in which your political advertising policies, restrictions, and rates are clearly spelled out. (I'm attaching a .pdf of the RAB's Political Advertising Handbook below; it's got all the information you need.)
Because the client, not the station, has hired the advertising agency, their commission should be added to the station's net rate, not deducted from it. This is why many stations publish two rate cards: Net to Station (often called "local") and Commissionable to Recognized Agencies in which the net rates are grossed-up to include the agency's 15% commission (net rate x 1.1765 = gross rate). Same principle applies to political advertising - net for direct buys, gross for agency buys.
I repeat: the agency's commission NEED NOT be a part of the net rate!
If a national or regional rep firm (hired by the station) is an intermediary, they're entitled to their 15% commission - and this usually comes off the net rate. For this reason, many stations keep their rep accounts as "house" accounts, meaning station management handles the transaction.
A clear rate card that shows net to station rates is certainly needed.
I think I would contact the political candidate and explain why their message will not be heard by your station's audience. I would not do so in an effort to make the agency look bad, explaining the FCC allows a 15% agency commission but the candidate's ad agency has tacked on a 15% agency fee in addition that will not fly with your station. I'd suggest if your station is important to the candidate the station and agency would be willing to work out a solution.
Sure, they might never buy from you again, but if they are that stupid and stupid is indeed the right word here, I think you'll see their client list dwindle. Any ad agency worthy of the title looks out for the best interests of their clients, setting any personal feelings aside.
I've stood my ground before and made an agency mad, but when they refused to buy, I suggested I tell my client and get back with them with what the client said. I never had to talk to the client. In this case, this was a client dipping in the till for some ad dollars placed by the ad agency.
The funniest of them all was a poor stand alone Dunkin' Donuts franchisee who was contributing a percentage of his gross to an advertising pool. Being in the MSA, not the market himself, the agency bought in the big city citing the insert in the big city paper you could buy locally was his 'local' advertising. The owner of the franchise was so mad about that, he called the home office and told them he wasn't paying another dollar to the advertising pool and would sue them for what he had paid in over the years. I had an order a few hours later from a very angry but defeated ad agency (a name you'd recognize). They continued advertising month after month until I left the station a few years later. I never intended to create such a fuss, just to should how he needed to supplement the newspaper insert with some dollars from his pocket.
In my experience, it depends on the agency. We have great relationships with some agencies. Others do not seem to desire a relationship, except in a predatory way. Here's a great article by Paul Weyland on the subject.
How to Deal With Predatory Ad Agencies
For example, it has become common practice with some agencies to clearly talk about buying :30 second spots and then send us an insertion order for :60 second spots...at the :30 second rate. Many will meet with me, but it seems they aren't as interested great ideas or in the great results our clients receive as they are in what we will give them for free. I don't necessarily blame them, because as an industry we seem to have trained them that way.
Another factor is that media buying is not a strong profit center for agencies. If they can get another channel of advertising to work for the client in which they make more profit, I suspect that is where they gravitate. I can't say that I blame them, per se.
As a Christian station, we do not receive much agency business anyway, so it isn't as pervasive a problem as perhaps with other stations. We live on mostly local-direct. I keep trying to cultivate healthy relationships with agencies, but try to remain patient over the long haul. I try to remain firm, but unless the radio industry as a whole trains them to do so, I don't expect the predatory agencies will change any time soon.
Every rate that leaves your station on paper, via email or phone should require one of the following:
All pricing net-to-station.
All pricing is gross.
