Forums » Friday Polls

Friday Poll: Should Radio Charge for Copywriting/Production?

    • 456 posts
    December 14, 2012 12:17 PM PST

    Two more thoughts on this topic. Our radio station group also owns a TV station. My clients don't blink at spending $450+ to get a 30-second TV ad done. My clients also don't blink to get a jingle package done.

    • 1037 posts
    December 15, 2012 2:18 PM PST

    Jack,

    I infer by its omission that your radio stations don't charge for production (the jingle packages being a separate product). Any exceptions?

    • 456 posts
    December 17, 2012 6:45 AM PST

    You are correct. No exceptions.

    • 12 posts
    December 17, 2012 5:50 PM PST

    I approach the subject a little bit differently from my brethren. To me, it’s a matter of whether the dollars realized from selling production justify the additional effort required to sell it. I always operate on the principle of “hard money” and “easy money.” To me, in most cases, the easiest money is selling a solid saturation radio spot schedule. My salespeople are trained to do that, and we can do that all day and all night. It’s the most efficient use of everyone’s time, and the internal systems at the radio station are geared up for that.

    Anything over and above that is, by its nature, harder to sell, and I put production in that category.

    That’s not to say we didn’t do plenty of other things besides sell spot radio, but there were always specific conditions under which we did so – to wit:

    1.    The client expects or demands it.
    2.    We need to impress the client to get his business, or more of it.
    3.    We need to meet or exceed what our competitors are doing.
    4.    We just want to shake things up, or have some fun.

    But here’s the thing: lots of stations minimize their yield – and some go broke – by chasing hard money and leaving easy money on the table. My philosophy is to sell easy money as much as you can to build your base, and sell hard money when you have to – as under the foregoing conditions – or when you have exhausted your easy money options.

    Getting back to charging for production, the philosophical debate is all very nice, but it depends on whether you can integrate such a plan into your selling so that it does not siphon spot dollars, waste your salespeople’s time, or introduce a negative connotation into the sales process.

    Do we deserve to charge for our production? Sometimes yes, sometimes no. A radio station is all about getting spots out the door, and when your understaffed production department is dealing with 25-50 spots a week – plus a healthy number of spec ads! – can you really afford to take the time to produce a spot that is sufficiently close to agency quality to warrant a charge?

    • 1037 posts
    December 26, 2012 6:25 PM PST

    (For RSC members who don't subscribe to Jay Mitchell's excellent weekly Small Market Radio Newsletter--and I heartily recommend doing so)--there was an additional exchange on the topic between Richard Teimer, producer of the syndicated Time Capsule radio features and "a ton of local-agency spots in the 80s and 90s" and Jay, which I'm taking the liberty of re-posting for the benefit of those following the conversation.)

    Charging for Your Local Production

    It’s always good to hear from our old friend Richard Teimer, proprietor of the terrific
    Time Capsule radio quiz, who shared with me his very clever, very funny holiday edition
    of the Capsule: www.tcapsule.com/xmas.

    Dick also shared his thoughts about the conversation, which began at the Radio Sales
    Café (www.radiosalescafe.com) and spilled over into these pages last week, about
    whether to charge clients for the production of their commercials:

    As one who produced a ton of local-agency spots in the 80s and 90s, I found there were always plenty of advertisers aware that (1) local stations have accounts that compete in the same category, and (2) local stations couldn’t ethically produce better spots for them than for their competition. We weren’t creative geniuses like Dick Orkin, but we sure got better results because advertisers who came to us understood that, unlike the stations, we weren’t playing for both sides and would do everything possible to make their messages stand out (of course, one result was that our local stations still detest us and won’t air Time Capsule!).

    Since it’s unrealistic to expect any advertiser’s world view to change, perhaps what Chris Rolando should do is set up a separate skunk-works department—an in-house ad agency—that would charge for its creative and production. He could then have something to offer to both world views. It would sidestep the ethical dilemma and still permit the client who’s satisfied with Yellow Pages copy to save a buck. Just a thought.

    My Reply
    Dick, your points about production express better my thoughts than my own ramblings did. I especially appreciate your point about the bifurcation that results from dividing your clients into First Class and Coach.

    I have toyed with the in-house agency concept myself, and I know others who have been able to pull it off. You’ve got to have incredible credibility to sell that one into the marketplace, although if you can do it, it’s great. The people I know who do it have set up more than just a production shop; they function as a full-fledged local agency, including buying airtime from other stations. Not all broadcasters are prepared to admit that theirs are not the only stations worth using.

    My bottom line on this: We provided production running on our stations at no additional charge to our clients. We had a nominal charge for production which also ran on other stations. In general I agree with Chris Rolando that this is a valuable service but one which is part of our cost of doing business.

    Personally, I think a lot of hotly debated topics would be less so if radio broadcasters could get over their inbred inferiority complex. So what if the paper charges for production? So what if the paper charges for funeral notices? So what if–wait a minute, I think I’ll get into the newspaper business. With all those extra charges, it’s gotta be a better business than ours.

    • 4 posts
    October 20, 2017 8:55 AM PDT

    Great to see the debate! While I strongly feel that radio should charge for production, I also unequivocally agree with Jay: "the philosophical debate is all very nice, but it depends on whether you can integrate such a plan into your selling."

    But before I get into how I see the two points converging, I wanted to address those who say that the cost for production is (or ought to be) baked into the cost per spot. It's called itemized billing. You can have production thrown in as "value add," but unless you specify the cost via itemized billing, you're just blowing smoke. And unless you'd give someone coming to you with already produced spots a cheaper price per spot, then you're really blowing smoke. 

    What I believe, based on what I've seen work both within radio and within other industries, is that radio stations should use a two-tiered production system. Tier one is run-of-the-mill ad voiced by customer or station announcer, with limited SFX and mostly non-creative sound editing / production. Basically, if your business has a straigtforward value proposition / pitch, and you're OK with having your ad basically "sound like" a typical radio ad, then that's included in the cost of the airtime. A majority of clients probably would opt for tier 1, but at least they understand that they have the option, and more importantly, they understand that the station is capable of providing that quality of ad.

    Tier two is the use of storytelling, theatre of the mind, multiple voices, better use of SFX, and creative editing and production. It also includes a more thorough review & interview of the business / owner / competitive landscape as well as limited consulting on branding the business in order to provide the copywriters with a more effective brief. Clients are charged for tier two production and not just enough to cover costs, either. They're charged, let's say, 80% of what an outside agency might charge. This can be as much about establishing the professionalism and capabilities of the station as it is about earning additional revenue. 

    And the point is that not every client is a good fit for tier two production, but those that are need to be sold on a branding campaign as an integrated part of the selling process, and not as an after-thought to a sales effort merely aimed at getting the prospect to buy off on a schedule. Basically, any client willing to commit to a year long branding schedule of sufficient frequency ought to be sold on the value of messaging and enhanced production as a thoroughly integrated part of the sales process. 

    I think Jay makes a good point about easy money and hard money, but I think the easy money doesn't come from hustling schedules. The easy money comes from growing branding clients and having them re-up year after year, while increasing their spend as their top line revenue and ad budget increases. Accumulating those kinds of clients creates stable income and "easy money." BUt to get that, you've got to create effective ads. And to create effective ads, you've got to sell the client on the value of great creative and production and then have the client commited to paying for the same. 

    • 5 posts
    October 20, 2017 9:10 AM PDT

    This has been a bone of contention with me for decades.

    For the radio stations, I have seen several responses that are very similar:  "We don't charge for it...it's built into the cost."

    In that case, production is considered overhead; just like the production director's salary, the music library lease/purchase, purchasing the computer for the production director to use, the electricity to run the computer and production room, as well as the water bill to flush the toilets, and the coffee in the breakroom.  Every station has those costs covered by the rates they set for advertisers.

    Which means, you ARE charging for production, you're just not listing it on the client's invoice.

    If I'm a business owner considering buying airtime from a station, and an AE said to me, "...and production is free!" I'd think:  either they're lying to me, or they have no idea how a business is run.  Either way, why would I take advertising/marketing advice from that AE?

    • 73 posts
    October 20, 2017 10:08 AM PDT

    I believe the question of charging for the copywriting and production should have been an industry standard but radio has always been a 'freebie'. We'd run PSAs for groups that asked for a donation or entry chrage without a second thought while the newspaper said "if you charge, we charge". The list goes on. I'm guilty of this thinking too.

    Most small markets put little time and effort in to spots. Many smaller stations have the sales representative write the spot and spots are doled out to the mostly entry level jocks to produce. Generally the production studio schedule doesn't allow for much creative. The jock assigned 4 spots for his hour of production before or after the air shift is simply going to churn them out without much thought. After all, they can't change copy without the salesperson giving the OK. 

    Many stations are struggling just to get enough sales to pull off what they do. Their mentality is more spots means better chances of success and if they change a production fee that means fewer spots. Anyway their competitor doesn't charge and your spots are no more stellar than theirs. The way we rose above charging at stations where I worked on air and in sales was through getting a better and more effective spot on the air (compared to the competitor) and raise our rate per unit to get more of the advertising pie.

    The times I have charged a production fee is when an excessive amount of work was involved. I got a musician to write and have his friends produce an original jingle. I had one client demand a banjo player and three people to sing the copy she wrote. As for the cost, the station got none of that fee as it went to those that did the work. 

    Rod Schwartz correctly stated many times in small markets the salesperson functions as an advertising agency. I took marketing ideas, wrote creative (sometimes creating the audio spot) and planned all other media spending for my clients (not all, just maybe 15% had me plan all media). Clients got proposals detailing how their 'words' or desired results could become reality. It was never 'we got this special, can I sign you up?'. Granted I had 10 years on air and in programming before getting in to sales. The most baffling thing to me is the clients that got this extra freebie, thought highly enough of me to give me some freebies. In fact two clients gave me a Christmas Bonus each year and while it was a mere token compared to time spent on them, the value was beyond words as they recognized the work and rewarded me for it.

    In fact, at one station I even worked collectively with the local paper to coordinate advertising campaigns for the client that were pitched with both of us seated in front of the client (our one rule was to leave the suggested budget for each media alone, opting for the client's plan for dividing the dollars). In another market we'd have a lunch brainstorming session for marketing ideas with reps from the three stations the client always bought. Instead of fearing our competition, we worked collectively for the client, something he really liked. It really scared the GM but it solidified our little group to become the only stations he bought. We all saw increases in spending. In fact, we actually learned from each other and became friends. I got leads and they got leads from me when the client wanted that media. We'd snicker at how it made our bosses uncomfortable but they saw the benefit in dollars. Literally our cooperation shut doors for other competitors that didn't work with us.

    • 4 posts
    October 20, 2017 10:11 AM PDT

    That's a great point, Nic. I'd just point out that there is a strong association of overhead = commodity. Electricity and utilities and copy paper and furniture and office space, etc -- that's overhead. A heart surgeon's time isn't overhead. Neither is an expert lawyer's time. 

    If you want to de-commodify the talents and capabilities of your people and station, you can't include their time, expertise, and services as "overhead."

    There's also nothing wrong with having zeroed out invoices. If you simply must include first-rate production as a no-charge item to get a deal done, you can still SHOW the value of it via zeroed out invoicing. 

     

    • 5 posts
    October 20, 2017 10:36 AM PDT

    Jeff:  my qualm isn't with the defintion of "overhead".  My point is stations who "say" they're not charging for production, actually ARE.  Stations just aren't listing it on the invoice.

    Then, they go so far as to say "production is free".  Another de-valuing of the whole process.

    You and I on the same page...just looking at it from different angles.

  • November 3, 2017 9:29 AM PDT

    [blockquote]Dale Olmstead said:

    I never did.  The cost of production...whatever it was, should b considered in the price of the ad, as you would with other expenses incurred in running the station.  I didn't charge for the paper the ad was written on, the cost for the production people to record/produce, the cost of the tape/hard drive or anything else. If special production was done this was considered value added service.   In the same light, I didn't charge less for ads that did not receive any special production. Costs for writing and production of an ad should be included in your rates. Isn't writing the copy and producing it part of what the client is buying.   If a client provides you with a produced ad...do you charge less?

     

    [/blockquote]

     

    If the client provides you with an ad, then you don't charge for production.

    If you emply people to do professional ads, charge them for it and let the client see the value of what they do.

     

    • 1037 posts
    February 5, 2019 7:17 PM PST

    I had the opportunity to exchange a couple of emails with a recent acquaintance and new RSC member, Michael Holmes, who mentioned that in the UK, there are two tiers for copywriting and production, free and paid. I'm going to try to learn more about this. If any of our members from the UK are able to shed some light, I'd love to hear from you.