Broadcasting Telecasting (Oct-Dec 1957)

Is There Adequate Liaison Between Account Exec. & Ad Manager? (Advertising Managers' Opinions) All Advertising Managers Advertising With Budgets Over Managers % Adequate Liaison 78.3 Inadequate Liaison 15.0 Did Not Answer 6.7 Is There Adequate Liaison Between Ad Manager & Account Exec? (Agency Account Executives' Views) How Much Should Agencies Be Paid For Own Shows, Outside Packages? (In Opinion of Tv Ad Managers) TOTAL % 100.0 Effective Sample 3,081 $1,000,000 % 71.8 25.3 2.9 100.0 447 Adequate Liaison Inadequate Liaison Did Not Answer TOTAL % Effective Sample All Agencies % 46.3 49.8 3.9 100.0 508 Agencies Billing Over $10,000,000 ■§§§§■ 58.3 38.9 2.8 100.0 36 When Agency Produces Amount of Tv Shows Compensation % More than 15% 31.1 15% 60.8 Less than 15% 8.1 TOTAL % 100.0 Effective Sample 520 When Agency Buys Packaged or Network Tv Shows % 6.2 35.3 58.5 100.0 546 How Much Should Agencies Be Paid For Own Shows, Outside Packages? (In Opinion of Tv Agency Men) When Agency Produces Amount of Tv Shows Compensation % More than 15% 69.7 15% 29.7 Less than 15% .6 TOTAL % Effective Sample 100.0 189 When Agency Buys Packaged or Network Tv Shows % 12.8 80.9 6.3 100.0 258 The Media Commission System as now Practiced: Is It Satisfactory, Practical or Neither? Satisfactory Unsatisfactory but most practical method Neither satisfactory nor practical Did not answer TOTAL % Effective Sample (These are views of advertising managers, advertiser top management, agencies and media) Ad Managers All With Budgets Advertiser Advertising Over Top Media Managers $1,000,000 Management Agencies ."% .'• % % % % 60.5 51.3 61.7 47.1 53.4 24.6 30.9 24.4 42.7 28.0 11.9 17.3 9.8 10.0 17.4 3.0 .5 4.1 .2 1.2 100.0 100.0 100.0 100.0 100.0 3,081 477 193 508 596 What Methods of Agency Compensation Would Ad Managers, Agencies, Media Like? How Ad Managers, Agencies, Media View Chance for Change in Agency Compensation Ad Managers All Budgets Advertising Over Managers $1,000,000 Agencies Orthodox System. 15% media commission paid only to agencies; advertiser cannot buy space or time at less than the gross rate. First Alternative. Media commission for agency services to media plus agreed upon additional compensation from advertisers for agency services rendered to advertisers; advertisers cannot buy space or time at less than gross rate. Second Alternative. No media commission; advertisers pay agency agreed upon amounts for services; advertisers can buy space or time at net rate. Did not answer. TOTAL % Effective Sample % 41.6 5.9 Media % 50.1 67.9 40.2 ...2 5.1 14.8 Now that Prof. Albert Frey has completed his year-long study of advertising agency practices and compensation, has previewed it and is in the process of compiling the final report, what will the result be? Along with all the other questions put to advertisers, agencies and media in the course of their study, he and Prof. Kenneth Davis included that very one. A majority in each group felt there would be no change or that in any case the media commission method will remain dominant. Prof. Frey thought that "probably the most interesting facts here are that 27.3% of the advertising managers with large budgets think there will be no change, and that a somewhat smaller number, 22%, feel there will be a significant change. Ad Managers All Budgets Advertising Over Managers $1,000,000 Agencies % % Media % 29.2 23.3 100.0 3,081 No change. 29.0 27.3 40.6 40.1 Some change, but 28.9 37.9 41.3 34.6 media commission method will remain the dominant method of com 36.3 9.7 35.9 pensation. Significant change 10.6 22.0 5.7 9.2 away from media commission meth od in next few years to new com pensation method. Don't know. 24.0 9.0 11.2 14.1 9.4 17.3 9.1 Did not answer. 7.5 3.8 1.2 2.0 100.0 100.0 100.0 TOTAL % 100.0 100.0 100.0 100.0 477 508 596 Effective Sample 3,031 477 508 596 top managements it was 1,012. All ANA members were sampled "because we wanted to make sure that our returns included a high proportion of the larger advertisers." Of the approximately 12,500 national advertisers who are not ANA members, one out of every four was chosen on a random basis. When the returns came in, Messrs. Frey and Davis put these two parts together "in their proper proportion" to get the "effective sample." Prof. Davis described the "effective sample" as representing "the return we would have gotten if we had sent questionnaires to the 13,000 advertising managers." (President West questioned later if there actually are 13,000 national advertisers in the U. S. Prof. Davis explained that Standard Advertising Register lists 14,000 but that this was reduced by 1,000 to take into account firms that had gone out of business or did no national advertising in 1956.) For the study of agencies, Messrs. Frey and Davis used the 1,800 listed with accounts in Standard Advertising Register. Details of the media sampling were not given, except that radio and tv stations, general magazines, newspapers, farm and business publications were all included and there was a special study of direct mail and point-of-purchase media. Mr. Davis explained later that questionnaires went to all tv and all 50 kw radio stations and to a sampling of radio stations of lesser power. Questionnaire returns totaled 845 from ad managers, 412 from agencies, 277 from media and 193 from top management of advertisers. Messrs. Frey and Davis both called the returns "excellent" statistically. Actually, they said, on the effective sample basis the returns represent 70% of all advertisers with budgets over $1 million; 71.5% of all such ANA members; 60% of all ANA members regardless of budget size; 64% of all agencies billing over $30 million, 55% of all agencies billing over $5 million and 45% of 4A members. Broadcasting November 4, 1957 • Page 31