Ad Industry and Actors Union End Dispute and Agree to New Commercial Contracts

SAG-AFTRA to continue protests against BBH

Union members protest outside Droga5 headquarters in 2016. Getty Images
Headshot of Patrick Coffee

Actors union SAG-AFTRA and ad industry trade groups The Association of National Advertisers (ANA) and American Association of Advertising Agencies (4A’s) have come to an agreement on new commercial contracts that they say are better fit for the digital age.

The two entities first reached a tentative agreement on April 2 and released the full memorandum of agreement documents yesterday on the website of the Joint Policy Committee, which includes both the aforementioned trade groups. That release was held until the union approved the new contracts on April 13. SAG-AFTRA will now work to educate its members with the goal of ratifying the contract within the next few weeks.

A summary of the agreement is embedded at the bottom of this story, though the full revised contracts have not yet been released.

"This is a giant leap forward that more accurately reflects how the industry is creating and distributing commercials."
Stacy K. Marcus, partner, Reed Smith

This announcement follows years of acrimonious dispute between SAG-AFTRA and the ad industry, typified by protests against agencies Grey, Droga5 and BBH. The latter shop made news last September when it decided to withdraw from the contract, stating that its conditions left the company unable to compete with newer agencies that could charge lower rates because they never became signatories.

Stacy K. Marcus, partner at law firm Reed Smith who served as chief negotiator on the ad industry’s behalf, told Adweek the back-and-forth focused on three key goals: innovation, simplification and leveling the playing field between signatories and non-signatories.

“I think our goals in many instances mirror to the union’s goals,” Marcus said.

The 50-year-old contract that existed before these negotiations, she added, “was created during a time when there was no such thing as Instagram” and therefore “did not reflect the commercial production and distribution marketplace.”

A primary element of the new agreement is a revised compensation structure designed to accommodate a market in which clients increasingly demand project work and rapid content production, unlike the long-term agreements of years past. These new approaches cut the holding fees advertisers paid to continue running ads with contracted actors, and they also include new editing rules allowing agencies to create multiple versions of addressable, or personalized, campaigns without owing additional “cost-prohibitive” fees to the actors who appear in them.

The new contract also includes “bundles” that offer one-time, yearlong payments for different sorts of campaigns such as TV, digital and OTT.

"Our concern is focused now on BBH because they illegally withdrew."
Lori Hunt, executive director of commercials and corporate/educational & non-broadcast contracts, SAG-AFTRA

On the digital side, the agreement addressed a major concern of agencies and clients by including YouTube among the platforms in the “digital waiver,” under which standard rules do not apply to productions with budgets below $50,000. And it eliminated the risk of unauthorized use claims against older social media content by agreeing that advertisers don’t owe additional fees to performers for work that continues to exist on a given client’s feed, but has not been actively promoted in the recent past.

This is a giant leap forward … that more accurately reflects how the industry is creating and distributing commercials,” said Marcus. Meanwhile, the older contract will remain as “a safety net” for advertisers who prefer that approach.

SAG-AFTRA also agreed to increase compensation for both principal performers and extras by 6%, rather than the 7% to which it agreed in 2016 the last time the contracts were renegotiated.

We know that the industry has shifted and continues to shift, and we are trying to adapt to that,” said Lori Hunt, SAG-AFTRA executive director of commercials, corporate/educational and non-broadcast contracts. She said the group acted to level the playing field between signatories like Grey and non-signatories like Droga5 by making it more difficult for the latter group to underbid on digital or project-based pitches.

The digital and OTT bundle, for example, carries a one-time, one-year fee of $3,825 for each on-camera principal performer.

“If you are a non-signatory agency and you’re trying to undercut that, it speaks a lot to your business model,” Hunt said.

While the general dispute between the union and the groups representing both clients and ad agencies appears to have been resolved, SAG-AFTRA’s protest targeting BBH will continue. Two days after announcing that its board had unanimously approved the new contracts, the organization posted this video in which members answer the question, “What does BBH’s betrayal mean to you?”

That protest has turned increasingly personal in the months since the agency announced plans to withdraw from the contract. Last December, the union targeted chairman Sarah Watson, calling her a “hypocrite” for being a member of Times Up Advertising while the agency “has abandoned actors depriving them of union guarantees of safety [and] healthcare.”

Our concern is focused now on BBH because they illegally withdrew,” Hunt said, noting that her union hopes the Publicis-owned agency will agree to rejoin the updated contract. “We have no current plans to strike or have any sort of activities around other non-signatories.”

A BBH spokesperson declined to comment for this story. Below is the Joint Policy Committee’s summary of agreement.

@PatrickCoffee Patrick Coffee is a senior editor for Adweek.