• by Michael Shields , July 12, 2004

The Association of National Advertisers has stirred up a long running debate between network buyers, advertisers and the major TV networks regarding commercial integration charges with a less than innocuous online missive.

ANA president Bob Liodice challenged advertisers, media buyers and networks yesterday's in his semi-regular blog, "ANA Marketing Musings," (http://ana.blogs.com/liodice/) to revisit the archaic practice of charging integration fees for purchased TV spots while citing widespread advertiser dissatisfaction.

Liodice wrote: "The ANA gets the message: advertisers are outraged over network integration fees. In their view these fees represent an old surcharge that has nothing to do with today's television production and trafficking realities."

Liodice pointed to research conducted earlier this year by the ANA on issues and challenges faced by marketers with regards to TV advertising. The survey found that 74 percent of the 140 major advertisers questioned said the integration fees the major TV networks charge are unfair.

Integration charges date back to the early days of television advertising, when commercials were placed manually within programming and fees were necessitated to cover associated labor costs. These days, while TV commercials are inserted within content digitally, integration fees are still charged by NBC, CBS and ABC, none of which were available for comment.

Many in the media buying community as well as advertisers consider this practice to be excessive. Liodice quoted one of the survey's respondents saying, "Integration fees are a thing of the past, when there was a 'physical' reason to charge. With new technologies, etc., there is no reason. It's basically money in their hands."

In fact, these networks are unlikely to give up a revenue stream that generates what amounts to pure profit and would most likely be inclined to increase cost for ad space if integration charges were eliminated. In some cases, individual advertisers can accumulate fees in the million-dollar range.

Such costs are more of an issue than ever, given the current advertising climate where accountability is paramount and corporations face more scrutiny than ever. "They are upset and they don't get it," Liodice said of advertiser's opinions. "In this age of needing to be transparent, when they are pressed to be accountable, they are asking the networks to be accountable."

Liodice says that his group has asked the networks repeatedly to provide further explanation of the need to charge such fees but has received no response. "We frankly don't understand, " he said. "We haven't had much success gaining understanding. They haven't said anything," he said.