Financial Considerations

1. Lauren Allard
PR5 the Commercial ProductionProcess
Financial Considerations
Island Records has asked Salford City Radio to create a radio
commercialfor one of their artists’. The advertisementwould be focusing
on the band, Bon Jovi’s upcoming 2017 UK tour, the aim is to help the
band sell out their stadium/arena tour. They have given Salford City
Radio an idea of how they would like their commercialto be planned out,
what they would want to include, the tracks from the band that they
would want to be included and also the information they want given out
to the audience. Considering that the band is very well known, and this
is an upcoming tour with dates that are yet to be released,the company
would want as many people as possibleto know about the tour and
where they can purchase tickets. Due to the music, the band and also
main target audience that Island Records has given us, the pricing for
the entire productionwould be quite high.
 Negotiated ProductionBudgets (Local Sales Team, National
Agency, Regional Agency)
Island Records have given us a certain target audience that they would
want their radio commercialto be aimed at, due to the pricing of the
tickets and also the target audience for their artist. Due to this we would
have to focus on the regions, demographics and age range. Focusing
the advertisement and having it broadcasted to those listeners. A simple
advertisementfor a small station would usually cost between £200-£300.
Large city stations like Londonand Manchester and digital stations can
costup to ten times the cost of a small station. The price usually
includes Script writing, Audio Production, Actors to voice the ads, Music
(if used), sound effects (if used). Luckily for our advertisement the cost
of productionwouldn’t be as much due to the script and planning already
being completedby Salford City Radio, prior to production.
The airtime costs would be a lot higher than the creative costs,all based
on how long the commercialwould be on air, how long the
advertisementwould be and also depending on the stations that are
chosen. Radio stations like the BBC, Capital FM, Kerrang and Radio X
would cost a ten times the amount for a small station. Each station has a
limited number of minutes a day to sell for advertising. If you book late,
you might get a good price on “leftover” airtime as the station will want to
sell it. But this practice can put the whole investment at risk if good
airtime isn’t available. We have to aim to spend at least 10% of our
budgeton the creative – for example:

2. Lauren Allard
A £2,500 campaignon a small station over four weeks will probably run
with one piece of creative which might cost£250.
Just because it’s longer, doesn’tmean an advertisementwill cost more
to make. A single voice 20 second ad will costthe same to make as the
same voice on a 30 second or 40 second advertisement.The airtime will
costmore however.
 Music Royalty Payments
The music industry relies on royalties generated by the licensing of
copyrighted songs and recordings as a primary form of payment for
musicians. In legal terms when it comes to music, there are two types of
musicians; songwriters and performing artists. Both musicians hold two
distinct copyrights: songwriters hold the right to the lyrics and the melody
of the piece of music, while performing artists hold the rights to a
particular recording of a song. Which is called a master recording. To
avoid copyright issues when it comes to including music in the radio
commercial,most would go to use Royalty Free Music which means that
the advertiser can purchase or download for free any piece of music,
and use it in their advertisement without any copyright issues. However,
for some advertisers, they have to use the companies own music
especiallyif this is for a brand.
With master recording copyright a record label seeks to collectroyalties
from the use of a specific recording of a song. Master royalties are paid
to a label when the label’s recording is used in an advertisement, film,
television program, streaming service or other medium. Master Royalties
are typically paid in addiction to synchronization or public performance
royalties, as royalties paid to the other publisher only grant the rights to
the use of a song, not a specific recording of a song.
The fees music users pay when music is performed publicly.The use of
music over the radio, in a restaurant or bar, or over a service like Spotify
or Pandora is considered a public performance.
 VoiceoverArtists’Fees
Voiceoverartists in radio commercials are the people who inform the
audience about the product, they tell the audience about the product,
facts and opinions that will persuade the audience to purchase the
product. Since radio commercials can be used to sell a productand also
inform a target audience about an issue in the world, meaning voiceover
artists’ can be used to inform the audience about a very important issue.
For charities, celebrities are normally used, this is normally due to the
charity wanting to reach out to the fans and also to use the celebrities’
fame for a greater cause. This would cost the advertiser a lot of money
to hire the celebrity for a 30 second advertisement.

3. Lauren Allard
 Trafficking Costs (Scheduling and Billing)
In broadcasting,traffic is the scheduling of program material, and in
particular the advertisements,for the broadcast day. In a commercial
radio or TV station there is a vital link between sales (of advertisement
or commercialspace)and traffic in keeping the information about
commercialtime availability. The station sells airtime to its customers.It
is not unusual in a single hour for 18-20 minutes to be commercials.
The scheduling involves, when the client would preferfor their
commercialto be broadcasted,if the advertisement is selling a product,
the client would want to have their commercialbroadcasted at the radio
stations peak time (when the station has its most listeners). Since the
commercialwould be broadcasted whenthe station is at its peak time, it
would mean that it would costmore for the commercialto be
broadcasted.Forthis advertisementwhich is selling concerttickets for a
very popular rock band, the preferredtime of broadcastfor the client
would be in betweenthe hours of 7am – 12pm,this is due to a lot of
people driving to work and listening to the radio during their journey. The
commercialwould be on air foraround three weeks, since the tickets
would sell out fast, and once the tickets are no longer available there
would be no more use for the commercialfor be on air. Local radio
stations would have RAJAR survey figures to indicate the mostpopular
listening times for the client’s potential customers.Formost radio
stations the mostpopular time of day for them is in between the hours of
7am and 12pm.
The traffic process starts by the salespersonmaking an agreementwith
a customerabout the campaign. The agreement is called a sales order
and it defines the dates when spots (commercials)are run and the
commercialterms of the campaign. The sales order usually also defines
the product group in order to avoid conflicts in scheduling, for example,
where two fast food vendors have a spot in the same break.
At the station, a traffic personcollects the sales orders and enters them
into a computersystem that will help to generate the daily logs.The
traffic personalso links the sales order with the possible media,such as
an audio tape which contains the actual spot.
Since radio stations normally charge the advertiser by every thousand
listeners (example £2 per thousand people),and the station has 10,000
listeners at 7:30am, then buying a spot at 7:30am will cost you £200.
 Rate Cards
Kennet Radio offers Advertising Packages for the production of Radio
Commercials,the package applies for the broadcastof the

4. Lauren Allard
advertisementon their radio station, they also offerproductionoptions
which include the following:
 Write / Produce 30 seconds radio commercial – dry (no music or
effects)£39
 Write / Produce 30 seconds radio commercial – with fx and royalty
free music bed. £99
However, these packages don’t apply to our radio commercial,
considering we are producing our own radio commercialwith music
taken from the company that we are advertising. Meaning no Royalty
Free Music would be used, neither of the above productionoptions
would apply to our radio commercial.
The cost of writing/producing the ad is in addition to the above airtime
cost. The ads will be played out during the run of the daytime schedule
(7am-10pm).And all packages include a 125 x 125-pixeladvert on
Kennet Radio’s website for 3 months.
The packages they offergoes from the pricing of £129 - £299 with the
extra costof per spot, which changes based on the packages chosen.
The most expensive package would be “The Platinum Package” which
includes a total of 312 spots and costs at the top price of £299,with the
costof £0.96 per spot. There are also Additional Options that they offer,
are the premium slots, based on the time of day the advertisement
would be played on their Radio Station. The two time slots have a
differentpricing, due to the amount of listeners they get on their station
during these time slots.
Airtime varies immensely depending on the station’s listener
demographics.Generally, radio stations charge you per thousand
listeners at one time – and a good rough price for this is £2 per thousand
people.