URL's Vegas

URL 3: Networks, Advertisers, and Ad Agencies Didn’t Care When They Were Robbed by Vegas TV Stations—Reasons:

URL 3: Networks, Advertisers, and Ad Agencies Didn’t Care When They Were Robbed by Vegas TV Stations—Reasons: (in Chapter 4, page 24. 596 words. Cum 598 words)

Let’s say Colgate-Palmolive felt ripped off when a local TV station like KORK in Vegas didn’t run its ads on the NBC network. It would go to its ad agency, the XYZ Company, and say, “Give me back my money.” Let’s say the money was $100,000 for a series of ads on the Bonanza TV show. KORK didn’t run them because it ran an ad for a local store instead, and got paid for both–double-billing, in other words. Colgate would ask its ad agency for the money because Colgate pays the ad agency. Then, the agency collects its commission (15 percent of the cost of the ad), and forwards the remainder of the money to the network.

So Colgate gave $100,000 to the XYZ Agency. XYZ kept $15,000, and sent $85,000 to the NBC network.

Because the ads didn’t run, XYZ agency would be upset at the NBC network, and it would ask NBC to reimburse it for the cost of the ads. So NBC would send the XYZ agency $85,000 (the 85 percent of the total cost of the ads) which it had received over the three-year period. Then, the XYZ agency would dig into its bank account for the remaining 15 percent or $15,000 which it had originally pocketed. The agency would then return the entire $100,000 to Colgate.

  • Colgate would be happy to get its money back, although it would have rather had its ads shown in the first place.
  • The ad agency would not be happy, because it lost the $15,000 it used to have.
  • The network would not be happy either, for it lost the $85,000 it used to have.

How would the ad agency and the network get their money back? They would have to ask the local station (KORK) for it.

But suppose KORK refused to give the ad agency or the NBC network the $100,000. A lawsuit would probably happen. This, of course, meant big legal fees…and the XYZ agency might conclude it’s more trouble than it’s worth to collect the $15,000 it paid KORK. NBC might figure the same thing, too, especially if many different advertisers and other networks were pressing KORK for money that it owed them. KORK might go bankrupt before NBC got their money back…and there would be no NBC network affiliate in Vegas on top of everything else!

Even though NBC pays KORK for the privilege of showing its network entertainment programs on Channel 3, the fact that Vegas is on the NBC network means that NBC can get more money for its network ads. After all, there were around 200,000 people in Vegas (in the early 1970s), and network advertisers will pay more money for 200,000 more potential viewers.

And so both the XYZ ad agency and NBC have a vested interest in not rocking the boat if they discover double-billing at a TV station in a small market. They would forget all about the poor advertisers. Why? Because they didn’t want to lose money. Both the ad agency and NBC would be out-of-pocket if the advertiser demands its money back!

Conclusion: Perhaps clipping and double-billing is so darned widespread throughout the US precisely because networks and ad agencies want to look the other way. Let the FCC investigate—if they’re not paid off by the TV stations not to investigate. I suspect the FCC is paid off by many, many TV and radio stations—not just those in Vegas. And I’ve become a mighty suspicious person after my Vegas experience! I could be wrong. But I’m almost positive I’m correct!

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