As negotiations between the advertising industry and the Screen Actors Guild and American Federation of Television & Radio Artists resumed Oct. 19, some agency and client-side executives privately said they were expecting a quick settlement. But they also said clients who've gotten used to the lower cost of producing commercials overseas may not flock back to the U.S. or union actors after a settlement.
Even within the U.S., commercial production is far from at a standstill. At least two attendees who asked not to be identified dovetailed their trips to the ANA conference with plans for non-union shoots in the Los Angeles area. Miller Brewing Co. President-CEO John Bowlin said his brands have been forced to shoot "a bare minimum outside the U.S."
Agency principals and client executives wouldn't go on the record with their intentions to work around the unions after a settlement. But their attitude was reflected in an anonymous question put to Ira Shepard, chief negotiator for the joint committee, during a presentation at the conference.
"Why should advertisers who have successfully produced around the union ever return to SAG usage?" asked conference moderator Lou Dobbs on behalf of the questioner. Mr. Shepard, who had just cited figures indicating production has continued relatively unabated at about two-thirds the cost in terms of session fees during the walkout, said: "It's a good question, and I've been asked it many times."
One agency executive said later that the absence of models and actresses paid over scale who have generally honored the picket line has hurt productions for beauty-care and fashion clients. But he said the impact of losing rank-and-file union actors has been negligible.
Even factoring in travel costs, he said it will be cheaper to shoot many commercials in Canada or Latin America rather than pay the increased residuals in a new contract. Citing a recent shoot with more than 20 actors, he said: "You can pay $500,000 in travel costs and save more than $2 million in residuals. It's a no-brainer."
"I think you hear that from the bean counters," countered a SAG spokesman. "But if you ask the creative people, it's not in their plans." He said agency creatives are tired of spending so much time on the road and aren't likely to stick with agencies that keep shooting overseas after the strike.
Toronto locals now nickname their city Hollywood North, said Bob Reaume, VP-media and research of the Association of Canadian Advertisers, saying traffic snarls due to commercial production have become commonplace. But he said Canadian actors "realize it's temporary." The Canadian counterpart of the ANA wants to maintain good relations with its own unions, Mr. Reaume said, with negotiations for a new contract for Canadian commercial actors set to begin next year.
For their part, SAG and AFTRA have turned up the heat on the industry, having launched Web, e-mail and Hispanic newspaper ads last week in support of their boycott of Procter & Gamble Co.'s Crest, Ivory and Tide brands. The unions also put up a picket line that closed a Chicago Ford Motor Co. plant Oct. 18, when Teamster truck drivers wouldn't cross the line for deliveries.
But one client executive said unions having resorted to such tactics shows they've realized how little impact the strike itself has. And while the tactics may pressure advertisers to settle, they won't necessarily pressure them to resume using union talent.
The strike wasn't the only issue on the mind of attendees. Internet standards and reliability of data was another issue. While consumers are concerned about privacy, marketers should be concerned about consumers lying, said Ted Bremer, director of MSN. The company's research shows that 84% of online consumers are "extremely distrustful" of doing e-commerce over the Web, but 45% of people have entered false responses to personal data queries on the Web at some time, Mr. Bremer said. "It's a key business issue," he said. "The amount of time you're marketing to somebody who's not real is a real problem."
Other advertisers were concerned about consumers disabling their TV ads.
P&G research shows that within a month of acquiring a TiVo set-top digital video recorder, the average consumer is watching about one-third of his or her TV pre-recorded "off the hard drive" rather than live, P&G President-CEO A.G. Lafley told the conference. As they get more experience, TiVo users are watching two-thirds of their TV pre-recorded and consumers are choosing to watch only about one-half of the commercials on the pre-recorded programs they watch. "That's not good news for brand advertisers," he said. "We need to learn more about which ads they watch and why."
"I don't think [TiVo] is the death of commercial advertising, but I also think we're blind if we don't anticipate the impact it's going to have," said Brad Simmons, VP-media services for U.S. and Canada at Unilever.
Irwin Gottlieb, chairman-CEO of MindShare, New York, downplayed fears. "Let's not lose sight of the fact that in 1979, when the VCR first began to be perceived as something that would be ubiquitous, most folks decided that was the end of television. . . . I myself wrote a paper we sent to our clients back then that everyone would become their own Fred Silverman. It didn't happen, and it didn't happen because people don't want to participate quite that actively in making all those decisions."