Pay-to-Play Schemes: A Cautionary Tale
September 24, 2011 by Kaszas Marketing
– by Maria Ford (Kaszas Marketing) and Shaun Markey (Shaun Markey Communications)
A few times a year, one or another of our clients receives a call or an email from a television producer or business news magazine enthusiastically inviting them to be featured in a television or print piece that will reach the client’s industry segment. Usually, these promotion opportunities are well-disguised “pay-to-play” schemes.
This article will help you identify pay-to-play situations, the inherent risks, and why we think our clients should invest their time and marketing dollars elsewhere. Due to the nature of our businesses, we see these offers frequently; but a typical manager or CEO might see only one or two of these in their career, and it’s easy to be taken in.
Pay-to-play approaches are becoming more frequent as traditional forms of media suffer from severely reduced advertising income. They are also becoming more sophisticated as pay-to-play business models evolve and the promoters hone their pitches. So, read on!
The Pay-To-Play Model: a Wolf in Sheep’s Clothing
We’ve seen two common pay-to-play schemes:
- A business television show contacts you and says that their producer wants to feature you/your company in an exclusive segment, perhaps with an industry expert.
- A business news magazine contacts you and says that their editor wants to run a multi-page editorial feature on you/your company.
These schemes share some hallmarks – if you are aware of them, you will know to be sceptical when you receive such an “opportunity” and dig deeper to do some due diligence. Red flags to look for include:
- It’s a U.S.-based media outlet and you’re a Canadian company.
- An “industry expert”, retired sports personality or other “star” will contribute to the piece.
- The quality of the publication or production is emphasized – phrases like “state of the art production facilities”, “exclusive”, or “high-quality, full colour, four-page spread” might be used.
- The final product will be distributed to your exact target market.
- You will be granted permission to use the finished product anywhere and anyhow you wish.
- The individual who contacts you includes example productions from other companies in their pitch.
- You’re expected to provide your own content, photos, or decide what the direction of the story will be and/or what questions the writer or host will ask you.
- You’ve never heard of the publication or the magazine.
Except for number 8 above, each of these features is obviously very appealing, particularly to companies with limited marketing budgets and Canadian companies seeking U.S. presence. But these are the characteristics of a pay-to-pay sales pitch, not of legitimate editorial or news coverage.
Legitimate editorial does not give the subject control over the content, nor the distribution, and does not dangle carrots like guest experts and production quality. And, as much as we’d would love for it to happen, a U.S.-based media outlet will typically NOT cover a foreign company unless that company has significant presence in the U.S., remarkable product innovation, or a significant U.S.-based customer story.
To put it bluntly, these schemes pray on the vanity (or desperation/frustration) of upper-level executives, usually CEOs. The people behind these schemes rely on the mystery, and power and inaccessibility of television or “free” print coverage combined with a CEO’s vanity to attract unsuspecting clients. Digging a little bit deeper, however, you’ll realize that:
- The video is broadcasted on an obscure specialty channel at a time of day when most people aren’t watching (like, the middle of the night).
- The magazine has limited distribution (in the tens of thousands).
- The media outlet is not recognizable as a trusted news brand.
But They Aren’t Asking for My Money
The reason pay-to-play schemes are effective in many cases is due to the refined structure of the pitch. This is all these companies do, so you can expect them to be good at it. The opportunity sounds incredible and there is generally a sense of urgency created by the sales person. And money is never discussed – the initial call or email leaves you believing that this is an incredible media opportunity that you’d be irresponsible to not pursue immediately.
But media productions cost money and money is not falling out of trees – in fact, most trade publications are literally shrinking due to deep cuts to advertising revenues. The funding for pay-to-play schemes generally operates in one of two ways:
- The subject company (you) pays. Money is never discussed in the initial phone call or email. In the example link above, it is not even mentioned in the follow-up email. You have to click on the “production package link” in the email to realize that there is a price – which in that particular case is $13,000.
- Your suppliers/partners/customer pay. Another model is for the publisher to contact your business partners, suppliers and anyone else whose name you’ll give them to ask them to advertise in the publication.
When the vanity ploy works, it’s because the subject has either overlooked or brushed off the real costs of the endeavour, often out of embarrassment. We’ve both seen companies pursue pay-to-play opportunities simply because the subject felt s/he had gone too far down the path with the sales person to now back out.
But It’s a Small Price to Pay… Isn’t It?
Even given the facts of the pay-to-play scheme, the subject of such a pitch might argue that it’s not a big price to pay for a professional video or print production that includes U.S. distribution and the freedom to reuse and distribute it any way the company pleases.
From our perspective, however, the costs of pursuing a pay-to-play scheme are unrecoverable. In the case of the “your suppliers/partners/customers pay” business model, you aren’t privy to the sales pitch they give your business contacts, who could be offended or feel pressured into buying into the scheme to support their existing business relationship with your firm.
Furthermore, your contacts will wonder why you have been free and loose with their information, as you have given it to an sales representative, who can also use the information for future dubious promotions.
Real cost to you: trusted relationships.
The advertising call that Kaszas received (see the second real-life sample above), made us uncomfortable: despite our knowledge of the scheme we still felt like we were doing our client a disservice by not buying an ad. For the record, the advertising rates started at US$3,000 for a ¼-page ad and went up to $13,000 for a two-page spread.
In the case of the “you pay” business model, have you considered how that same budget could be better spent? If you have $5,000 or $15,000 available to spend on one of these unplanned schemes, why hasn’t that budget been discussed with the marketing team from a strategic perspective? If video is part of your marketing strategy, high-quality productions can be done by local professionals and you’ll get far more mileage out of the expense if you control the production yourself.
So, the next time you receive that email or phone call in which a sales representative talks or writes glowingly about a unique and wonderful media opportunity, either ignore it or get to the bottom line quickly with one question: “How is this production funded?” And, keep asking that question in the early going. In all likelihood you’ll quickly uncover the type of scheme we’ve described above and you can dismiss it without further time, delay – or embarrassment.
We encourage you to talk to either one of us about how to make the most out of marketing, media relations, print, web and video production budgets!