Music in advertising: Heart or head – emotion or budget?

27.01.2020

Advertising calls for the right kind of music. Well-known titles do not always have to be more expensive than budget-friendly, unknown songs. Companies starting early with planning and fine-tuning the contractual provisions relating to music rights are frequently reaping the rewards.

Music in advertising

As its introductory spot for the Dark Milk sub-segment has shown, Milka has proven yet again that an emotionally binding, appropriate selection of music has the ability to promote the brand or even make it a star. What Cadbury succeeded in achieving with the drum break feature from Phil Collins’ hit “In the air tonight” or Coca-Cola with K’naan’s percussive song “Wavin’ flag” is also possible with a title that is more associated with musicals. The brand message reaches the target group. The objective has been accomplished.

Music’s emotional power has the potential to tie customers more strongly to a brand than any other element of brand communication. Using the right combination of image and sound may provide a real turbo boost to introducing and successfully marketing the respective products. The briefing phase can already be used to find out whether the music is a fit with the product. The appropriate bonding is measurable. Research company september Strategie & Forschung measures key performance indicators (KPI) such as trust, sympathy, attraction, proximity, relevance, scepticism and stress to assess the impact of advertising media.

Clarifying rights at an early stage

Whether unknown library music or well-known titles, the use of suitable music in an advertising campaign requires long lead times. For international titles and artists or composers, up to 6, 9 or even 12 months should be scheduled until the contracts are signed.

As relates to the rights to the composition (composers, authors and music publishers), rights owners may be researched via the GEMA work database at gema.de. Names of the rights owners of the sound recordings, which need to be requested separately, can be found on the Internet by simply entering the title or on databases such as discogs.com.

Publishers and record labels should be involved at an early stage to convince them of the desired connection between product and music. This may result in opportunities for marketing the music in parallel to the advertising campaign and obtaining more favourable conditions for the own sync licensing deal.

Synch licensing deals with publishers and record labels

When clarifying and licensing advertising music, typically at least two rights holders must be asked for rights and paid. Dubbing and advertising rights for the composition are usually held by a music publisher, in cases of foreign collections usually represented by a German sub-publisher. The corresponding rights to the sound recording, usually held by a record label, must be requested separately. Both the rights from the publisher and from the record company are therefore to be acquired and remunerated separately.

For the sake of simplicity, the following statements refer only to the acquisition of the rights to the composition, but are largely analogously applicable to the separate acquisition of the rights to the sound recordings.

Typical key data

Publishers typically list the respective works under different categories. Titles from ABBA are more expensive than unknown score titles. In addition, the price depends on the company using the music title. Large electronics companies will pay prices that are different from small businesses. Last but not least, the price also depends on the specific use of the respective title. It makes a difference whether the respective spot is used on TV, radio, on a YouTube channel with paid media or only as an image film and whether it will be shown worldwide or only in certain territories. Where it is used via YouTube, for example, pricing considerations will also need to be guided by the fact whether the exploiting company is able to block individual territories via a content management system.

Depending on the respective parameters, music publishers today typically expect a flat-rate minimum remuneration of 3,000 euros for dubbing and advertising rights to the musical work (music and text). This corresponds to computations in accordance with empirical rules of the German Music Publishers’ Association Deutscher Musikverleger Verband (DMV). These empirical rules lead to market-driven licences for advertising and special uses. Given that the minimum remuneration is merely an entry price, it typically does not grant any additional rights of use beyond a very limited, simple online use. When more well-known titles for different media and territories are requested, the flat-rate minimum remuneration can no longer be used a price basis.

For larger and medium-sized campaigns in Germany, Austria and Switzerland, the media budget now serves as the basis for computing the respective sync licence. In Germany, this licence varies between 2.5% and 5% of the respective net media budget after deduction of discounts.

Licence pricing may also be computed purely on licence duration. This method is particularly common outside Germany, Austria and Switzerland and does not take into account media budgets or advertising frequency. It is a pragmatic pricing method that is largely free of invoicing modalities. It must be examined whether it is an appropriate arrangement for the individual case.

A specific licensing practice applies to Internet campaigns. It distinguishes between local, national and international use with freedom of design as relates to the territories to be blocked via a content management system. The price is usually based on the number of page impressions or page access. Typical cost per thousand (CPM) ranges between 0.005 Euro per access in individual cases and up to 0.05 Euro per access, depending on the value of the musical work.

The above-mentioned parameters are negotiable, even more so if the campaign offers the music rights holders options for further exploitation activities and revenues in addition to the sync licensing fee.

When the heart says “yes”

Advertisers who know early on which song fits the product and the planned spot and who are winning over the rights holders with a well-planned campaign stand a good chance of substantially negotiating the key data of a sync licensing deal, including for more wellknown titles. Simply deciding for the seemingly most economical solution, however, irrespective of the actual “fit” with the brand, often also means deciding against the success of the promoted product.

Published in Newsletter Confectionery Industry Special – 2020 edition.

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