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Two years ago, Budweiser produced an ad in Canada featuring a men’s rec league hockey team that the brand surprised by filling their arena with enthusiastic fans

Canada's advertisers are making important changes in how they pay the actors that appear in their commercials, in a reflection of a wider shift in advertising spending on digital media.

The new agreement between the actors's union, ACTRA, and groups representing the ad industry in Canada – the Association of Canadian Advertisers (ACA) and the Institute of Communication Agencies (ICA) – was announced in late July after four months of negotiations, but was not fully ratified until midnight on Sunday. The three-year agreement came into effect on Monday, and the groups involved are now discussing its changes in greater detail.

There are two major changes to the agreement, governing how companies are required to pay for talent in ads. Both changes signal larger shifts in advertising in general – and more to come.

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More "reality" permitted

Two years ago, Budweiser produced an ad in Canada featuring a men's rec league hockey team that the brand surprised by filling their arena with enthusiastic fans. But ACTRA Toronto cried foul that the more than 500 "background performers" involved were non-union and were compensated with "much less than industry-standard pay."

However, the trend of advertisers wanting to use real people for more authenticity in their ads is not going away. Think of WestJet's blockbuster Christmas ad that surprised real travellers with their wishes from Santa, for example. The new agreement allows for more of it.

"Sometimes you need the verisimilitude of a real, surprised reaction," said Bob Reaume, ACA vice-president of policy and research. "It appears more and more to be in the creative toolkit these days. ... One thing we don't want to do in this contract is to put handcuffs on creative people."

ACTRA is hoping to avoid forcing advertisers to go totally outside of the union if they want to use real people; and to be able to use union performers where needed in reality-style commercials, as well.

"We were worried that if we don't provide these easements, that major brands will produce commercials non-union," said Stephen Waddell, ACTRA's national executive director and chief negotiator on the new agreement. "That's a big give, on our part. ... We've got reality television, now we've got reality commercials."

Performances in online ads are no longer discounted – sort of

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For the past six years, actors have agreed to accept less pay for appearances in digital ads. When online video advertising still accounted for less than 20 per cent of ad spending in Canada, the union agreed to cut its rate for video shoots in half: for TV ads, companies had to pay for a minimum eight-hour day, whereas for online ads they could call actors for a four-hour half day. (Online video ads that took longer to shoot would still pay more.)

Now that six-year experiment has ended, and the agreement says that an ad shoot is a full day's work, regardless of medium.

It's easy to see what's driving the change: online video is now a major vehicle of advertising. Last year, spending on online ads edged out TV ad spending for the first time in Canada.

"We knew it was a growing area, but we didn't know how important or how real it was eventually going to be," Mr. Reaume said. "...We've come to the conclusion now that spending on the Internet is only going to go in one direction. It's the way we're going to advertise in the 21st century."

While a minimum of eight hours at a rate of $756.50 for a principal performer may seem like a lot of money, actors cannot count on daily work. The day rate accounts for that.

"You're lucky if you get one job in 20 auditions. You have to take into account that a performer has to be prepared, hold themselves available for work, and go to 20 job interviews before they get a chance to work," Mr. Waddell said.

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But one discount remains: the "residuals" actors receive – payments for when an ad actually runs – are still higher for TV commercials than for online video ads.

What's more, residuals for ads aired on cable channels are lower than for conventional TV stations such as CTV and Global, even though ratings on specialty channels such as TSN and Sportsnet are no longer as marginal, from a ratings standpoint, as they used to be.

The groups are launching a one-year study to examine this issue, with possible changes on the way.

"With multi-platform use, once you have that commercial in the can, you can use it wherever you want. ... Let's have a structure that cuts across all media platforms," Mr. Waddell said. "We've got to find a new model."

The shift to digital

Advertising spending in Canada at current prices, over the past five years

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2009

Online: $1.84-billion (19.5 per cent of total advertising spending in Canada)

TV: $3.1-billion (32.8 per cent of total advertising spending in Canada)

2010

Online: $2.28-billion (21.9 per cent of total)

TV: $3.39-billion (32.6 per cent of total)

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2011

Online: $2.66-billion (24.6 per cent of total)

TV: $3.55-billion (32.7 per cent of total)

2012

Online: 3.07-billion (27.4 per cent of total)

TV: $3.47-billion (30.9 per cent of total)

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2013

Online: $3.43-billion (30.8 per cent of total)

TV: $3.4-billion (30.4 per cent of total)

2014 (forecast)

Online: $3.83-billion (33 per cent of total)

TV: $3.4-billion (29.4 per cent of total)

*Source: ZenithOptimedia Advertising Expenditure Forecasts, June 2014

Editor's Note: An earlier version of this story said that the actors' union ACTRA and groups representing the advertising industry will conduct a three-year study into residual payments. The time commitment was incorrect. The study's term will be one year.

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