Advisory opinion letter to Mr. Brernsremn

Auceust 25, 1970 Dear Mr. Brernsremn:

In reviewing your letter requesting an advisory opinion relative to the new marketing service to be inaugurated by PostAds, Inc., we have run into several questions that require clarification before we can properly go forward on the opinion.

As we understand your proposed program, PostAds, Inc., will promote products of manufacturers or suppliers through “PostAds” at point of sale traffic. These ads, approximately 22’” x 24”’, will be placed eight to a store for thirteen week periods. It is not clear, however, what arrangements will be made for those stores also selling the advertisers’ goods, who do not or cannot provide space for PostAds. In other words, what alternative plans are available for such stores? As you know, the promotional plan must be not only offered to all stores com ADVISORY OPINIONS. WITH REQUESTS THEREFOR 1613 peting in the distribution of the seller’s goods, but the plan must be functionally available to all such competing customers, ¢.¢., useable. It is also stated that in return for the services which the participating stores will render, Post Ads will pay each such retail outlet a certain sum each week as (a2) rental and (b) as reimbursement for services rendered. We will need to have more information as to how such payments are proportionalized under Guide 7. Also, it might be necessary to break down such payments as between (a) space rental and (b) service payments for supplying information on shelf movement of the particular products. The fixed rental fee must, of course, conform to Guide 11, notwithstanding footnote 1 on page 2: of your letter. We cannot emphasize too strongly that tripartite promoters of advertising services have the duty to make certain that such plans, and all phases of them, are functionally available to a]l competing customers, including the smaller stores, and that the payments thereunder are proportionalized as between such customers. This woud thus apply to that part of PostAds plan to make available to retail outlets having average gross sales of $25,000 per week a back-lighted, moving color transparency advertising machine. The question that must be answered is: What is being offered to retail outlets not qualifying ? Your attention to these questions will be greatly appreciated.

Very truly yours,
(S) C. Paun Srermpacn,
_ Attorney, Office of General Counsel.

Letter of Request
- June 26, 1970
Dear Mr. Suea:

Weare writing this letter to obtain an advisory opinion in connection with the following proposed transaction, which is not currently being followed and is not the subject of a pending investigation or other proceeding by the Commission or any other governmental agency. Our client, PostAds, Inc. is a New York corporation formed to develop, introduce, manage and conduct sales and be marketing consultants.

PostAds, Inc. has developed a concept which will offer manufac_ turers a new marketing service which will allow them to advertise their products within retail outlets at the point of sales traffic. The point of sales advertisements ( “Post Ads”) are planned to be approximately 22’’ x 24’’ in size, printed in color. PostAds will be placed in frames which in turn will be affixed to gondolas, counters and/or on the walls of the participating 1 retail outlets i in the markets selected. At the start of the service, it is proposed to concentrate on pr oducts in the health and beauty aids field, althought products in other non 1614 | FEDERAL TRADE COMMISSION DECISIONS food categories may be included later. The types of stores in which PostAds may be placed will cover all competing outlets in the area of promotion in which the advertised products are offered for resale, including discount drug stores, department stores, chain and independent grocery stores, convenience stores and others. PostAds, Inc., will undertake to make arrangements with the competing customers within the selected markets which will provide for the rental of space within the participating competing stores and the fulfillment of certain services by the participating store’s management or other designated personnel. These services will include placing PostAds in (and removing PostAds from) their fixtures upon delivery, or according to a specific posting schedule; seeing that the PostAds remain in position during their specific posting periods; and reporting on an historical and current basis the shelf movement of the advertised product and all other products in that category according to conditions | specified by the advertiser.

In return for the services which the participating stores will render, PostAds, Inc., will pay each participating retail outlet a certain sum each week as (i) rental for the space utilized,' and (ii) in reimbursement for services rendered. If the participating retail outlets are either unable or unwilling to supply the information as to the shelf movement of the products, etc., the fee paid for the service will be adjusted accordingly.

PostAds, Inc. and the Manufacturer or Supplier of the Product The personnel of PostAds, Inc., will solicit advertising orders for PostAds, both from the manufacturers and/or their advertising agencies. ‘The aim will be to post eight PostAds for each retail outlet, although smaller numbers may be used. Each PostAd will be sold for a 18-week posting period, within which time it is anticipated that manufacturers will display different advertisements for the same product, or different advertisements for a number of products. It is. planned to have only one brand i in any one product category posted at one time.

In fulfilling its contractual terms with the manufacturer and/or its advertising agency (PostAds, Inc. will pay the agency, if one is involved, the standard agency commission ) the following actions are planned by PostAds, Inc. :

1. To select. specific markets in which PostAds will be carried | by: competing retail outlets electing to participate. These markets will be chosen so as to give a balance « of geographic and economic features. for the purposes of testing, evaluating, introducing new products or 1 This fixed rental fee will be pald irrespective of whether PostAds, Ine. actually utilizes. the space leased.