Sponsored sales

Magazine media paid promotional programs

Sponsored sales are defined as subscriptions or single issues purchased by a third party (sponsor) in quantities of 11 or more to promote the business interest of the sponsor. All sponsored-sale copies must be delivered to specific individual names at private residences or business offices and intended for the personal consumption of the addressee.

For sponsored sales (subscription or single issue) to qualify and classify as paid circulation, the following AAM requirements apply (See Rule F 2.1/F 102.1 Sponsored Sales):

1. The sponsor must pay at least one cent per subscription or single issue, net of all considerations.

  • A consideration is anything that is offered to the sponsor, by the magazine or its agent, in addition to the copies of the magazine.
  • Therefore, the amount paid by the sponsor must be at least one cent per subscription or single issue, after you subtract the value of all ‘inducements’ from the purchase price.
  • Inducements include, but are not limited to, any of the following items provided in relation to the sponsored sale transaction (purchase of magazines): ­
    • Any money paid to the sponsor
    • Any account credits issued ­
    • Free or discounted products ­
    • Free or discounted services (i.e. advertising, marketing, and distribution)
    • See also the definition of net of all considerations.

Note: Fees paid by a publisher to an agent and commissions (remit) paid by an agent back to the publisher do not impact the price qualification for a sponsored sale. 

 

2. The purchaser must meet the definition of a qualified sponsor.

  • A qualified sponsor is any business or organization whose primary activity is to sell or provide products or services to the general public. The purchaser must also be financially independent from the magazine.
  • A few examples of qualified sponsors include, but are not limited to: ­
    • Retailers: in-person and online (for distribution to frequent buyers or those that purchase $xx or more at their store) ­
    • Charitable organizations (for distribution to their donors) ­
    • Schools (for distribution to the students’ homes)
  • A few examples of non-qualified sponsors include, but are not limited to: ­
    • Other publications ­
    • Subscription selling agents ­
    • Advertising agencies ­
    • Direct-mail firms ­
    • List rental organizations

3. The recipient of the magazine must be informed of the sponsor’s identity.

  • Notification must occur at the beginning of service of the magazine.
  • For subscriptions with a term of more than one year, a reminder notice must be sent to the magazine recipient at least annually.
  • The notice may be executed in one of the following ways (in a clear and conspicuous manner):
    • For subscriptions or copies offered with a retail or online purchase, the notice may be provided on a sign, Web page, flyer, etc. when the purchase is made. ­
    • The sponsor may choose to have the consumer opt-in to accept the sponsored subscription. The location of the opt-in is a sufficient place to identify the sponsor. ­
    • Separate notification (letter, postcard, etc.) may be sent to the consumer advising the recipient that they will receive a sponsored subscription, compliments of the purchaser. ­
    • A sticker, flyer, wrap, banner or similar item may be placed on the cover of the first copy of the magazine mailed to the individual. ­
    • Inside the address label of the first copy serviced, provided the appearance of the notice is prominently displayed in the label (larger, bolded and/or in a different font than the name and address information). ­
    • See examples below.
  • The content of this notification must state something similar to “This magazine is compliments of…” “You will receive a one-year subscription to Magazine X brought to you by…” or “This copy was sent to you by…”. ­
    • This notification may also contain the sponsor’s logo and contact information including street address, website address, e-mail address, phone number and fax number. ­
    • If the notification vehicle contains any information in excess of the sponsor’s logo and contact information, AAM considers the additional information to be advertising. The sponsor is required to pay market value for this advertising – over and above the cost of any magazines purchased.

4. A contract between the sponsor and the publication, or its agent, must exist.

  • Agreement by sponsor to purchase subscriptions or copies must be in place prior to start of delivery.
  • For each magazine involved in the purchase, the contract must include the title of the magazine(s) involved, the quantity of subscriptions or single issues purchased, the term of the subscription (or number of issues), cost per subscription or copy, and total balance due.
  • Any other items received by the sponsor from the magazine, or its agent, related to the sponsored sale must be separately itemized in the contract or on the invoice. This must include a charge to the sponsor for these items (market value).

Additional items of note: 

  • The following types of distribution may not be classified as sponsored sales:
    • Copies served to public places for use in reception areas
    • Copies served to other public settings where copies are shared by multiple consumers
    • Copies delivered in bulk and to be picked up by unknown users (such as event distribution)

      A publisher may explore classification of these copies as ‘verified’, ‘analyzed nonpaid bulk’ or ‘analyzed nonpaid market coverage’ depending on the specific details and execution of the program. In addition, a publisher may elect to service these copies and classify them as ‘nonanalyzed nonpaid circulation.’
  • Copies served in post expiration status are not eligible for inclusion as paid circulation. 
  • Back copies may not be serviced to fulfill sponsored sales distribution unless the recipient made a direct request (opted-in) for receipt of the publication.
  • Payment by the sponsor must be made to the publisher, or its agent, within four months of start of service of magazine. Payment not received at all or past the four-month time frame will disqualify the sponsored sales from paid circulation. Proof of payment must be maintained for review by AAM audit staff.
  • During the audit, an attestation from the publication’s CFO or other senior financial executive is required. This will confirm the purchase of the magazine, that it represents a ‘stand-alone’ transaction and adherence to net of all considerations requirement by the publication or its agent. Attestations must exist, per title, for all sponsored sales sold or served during an audit period.
  • During the audit, an attestation from the sponsor is required (one from each different sponsor). It must be signed by a senior financial executive of the sponsor organization and attest to the details of the sponsored program, including acknowledgement of the sponsored sales transaction, how the purchase was intended to promote their business interest, the price paid per subscription or copy, the totality of all products and services received by the magazine or its agent related to the sponsored sale, and their contact information.
  • You may request a pre-evaluation of your sponsored sales program by completing this form.

Purchaser Notification Examples:

Acceptable notification made via address label:

Compliments of XYZ Manufacture
Mary Smith
123 Main Street
Anytown, NY 12345

 

Compliments of XYZ .COM
Mary Smith
123 Main Street
Anytown, NY 1245

 

COMPLIMENTS OF XYZ STORES LOCATED AT 123 MAIN STREET, ANYTOWN, NY   Mary Smith
123 Main Street
Anytown, NY 12345

 

Acceptable notification made via sticker on cover of magazine:

Enjoy this Magazine,

Courtesy of
XYZ Manufacturing,
20 South Street
Anytown, NY

 

Magazine compliments of
XYZ.Com

 

Acceptable notification made via banner on cover of magazine:

This Magazine is being provided to you by
XYZ Fashion Store, located at 55 First Street Anytown

 

 

MAGAZINE COVER

 

Mary Smith
123 Main Street
Anywhere, NY 12345

Sponsored Sales:  Net of All Considerations – Guidelines

Overriding Consideration: the amount paid by the sponsor/purchaser must be sufficient to meet the definition of paid circulation - after considering all/any other ‘inducements.’

Analogy: much like qualification standards for premium usage, the sponsor must be ‘out of pocket’ a qualifying amount for the subscriptions.

Fees paid by a publisher to an agent are not considered in the qualification formula.

It is not necessary for the money to flow to the publisher – the agent can retain the subscription amount paid by the sponsor.

Fees/rebates/refunds/other credits provided to the sponsor by either the agent or the publisher will be considered ‘offsetting dollars’ in determining qualification of sale.

Examples:

Publisher pays agent $4.00 per subscription for sponsored names.
Agent collects $1.00 per subscription from sponsor.

Qualification formula:

Amount paid by purchaser: $1.00
Amount rebated to purchaser: 0
Net amount paid by purchaser: $1.00
Qualifies as ‘paid:’ Yes

 

Publisher pays agent $4.00 per subscription for sponsored names.
Agent collects $1.00 per name from sponsor.
Publisher or agent reimburses sponsor $2.00 per name for development of list.

Qualification Formula:

Amount paid by purchaser:  $1.00
Amount reimbursed to purchaser:  (2.00)
Net amount paid by purchaser:  ($1.00)
Qualifies as ‘paid:’  No

 

In all cases, the auditor will net any dollars ‘cycled’ back to the purchaser – for any reason – in determining if the sale qualifies as paid circulation – the same standard that is applied to individually paid circulation will be applied to sponsored sales.