Tom Denford
By Tom Denford
May 5, 2016 1:36:01 PM

A Contract For Trust

 

For the first time in a decade, ISBA, the UK trade body that is the equivalent of the ANA in US, has issued new guidance for marketers on contracting with media agencies.

That should be pretty simple you’d think. After all, in the last 10 years media has become infinitely more complex, digital has become central to the communications process, integrated marketing communications has become ever more vital and media buying has evolved from being paid only to considering paid, owned and earned communications.

You might assume that all sides would welcome an updated framework that gives clients greater insight into how they can establish a clear mandate to work more effectively and more harmoniously with their media agencies.

The trouble is that this contract – which ID Comms worked on alongside ISBA and other consultancies – has been released at a time when relationships, not just in the UK but globally, between advertisers and their agencies are increasingly strained.

The reluctance to welcome it isn’t because it isn’t needed. Contract best practice has been widely overlooked in the last 10 years. The average marketer has had many other legitimate distractions hogging their to-do list.

But that’s exactly why now is exactly the right time for advertisers to begin to address the startling gaps that have appeared in the typical media agency contract after a decade of rapid change.

We recommend that brands go back and review contracts every 12-18 months, not to necessarily implement any changes but to ensure that the terms they contain are reflective of and suitable for the current media landscape. Those who rest on outdated contracts significantly risk losing competitive advantage against those brands more on the ball.

Not just that but having in place a best-practice and robust contract with your media agency clearly signals you as a client who knows about media, understands what a great driver it can be for business growth and most likely wants to work hand in hand with their agency to make it happen. A smart agency will welcome a client who is well-versed on their rights and who has a clear perspective on how they want to work with an agency.

The new ISBA contract initiative, which undoubtedly will inform many future US contracts also, is a toolkit to allow brands to regain the control of how their media investments are managed by media agencies and resets the balance in the favor of the marketer. For too long, too many advertisers have had too little visibility or leverage over how their media agencies generate and retain money.

 

Making this change should be seen as a good thing. Marketer knowledge of media is, of course, with a few notable exceptions, generally poorer than it should be and so having a clear framework for constructing the terms of the relationship in a proper, clear way, will hopefully give many the confidence to improve.

And better-informed marketers backed by a strong contract, should be something that agencies welcome. A marketer who understands media will be more likely to engage with innovation, to put media at the top table and use it wisely to produce more effective and more efficient marketing.

They will recognize the amazing work that agencies can do and be more willing to reward them for the insight and strategic vision they can bring to a campaign.

The reason why such changes haven’t been welcomed is that if all clients decide to use it then media agencies (and holding groups) will have to make greater disclosure of financial practice.

This in turn, could have a knock-on effect on agency profitability even if it leads to healthy conversations about finding the right balance to keep agencies incentivized in the right ways.

This might sound like something that’s happening in a small country far, far away but actually it’s likely to have major implications for US marketers too. That’s because many of the contract failings in the UK and the agency behaviors are very similar.

And the row that’s going on the in the UK is just a foretaste of what’s likely to happen once the ANA’s highly anticipated rebate investigation reports in late May.

It will likely detail the measures that marketers need to take in the world’s biggest advertising market. Smarter, more up to date contracts are expected to be one significant recommendation.

Just don’t expect the media agencies to take such recommendations lying down. If they push back, then maybe it’s working.

 

The ISBA contract was discussed at the ANA's recent financial management conference, check out this week's #MediaSnack which was broadcast live from the event...

 

This article was originally published on MediaPost on May 5th, 2016.