Get a demo Do I subscribe? News sign-up
Print

Advertisers and agencies disagree on terms of trade

News, 14 June 2017
Topics

GLOBAL: What constitutes fair terms of trade continues to be a bone of contention for media agencies and advertisers with both sides likely to regard current terms as being less than mutually beneficial.

Not only are they failing to agree but they are heading in opposite directions, according to the 2017 Global Media Terms Survey, from media change consultants ID Comms.

This report, based on responses from 102 marketing, media and procurement professionals around the world with combined annual media budgets of more than $20bn, found 80% of respondents agreed or strongly agreed with the statement that: "media agencies incentivised by fair terms of business with their client will be more transparent and more aligned to their client's business outcomes".

But their views over what plays the most important role in aligning agency behaviour with client goals diverged.

Advertisers in both procurement and marketing/media roles believed the most influential factor in agency alignment and transparency was contract terms, while agency respondents thought the Scope of Work was most important.

Respondents also differed about how mutually beneficial key elements of current practice actually are. Fees were rated overall as unfair while overall payment terms were rated as more fair than unfair by all participants.

Agency representatives, however, rated both fees and payment terms at 2.6 on a 1 (never fair) to 5 (always fair) scale , while procurement specialists suggested that current practice should score 3.5, ranking them as more mutually beneficial than disadvantageous to either party.

The survey also highlighted continuing scepticism around transparency with some advertiser respondents believing that agency and particularly holding company behaviour is more deeply embedded and won't be changed by terms of business alone.

"A clear scope of work, fairness in fees and payment terms and a great contract that protects both sides are the must-have tools for aligning agencies with advertisers and creating a productive, trusting working relationship," said Tom Denford, Chief Strategy Officer at ID Comms.

"However, it's clear from these results that there remains a huge variety of opinions on what should drive these beneficial behaviours and the other factors that might be in play,"

Agency respondents were particularly gloomy about the immediate future with only 3% expecting terms of business between advertisers and media agencies to become fairer overall during the next 12 months.

Data sourced from ID Comms; additional content by WARC staff

Topics