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By Tony Whittingstall
For many advertisers the language of their contracts with advertising agencies can often be confusing and lead to poor deals, including related parties, AVBs/rebates, unbilled media and principal/inventory sales.
The Right Team
“As the role of the CMO gets bigger – and so too does the number of third parties involved in the media supply chain – it is crucial to bring in the right expertise”
Advertising can be a significant outlay but a vital part of expanding your business, following the turbulence of the last year or so, it is as important as it’s ever been. But for all advertisers, the language of their contracts with advertising agencies can often be confusing and lead to poor deals.
In this piece, we have chosen a few examples that illustrate this and therefore should be considered carefully when defining your contracts.
There are dozens of areas which can be confusing for the uninitiated. That is why bringing in an independent marketing compliance expert can be crucial in understanding the practical application of your contract. Otherwise, the definitions of certain terms – or lack thereof – can lead to recurring difficulties.
So, let’s dive into a few example terms from the client-media agency relationship that you should consider carefully:
Many agencies use media specialists with whom they share the same ultimate parent company to handle certain activities. Ensuring such use doesn’t negate key contractual principles requires a strong and wide definition of the agency group and related parties along with use of such parties being contingent on their acceptance of the obligations in question.
A time frame for return of unbilled media should be specified, but it is also worth considering the time frame for a variance between billed cost to a client and received cost from a vendor to be considered as unbilled media.
The overall time frame for return of these amounts would then be the combination of these two periods.
While the concept is common, it is important that the client gives informed consent to buy such media on a non-auditable basis. As such, many clients make their express prior written approval of each booking a prerequisite for the buy to qualify as inventory media. Clients should also be able to determine the source of this inventory.
As the role of the CMO gets bigger – and so too does the number of third parties involved in the media supply chain – it is crucial to bring in the right expertise.
Rather than create cause for concern, a compliance audit simply ensures that both sides are speaking the same language and expecting the same things from their working relationship.
Establishing terms early on will hopefully lead to a successful, long-term partnership.
For more information on MMC, please visit: https://www.mediamarketingcompliance.com/