/ BY MIKE MCGOUGH, DIRECTOR OF MEDIA SERVICES, CORTEX MEDIA
The client/agency relationship’s foundation is built upon the long-form contract that is memorialized between the two parties. This is the key document where, among other things, an advertiser’s rights regarding transparency and work product/data ownership are established.
Cortex Media does not provide legal advice since we are not attorneys but we have vast experience working with our clients’ legal counsel and procurement teams on the commercial aspects of media agency contracts.
Every media or contract compliance/invoice audit we perform requires a review of our client’s agency contract to understand what they are entitled to or not from a commercial perspective. The contract review ensures we are evaluating the work consistent with the specified deliverables and the commercial terms of the contract.
In many cases, we see that a client’s agency contract is “evergreen” and may have been memorialized five years ago, or even longer. As the industry evolves at breakneck speed, media agency contracts need to be updated to reflect the current commercial environment.
With new relationships, it is paramount to begin with the proper protections. Below, we have highlighted the eight key commercial areas that are critical for an advertiser and need to be at the top of the list as part of any contract negotiation.
How is your contract protecting you in these areas?
1. What is the scope and breadth of your audit rights? What is excluded from review?
2. Is the agency required to disclose information on brokered media deals?
3. Does clear language exist regarding the return of any discounts and rebates? Are all benefits being transmitted to you?
4. How are you protected in any cases of conflict of interest in which the media agency makes purchases through related/owned agency parties or may involve commingled negotiations for agency owned inventory?
5. What are your rights around data ownership, custody, and protections?
6. Do you have clear ownership of negotiated media rates and other work product?
7. Do you have detailed KPIs for agency performance that are specific, actionable, and measurable?
8. How have performance-related bonus/malus compensation plans been structured?
Addressing “transparency” between client and agency starts with the right contract language which outlines the core services to be provided by the agency and the commercial conditions under which the agency should operate.
Cortex can work with your legal and procurement teams to include the necessary conditions for a clear, fair, and long lasting relationship with your media agency.
Note: Cortex Media is an independent firm providing services to brands at every stage of the media process, from helping to find the right agency partners to performance tracking and evaluation to financial reconciliation and strategic consulting.