Let's Make Agency Negotiations Less Contentious

May 15, 2019

Agency contract negotiations have become more contentious, and contracts can end up taking months or even years to negotiate. Keri Bruce, partner at Reed Smith, and Thea Winarsky, EVP of global legal and business affairs at IPG Mediabrands, discussed how clients and agencies can work together to improve their relationship and the industry as a whole.

Keri Bruce: Brands want transparency, but it’s a broad term. Is it transparency into how the agency operates within the industry? Is it, “Are you making money in ways we don’t know about?” Is it the relationships you have? Is it the real or perceived conflicts of interest? People are throwing things into contracts without knowing what they want or need.

Thea Winarsky: After the K2 Intelligence report came out, people were fearful to admit that they didn’t know how the ecosystem worked. Now we’re at a point where people shouldn’t be afraid to talk about it and ask, “Do we need to approach this differently? Should we get other teams involved, or other people in the industry?” The good news is that we can still use trust and transparency to get more of what we need, and we can harness that power and make changes.

Bruce: I’ve seen frustrations with the negotiations process because it can go on forever and be a real drain. There are a lot of tough questions, and lawyers don’t always have the answers. So bringing the right experts to the table is important. Operationally, things happen offline. For example, a contract may not list something out, but it’s in the scope of work. So the document has to evolve because the client came with updates. Do you see agencies working that way?

Winarsky: Sometimes clients feel like the pitch process is the end and they have to get everything up front. We always have policy conversations and work with various teams to ensure brands are getting what they need.

Bruce: Do you think agencies and brands will ever be aligned on audit rights?

Winarsky: Audits are ongoing at every agency. They need to be closed out satisfactorily, but there are always going to be conversations. I do think there’s a middle ground for discussion, because clients have a right to that information. But it needs to be executed fairly on both sides. Also, I’m seeing a lot of things being called audits that aren’t. If there is an ongoing consulting review for taking work in-house, that’s not an audit.

Bruce: How do agencies vet partners to know they’re legitimate providers? Do agencies share information about who the bad parties are with each other?

Winarsky: We try to work together at the highest level possible. We’ll ask, “Have you used this vendor before, and have they worked for you in the past?” Our legal team has internal compliance procedures when we’re looking at vendors. We’re constantly upgrading our brand safety investment. We’re making sure everyone is compliant with the General Data Protection Regulation (GDPR) and the California Compliance Privacy Act (CCPA).

Bruce: What are the expectations with vendors if there’s an amendment that the agency agrees to, but the brand wants something different?

Winarsky: If brands want something from their agencies, it may be a matter of respectfully challenging them to see if they can roll out something similar within their own organization. But sometimes they want to be a market leader, if it’s not an industry standard. They’ll say, “I don’t care, our CEO wants this change.” So we have to figure it out and lobby together. But if we’re clear what the goal is, that’s better than having vague language in the contract.

Bruce: How do you think as an industry we can move the needle to improve transparency in the ecosystem?

Winarsky: If there is a reason for having something in a contract, such as millions of rows of data points, or things that trigger privacy concerns or pricing information that can’t be shared with competitors, then there needs to be a discussion. But it’s unfair to assume the other party is hiding something.

Bruce: What do the agencies do behind the scenes to benefit clients? Is there collaboration among IPG agencies to stay on top of the different industries? Do you recommend best providers?

Winarsky: Different people from our legal team are dedicated to agencies and specialties, such as content or privacy. We collaborate and attend seminars to make sure we’re out in the market. We also spend time with our in-house business teams. When beacons and bots were new, we looked at privacy issues. When the GDPR was rolled out, we collaborated overseas. We try to work together and connect better internally and with clients.

Bruce: In terms of access and control of data, there’s an inclination toward everyone thinking it belongs to them. What is the agency perspective on those rights?

Winarsky: Regulators are moving in cities, states, countries, and industries. We need to work together to recognize that consumers own data, and they can come and pull it back if it’s not respected. We strive to be our clients’ trusted advisors so they can be trusted by their consumers.

Bruce: States are coming out with proposed legislation every day. More efforts are needed to figure out how this is going to affect our ecosystem, and what role everyone is going to play until we have more information from regulators.

Winarsky: Also, what does it mean in terms of the products and services that brands want to roll out? Products that capture voice, augmented reality — these things are already here, and we need to understand them ASAP, while respecting the consumer.

Bruce: What are your thoughts on the agency holding company structure? Is it too big or complex? Clients will call me and say they’ve been working with an agency affiliate when it’s just an agency that someone loaned a trademark to. They’re affiliated in that they work together and refer clients to each other, but there’s no true relationship.

Winarsky: I think there’s something to be said for scale, but there’s no magic number. As long as the client understands if there’s an outside investment or if they’re getting referred, I haven’t seen it be an issue.

Bruce: Should there be a system in place to operationalize those disclosures? You assume they’re vetted, financially strong, and just as good a partner, but sometimes they’re not even related.

Winarsky: Usually it gets fleshed out in the contract, but I would give the agency the benefit of doubt that they’re not necessarily hiding things. The documentation has gotten clearer, but if there’s value from the investment and no liability, did it really make a difference? We have 900 different subsidiaries. If an agency is not the one providing services, then there’s no reason to know them. But if there is reason to know those global affiliates, we have detailed disclosure.


Q&A with Keri Bruce, Partner at Reed Smith; Thea Winarsky, EVP of Global Legal and Business Affairs at IPG Mediabrands


Q. What’s the best language or practices to foster trust in the industry?

A. Bruce: The ANA template is a great place to start. You can design a contract for transparency, and ask agencies, “Are you buying for yourself or reselling to your clients?” It’s important to go in with eyes wide open.

Winarsky: We tend to negotiate different packages for clients based on budget and the different things they want, and to get them the best value. Some clients may want free custom content, while others don’t want any. It’s important to make sure we’re matching key objectives to drive sales and have backup documents and reviews. And if you don’t understand something, bring in a lawyer.

Q. Does your legal team work for the holding company?

Winarsky: We have a mix of people who report to the holding company and others who report to the media brand. But everyone is there to service clients and protect the interests of the company.

Source

"Building a Framework for Change." Keri Bruce, Partner at Reed Smith; Thea Winarsky, EVP of Global Legal and Business Affairs at IPG Mediabrands. ANA Trust Summit 1-Day Conference. 5/15/19.

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