Media agencies: AANA's 'blanket approach' to contracts unworkable

Arvind Hickman
By Arvind Hickman | 31 October 2016
Media agencies doubt a blanket approach to contracts will work.

Media agencies are considering their position over media guidelines released by the Australian Association of National Advertisers with several indicating the 52-page contracts aren’t workable.

The Media Federation of Australia is combing over the 52-page document before issuing a statement on how it will proceeds but other media agency executives have told AdNews they are surprised they weren’t consulted during the process and that a one-size-fits-all approach would not work or be desirable to clients.

Dentsu Aegis Network CEO Simon Ryan tells AdNews he found it “very weird” the AANA didn’t collaborate with media agencies drafting the guidelines. “It needs to be a collaborative approach between advertisers and their agencies,” Ryan tells AdNews.

“They’ve taken a view it’s a blanket thing, but every agency and every client has different contracts. No one has a blanket contract, every client has a bespoke contract with their agency around fees, rates, value, data, depth of services. I just think it’s up to the agency and their client to work out their contract.”

Ryan says that Dentsu Aegis Network agencies will continue on the same path and that “our clients are very happy with the contracts they’ve got. If not, they wouldn’t stay with us.”

A media agency boss, who wished to remain anonymous, tells AdNews “I’d be very surprised if clients want that”, explaining that every client is different and has different requirements that are written into contracts.

Another media executive says that if agencies followed the media contract template to the dot, it left them virtually no room to make money, particularly in an environment where advertisers are screwing down costs to near unsustainable levels.

For example, some clients are happy to allow media agencies to make an undisclosed margin on programmatically traded digital inventory because they realise the benefit of holding groups buying it cheaper in bulk. It may be preferential for clients to receive inventory at a guaranteed rate and for agencies to absorb the risk.

Media agency groups are discussing the proposal internally this week while the Media Federation of Australia’s legal team will go through the 52-page document before issuing a response.

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