Magazine article Marketing

Industry Aid for Small-Print Woe

Magazine article Marketing

Industry Aid for Small-Print Woe

Article excerpt

The IPA and ISBA have come together to draft a model contract for advertisers and agencies. Claire Murphy looks at the benefits of putting work on solid legal ground

Checking the small print on the contract with the ad agency doesn't rank very high on a marketing manager's most-fascinating task list. But neglect it and he or she could find themselves in the less-than-fascinating position of explaining to the managing director why the firm is in a costly legal wrangle with the agency.

The importance of having a watertight contract never becomes apparent until the relationship with the agency breaks down. It's only when you want to stop working with your agency, perhaps suddenly, and bring in a new one, that you might realise your contract dictates that the agency is entitled to six months' fees.

All of which is why a group of marketing industry bodies have come together to draw up the first standard contract to be agreed by marketers (via the Incorporated Society of British Advertisers) and the ad world (negotiated by the Institute of Practitioners in Advertising) (Marketing, 17 September).

ISBA has given standard contracts to its members before, but this contract introduces various new clauses, which cover issues which have emerged within the past few years.

Recent research by ISBA, for example, showed that resource-based fees are becoming an increasingly popular way of paying your agency. It involves working out a rate that each of the people who work on your account will charge their time at, then adding an amount for overheads plus an agreed profit for the agency.

But this means that the people working on your account are more crucial than ever. What happens if the key creative or planner leaves. The answer, as built into the new contract, is to specify that the client must have the right to approve a replacement.

Faith in people

"It's the people that you put your - faith in when you appoint an agency," says Stef Clarke, Halifax's manager of media strategy. "If you can't safeguard those people then what is the agency there for?"

But ISBA's study shows that only around 30%-40% of advertisers build a reference to key people into their contracts at the moment.

Another contentious new addition to ISBA's model contract concerns mutual loyalty. The contract proposes that the client should agree not to use another agency to work on the agreed piece of business while the main agency is contracted to do it.

The agency agrees not to take on any competing clients ('competing' would have to be defined between agency and client). …

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