Articles

APAC - Advertiser Vs Media Agency Contract Gaps

David Brocklehurst, Managing Director, APAC

Following our last analysis across 300 audits in Europe, USA and the UAE (click here to read more), FirmDecisions have now conducted a similar analysis of 121 audits that were conducted across Asia Pacific in 2015. Not unsurprisingly, similar trends have emerged. Of course, many agreements are Global and will thus carry across all Regions. However, surely this makes the issues even more concerning? If Global contracts are not signed, or audit clauses not exhaustive or if agencies are not meeting their financial obligations with AVR’s, then if these issues are Global and not just local, this potentially magnifies the same non-compliance issues across every country in the world.

While generally embraced as “Asia Pacific”, this Region is an assortment of many cultures, religions, living standards, histories and idiosyncrasies. It is for this reason that Local agreements are very important. While Global contracts are very important to capture and define the broad terms of engagement, local agreements are equally important in ensuring local practices are accounted for.

When you then consider the growing and broadening aspects of the media landscape, it has become critical that advertisers ensure their best interests are protected by a robust, detailed and current contract with their agency groups.  Consider the exposure being experienced by clients and agencies in operating without a signed contract!

Our study looked at the same issues as were examined in our last analysis

  1. Unsigned contracts, insufficient rights

Our analysis shows that 26% of advertisers do not have a signed contract with their media agencies.  Both agency and advertiser are at risk when they operate without a signed contract that defines the terms and legal status of their engagement.  Furthermore, 25% of contracts do not allow sufficient audit rights. An audit acts as a safety net for advertisers. For most companies, their media spend represents a large sum of money. An audit should be able to examine all of the records and transactions applicable to the advertiser’s billings, across the whole of the agency group. However, some audit clauses have attempted to limit the scope of the audit while agencies have also created separate entities whose transactions are not subject to audit. In fact, agency groups are now actively attempting to influence client’s choice of auditor – not something they should have a right to influence. The client should have the right to appoint the auditor of its choosing to ensure independence and full transparency of the interlocking trading chains.

  1. Limited data access

Infographic: advertiser / agency contracts in numbers 

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What our research highlights is the extent to which contracts are unsigned, incomplete, or simply inadequate to protect the advertisers’ interests, leaving the agencies plenty of latitude, especially in the complex digital market.

As digital and programmatic make audit trails decreasingly transparent, all advertisers should seek professional advice about agency contracts, and then ensure their contractual rights are being adhered to and applied.

Our message to advertisers is simple: have a contract with full audit rights over media agency activity, and full transparency, and make sure you have access to records and data, which are yours and not the agency’s. Advertisers need to protect their interests and guarantee transparency of their investment, which often runs to millions and sometimes billions of pounds, Euros and dollars.

 

To explore our media contract analysis covering Western Europe, US and UAE click here