Media habits are changing: will your contract let you do so too?
“If anything kills over 10 million people in the next few decades, it’s most likely to be a highly infectious virus rather than a war — not missiles but microbes.” When Bill Gates said this in 2015, very few people imagined his prediction would be well on its way to reality just five years later. In fact, just six months ago almost nobody expected that a global pandemic would be impacting our lives the way COVID-19 is today. Billions of people are working from home, families and friends are kept apart, parents are teleworking, children are studying remotely and maturing rapidly, and dogs are getting more freedom and walks than ever before.
With this new normal rapidly unfolding, almost all companies and industry sectors have been compelled to adapt, implementing new ideas and solutions to maintain continuity of service to their clients. Most unusually, disruption from COVID-19 is truly global, not just local. Brands and the advertising industry are also very far from immune. And while a few sectors – mostly particularly food and pharmacy retail – are enjoying record sales, others have shut down entirely, from restaurants and non-essential retail to live sports and mass entertainment.
As a general rule, contracts between advertisers and their media agencies include “Force Majeure” clauses that take into account the circumstances under which neither party is considered liable for a failure or delay in the compliance of the contract. These include acts of war or terrorism, floods, earthquakes, and other catastrophes. These clauses often allow the contract to be suspended in the event that the circumstances persist.
However, we have never seen a clause that allows advertisers to move media consumption from certain media to others during a period of crisis. With COVID-19 dominating decision-making for most of us still able to work, advertisers should spend some time understanding whether the contracts they have with their agencies are sufficiently flexible to allow them to move their already committed investment from media that now has little or no impact to others whose audiences have grown strongly during the pandemic. Understandably, cinema and out-of-home advertising are effectively on hold, while TV audiences and internet traffic are growing rapidly, although they also present their own challenges, related to the appropriateness of content, quality, and performance of inventory.
Such a clause may not have been deemed necessary historically. But COVID-19 has taught us to prepare for the inconceivable. As well as introducing the flexibility to switch media in the event that planned media channels become unavailable, not viewed, or likely to deliver worse return on advertising spend, the pandemic will also force advertisers and their agencies to plan actively for contingencies including business recovery plans and teleworking.
How and when these changes are implemented depends on multiple factors, but brands should certainly incorporate these issues from now onwards when reviewing existing or preparing new contracts. This will allow more flexibility for advertisers and their agencies, mitigating the negative impact of unpredictable and uncontrollable events, preventing cancellations and minimising penalties between both parties.