Recent news suggests that some clients are now kicking their agencies harder than ever.
Following demands of extended payment terms by multinationals such as Procter & Gamble, which has announced that it has extended the average time it takes to pay its suppliers from 45 to 75 days, it now seems that some are expecting payment just to be on the roster. Well, that’s what the Marketing Agencies Association claims, having fingered Premier Foods for demanding an upfront fee for the privilege.
The sums involved are not inconsiderable and are thought to be based on an estimated income model. For its part, Premier Foods rejected the claim that it asks to be paid to be on its roster – instead, it described the fee as an "investment payment" that "confirms their desire to remain a strategic player in the future".
They get no equity for this investment, so it’s easy to conclude that these are weasel words that, aside from putting more pressure on cash-strapped agencies, make a mockery of the idea that agencies are partners to clients. Should agencies really be expected to pay to be on a client’s roster?
Colin Fleming, chief operating officer and finance director, Abbott Mead Vickers BBDO
"Agencies already invest much time and money in winning a place on client rosters. Once on a roster, there is typically periodic fee reviews. The amount an agency chooses to invest in winning a piece of business, and the amount it invests in the subsequent relationship, should be at the agency’s discretion. A roster fee is, by contrast, a compulsory fee. It runs counter to most clients’ ambitions to have their agency remain a viable partner and should not therefore be considered."
Michael Sugden, chief executive, VCCP
"No. This is wrong. Plain and simple wrong. I thought I had seen it all with the Thomas Cook ‘signing-on’ fee saga, but this is a new low as there isn’t even any guarantee of work. Cue vein-popping, expletive-ridden rant about client exploitation, the value of partnership, blah blah… But clients are not to blame. Agencies are. Don’t expect clients to value our time if we don’t do so ourselves. The truth is, in life, we only pay what we can get away with. Clients are no different. Agencies need to grow some balls and pick up a dictionary. There’s a little word, a useful word, we all need to learn. It’s called ‘no’."
Scott Knox, managing director, Marketing Agencies Association
"Absolutely not: unless, in doing so, the agency is given equity in the brand or company – that way, the risk and reward element is a real one. I understand that, for some brands, the market is tough – however, this doesn’t justify lazy business practice in requesting upfront roster fees (whatever name they go by), extended payment terms and the like. Agencies simply cannot exist, let alone innovate, with such tight or non-existent margins and cash-draining measures being implemented by some corporations. We are already seeing some agencies turn their back on the bunfight market of working on blue-chip brands."
Matt Pye, chief operating officer, Cheil UK
"For decades, we’ve been largely defined by our main client, Samsung. When I arrived, I did so with a clear ambition to make Cheil a genuine multi-client agency. We have more hunger for new clients than any other agency in town. But would I pay for the privilege of a new client? Not on your nelly. Putting to one side the bit about pride and respect and all that human stuff, I fundamentally believe it starts the relationship on the wrong foot. I firmly believe that agency/client relationships are partnerships – genuine partnerships built on shared ambitions and shared blood, sweat and tears (of joy, hopefully). Business partners, not masters and servants."