So, ISBA and the IPA have launched their new client/agency framework contracts. Designed, in the words of ISBA’s Debbie Morrison, to "truly reflect the way clients and agencies now work together across multiple communications platforms."
The new contracts mark a refreshing of terms that were first introduced in 1998. While it’s always encouraging to see updates and renewal of important initiatives, I have concerns over how these new contracts were developed and also that they fail to reflect some of the more pressing issues facing both advertisers and agencies.
The contracts fail to address the bigger forces at play...that the value of marketing communications created by agencies has been eroded
Developed by ISBA and the IPA, together with law firm Lewis Silkin, the contracts have always previously been broader industry endeavours – involving other bodies including the MAA, the DMA and the PRCA.
It’s disappointing that this wasn’t the case this time around. The MAA has added value in the past thanks to our knowledge around areas such as experiential, promotional, direct and shopper marketing. Other bodies not involved in the development of the new frameworks also previously brought significant expertise to the table.
More importantly, I’m worried that the contracts fail to address the bigger forces at play in the marketing world. Namely, that the value of marketing communications created by agencies has been eroded by the significant shift towards project-based relationships between advertisers and agencies.
The industry should be worried
It’s interesting that ISBA and the IPA have put out contract frameworks for both retained and project terms but have provided nothing in the way of context or comment on the evidence that longer-term client/agency relationships deliver far better results for brands.
Instead, the updates provide templates that the basis for even greater encouragement for clients wanting to put agencies on project-based terms by offering greater flexibility. My worry on this is that agencies, many with high fixed-costs, will be forced to change their business models.
Research already shows that 61.2% of agencies are investing more in freelance staff as opposed to permanent, senior, talent (Kingston Smith, ‘Agency Business Model Survey’). This trend is set to continue and these new frameworks do nothing to question it.
The industry should also be worried that while so much effort, several years at least, has gone into drawing up these contracts, so little has been expended by the likes of ISBA and the IPA on addressing bigger issues such as fair payment for agencies and other suppliers.
When the MAA has called on other bodies to get behind our "campaign for better business" and to end corporate bullying of suppliers, we’ve been met with almost total inaction.
These templates provide a framework that will smooth the path toward a certain kind of client/agency relationship, including the move towards project-based terms.
They do nothing, however, to resolve the larger, underlying tensions between clients and agencies that threaten to undermine the marketing industry and the quality of work created by agencies.
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