Sign up here for the latest articles
By Nick Swimer
Reed Smith’s Nick Swimer advises on the frameworks and models which accompany the rise of programmatic advertising; emphasising the necessity for diversification of templates between both agencies and brands.
A Fair Contract
“A fair contract must be balanced against all factors and agencies should not assume that they can ‘bank’ any concessions that a template may appear to include, particularly where they creep into the commercial terms”
Like Moore’s law, the number of ad-tech and mar-tech intermediaries promising brands improved targeting and marketing intelligence seems to double each year and has led to an advertiser inventory buying chain that is in fact, no longer a chain at all; rather it is a whirlpool or even a lattice in which relationships and click wrap contracts cross a multiplicity of operators before finally arriving at the publisher or advertiser (depending on your perspective).
The recently published ISBA media planning and buying template was met with wide interest and debate from the ad industry. It sought to address some thorny issues that previous versions had perhaps only flirted with and also try and address the increasing complexity of programmatic buying; allowing the parties to focus their attention on the real value of the contract – the price and quality of the inventory across media and markets.
Advertisers must not, of course, treat these industry wide templates as the finished article. This approach has undoubtedly led to a loss of value for many. Whilst these templates set out the broad overall service framework and intention to operate in an open way, it is simply not possible for them to reflect the structure of the commercial deal, the markets within scope, the programmatic buying solution or indeed solutions adopted, and the manner in which the advertiser and agency are set up to govern a partnership – so the agreement needs to be specifically tailored to address all of this.
What is more, brands will have their own approach to evaluating performance, reporting requirements, financial and billing processes and approvals for authorising budgets and media plans, all of which needs to be reflected in the agreement. They also have their own sensitivities in relation to using data and the basis on which they will purchase programmatically.
All of these factors will differ from brand to brand and indeed agency to agency, so a standardised template is only half of the story.
Regional or Global frameworks
Crucially, the UK trade template only speaks to the principal buying model operative in the UK and infers UK laws. The ANA template approaches the agreement from the lens of a US media buying model. In this model, the agency is an agent-in-law, and the agency has all of the attendant obligations of a fiduciary when buying media. Digital media buying in the US is also often undertaken on industry negotiated terms.
As such, brands should keep in mind that these templates are designed for domestic planning and buying rather than a regional or global framework.
An international approach to media planning and buying agreements requires businesses to take account of the different buying practices, customs and sensitivities of the various markets within the scope. It is true of course that some of this can be effected through supplementary local service agreements, but advertisers will often be keen to ensure that any framework agreement harmonises the approach across all markets. This avoids local service agreements becoming an opportunity for a wholesale renegotiation of terms.
It is important to remember that trade associations represent a broad church, and some members may have experienced issues that are not addressed in any template or disagree with the rationale its trade body has put forward in relation to a position (as either too aggressive or not aggressive enough!). For example, there remains a lack of consensus around free inventory (so called ‘value pots’) and how this should be apportioned between clients and brands may approach the calculation of Net Media Spend through an entirely different commercial lens depending on the purpose of the definition and what cost it is trying to capture (particularly in relation to digital advertising).
Inventory media also remains a battleground. The challenge of really capturing what this means in markets where all media is acquired by the agency as principal to contract remains.
A fair contract must be balanced against all factors and agencies should not assume that they can ‘bank’ any concessions that a template may appear to include, particularly where they creep into the commercial terms.
Trade associations should be applauded for their significant work in seeking a settled industry wide framework, but as no doubt ISBA and the ANA would agree, they require significant tailoring and are not simply a ‘plug and play’ solution.
Nick Swimer is a Partner at Reed Smith.