• by Ben Kirshner , Op-Ed Contributor, June 24, 2016

We’ve heard an outcry from agency leaders that the K2 report isn’t fair because it's anonymous and unsubstantiated, causing it to rain on the just and the unjust. We’ve also heard that clients are the real problem, because they own the budgets, control the contracts, turn a blind eye toward certain rebate practices, and squeeze profits to the point where agencies have no choice but to find money outside the lines.

At the same time, agencies are said to be at fault for not being transparent and finding creative ways to boost their incomes, such as reselling media at a markup to clients, holding equity in supplier companies and for "selling" clients unnecessary research, or other services, at inflated prices.

One defenseof some of those practices is that agencies are not compensated for the ad technology development costs they incur.

Much of what is in the ANA report is not new.

The squeeze started the first time a creative agency agreed to do creative on spec and a media agency agreed to cut a commission. Those things were done in the name of competition. They increasingly rendered agencies to commodity status.

Yet agencies do it every day. The big ones still manage to pay their CEOs millions in cash and stock options. And now they're blaming the clients for prohibitive margins? 

Perhaps the best way to approach this is to reaffirm that agencies are a service proposition acting as an extension of their clients’ businesses. As such, they should return to serving clients’ interests purely and cleanly. All the costs that go into servicing an account need to be above board, including developmental techniques and technologies. Clients need to know what all of these investments are and pay for their share explicitly, so the agency is fully and truly compensated. “Above board” works both ways.

Every agency contract promises to obtain the best rates and terms for media advertising.

But why not go a step further and include this clause: “Client shall be entitled to the entire benefit of all such discounts, rebates, allowances, refunds, concessions and similar adjustments and payments secured. Agency shall either credit to Client’s account all such adjustments or remit directly to Client such adjustments within a reasonable time after receipt.”

Clients and agencies might want to abandon the use of master service contacts – which enforce certain rules and standards on ALL vendors – and design agreements that are specific to the success of the client/agency relationship.

For example, I guarantee clients that if we change up their team, we will deliver a greater, measurable result, or be subject to termination. And clients can terminate our agreement anytime on 48-hour notice. In return, we require client team leaders to show up for 80% of weekly meetings, 100% of monthly meetings and 100% of quarterly reviews (along with key members of the leadership team).

Advertising is shared obligation. It’s not agencies vs. clients. Successful business relationships depend on mutual interests.

While the solution starts with writing those interests down in a joint agreement, the commitment has to go much deeper than that. Client and agency have to be building a business together.

We need mutual commitment to a common goal with practices and processes that support the end game, not contracts that protect us from each other — as the industry conversation has focused on. When it’s my business in support of yours, not your business at the expense of mine, we have partnership that fosters trust.