Commentary

Verify: ANA Has A New Contract Template For Agencies

The Association of National Advertisers issued an updated media agency contract template for advertisers today that includes new provisions and revised definitions intended to increase transparency between clients and agencies.

In other words, the ANA is suggesting that advertisers sign a contract that spells out exactly WHAT they’re getting for the money they spend with media agencies.

What a concept!

Pity such contracts weren’t around oh, I don’t know, maybe 150 years ago, when agencies and advertisers first started doing business together.

As Ronald Reagan famously said in regard to the U.S. approach to nuclear disarmament with the Soviet Union, “Trust but verify.”

Emphasis on the “verify” when it comes to agency-advertiser relationships these days.

The new template updates the original, which was issued in July 2016 as a supplement to the ANA’s landmark report on media transparency, conducted with K2 Intelligence, with a follow-up report by Ebiquity and FirmDecisions that provided recommendations on achieving media transparency. 

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Both templates were developed by the ANA in conjunction with law firm Reed Smith.

The ANA confirmed that it did not work with the 4As on the latest update effort.

“While significant progress has been made in bringing more transparency to the relationships between advertisers and media-buying agencies, much more is needed,” stated ANA CEO Bob Liodice. “The new contract template is more comprehensive than the original and contains updates that address the current marketplace. We urge all advertisers to review the changes and incorporate them into their current media agency contracts, where applicable.”

The new template updates the definition of “programmatic media” that more closely reflects the definition used by the Interactive Advertising Bureau. 

Also, the definition of “conflicts of interest” was updated to include language clarifying that disclosures should be made about investments if a media agency or its affiliates have a financial connection to a company that provides services to the advertiser.

There are also revisions to the definition of “affiliates.” Agency conglomerates have complex structures often with hundreds of affiliates and multiple holding companies. Advertisers should ensure the defined term “holding company” is the highest holding company entity possible.

And there’s also an added notation to the definition of “principal or inventory mark-up” and “principal or inventory sale”: The K2 Intelligence Report found that mark-ups on principal or inventory sales (e.g., non-disclosed services, proprietary media, etc.) can be between 30% and 90%.

The notation clarifies that the definition is designed to put guard rails around “non-disclosed” agency services by providing for a capped amount of mark-up the media inventory seller (typically an agency affiliate) can make.  

The updated template also deletes the term “Barter Inventory” from the definition of “Rebates and Incentives.

To the extent that advertisers agree to a barter transaction, the parties should enter into separate written agreements covering such services, per the revised agreement.  

Also, language was added to the template to ensure that advertisers have access to transaction data over which any vendor or media owner claims rights that limit an advertiser’s access and/or ability to leverage transaction data. 

If access is denied by any supply-chain participant, the agency should assist to remediate the issue and/or the advertiser may consider removing the vendor or media owner from future media purchases to ensure an advertiser's access and control of transaction data critical to measurement and ROI.

The revised template also addresses so-called “value pots,” rebates and incentives to which an advertiser is entitled its proportionate share. The ANA defines a value pot free or discounted media offered to agencies by media in advance on the basis of anticipated volume of media purchased by an agency on behalf of an advertiser, collectively or individually. 

"Value Pots?" Really? OK, I'm going to take a break now, have a martini, and ponder the utter ecstasy that "value pots" implies. See you later.

I'm back. Value pots. They blow my mind. 

Time to move on. There's an auditor nondisclosure agreement to deal with. The NDA between an auditor retained by an advertiser and an agency being audited has become a "major battleground" for agencies, according to the ANA. The ANA recommends that advertisers attach an auditor NDA form as an exhibit to their media buying agreements with agencies. 

Battleground, that’s the right word, for sure. That’s what the agency-advertiser relationship is right now.

What it isn’t — a partnership, despite all the buzzword bingo bullshit in which advertisers and agencies love to describe their relationship.

Oh yes, we have a partnership!

No, actually you don’t. You have a client-vendor relationship with strict contractual details. It's called a business relationship, which is all you’ve ever had and will ever have, despite all the PR bullshit. The ANA has been hammering the point home for going on three years.

Better late than never.  

 

2 comments about "Verify: ANA Has A New Contract Template For Agencies".
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  1. Roland Janisse from Cortex Media, July 16, 2018 at 4:07 p.m.

    The updated ANA template is an important step forward in the advertising industry’s “transparency movement.” It calls for meaningful changes in the way agency holding companies manage their relationships with advertisers--setting expectations for greater transparency in many areas of the agency’s business with their advertisers.

    The new ANA contract template cuts through this complexity and demands agencies act like agencies in their relationships with advertisers. It is designed to overcome many of the transparency roadblocks encountered in the digital supply chain, carefully detailing the degree of transparency expected. For principal transactions, where agency affiliates purchase and resell media on their own accounts, the template provides for limitations on allowable mark-ups, and requires that agencies provide auditors with the visibility needed to verify compliance.

    Advertisers are determined to get the transparency they require, and agencies that resist may suffer lost business and continued distrust. We believe the holding companies who fully embrace these transparency requirements will be first to regain the trust of their clients and set the stage for healthy and mutually beneficial relationships.

     

    Roland Janisse, Cortex Media

  2. Steve Hall from Adrants, July 17, 2018 at 11:51 a.m.

    Roland was that a comment or where you trying to re-write the article as if it were a press release from the ANA?

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