PHD Australia CEO, Mark Coad, believes the whole industry has lost its way, which is bleeding into the pitch process and leading to contract misunderstandings between clients and agencies.
Marketers, he said, can’t hold agencies to a fixed-price model and then expect to have money returned to them. “Very rarely these days do we go into a pitch without it being some kind of fixed-price model, and if you’re going to hold an agency to a fixed-price model then you kind of can’t also have your cake and eat it too,” he said.
“We’ll do a pitch and we’ll get a 12-tabbed spreadsheet on nearly every pitch we do. And we’re asked to put a number in the box, right? Let’s say that number is 100. If I end up buying at 110, I’m meant to round it down. But if I buy it at 90, the client wants the change. So am I a principal or am I an agent? And I think we need to look at our contracts and understand the legal and structural relationship we’ve got with one another and I think we’ve lost our way.”
Watching back highlights from the ANA’s (Association of National Advertisers) recent conference in the US, Coad said he was frustrated with the discussions around trust and transparency, and marketers taking back control from agencies – and argued the onus was on both marketers and agencies to actually understand the contracts they’re signing.
“Any client who doesn’t understand whether they’re on a disclosed model, or an undisclosed model, needs to look at their contract. And if they don’t have an inherent trust in the people they’re dealing with, they shouldn’t deal with them,” he said.
“I think we’ve all got a responsibility here from a contract point of view… And we’ve all got a responsibility. I genuinely believe that. I think marketers need to understand the nature of the contract that they’ve got with their agency, and agencies need to understand the nature of the contract they’ve got with their client. And I think the whole industry has lost their way.”