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How small agencies fight a lone battle to protect their interests

The big ad agencies can take a legal recourse or seek help from the association they are affiliated to in case of any issue. But taking on errant clients is always an uphill task for small and mid-sized agencies

The bigger advertising agencies, or the ‘biggies’ like we call them, have legal departments in place or have the Advertising Agencies Association of India (AAAI) to turn to in case of any dispute. But what about the protection of the interests of the small and mid-sized advertising agencies? One wonders what they go through in the event of any problems with clients or otherwise.

Plagiarism is a problem that is not unheard of. And neither is clients cheating on agencies something new. There are times when brands call for a pitch, and they refuse to pay the small agencies, and as a matter of fact, sometimes even the big agencies are not paid for their pitch work. Clients refuse to pay fees to their agencies in spite of getting the creatives prepared by them and even for their project work.

The day-to-day and larger problems

Akshay Menon

Akshay Menon, Creative Explorer, Three Bags Full, says, “Well, there are 25 things to take care of on any given day, apart from just cracking briefs. Being a creative set-up, we get involved in many unforeseen situations that go beyond ideation. In fact, we find great joy when there's an entire day only to brainstorm, write and design. The unanticipated parts range from fixing the Wi-Fi to drafting a press note for the client's relative. Such instances remind us of our cozy roles in a large-sized agency, where we focused all our energies on the task at hand. Nothing more.”

Nagessh Pannaswami

Nagessh Pannaswami, Founding Director, Curry Nation Brand Conversations, highlights, “Protecting our turf has become an additional task for us to manage almost on a daily basis. Because it has become quite competitive — bigger agencies are undercutting, and willing to work at fees far lower than what you expect them to be working on.”

Jagdish Acharya

Jagdish Acharya, Founder and Creative Head, Cut The Crap, tells, “Getting a seen-that tick for some solid work that we keep doing is our main issue. That’s because our clients/brands happen to be under-the-radar types.”

Vistasp Hodiwala, CO-founder and CCO, Underdog, feels that honestly, in the day to day hustle and bustle of winning business, trying to be relevant by doing great work everyday and hoping to meet every client's expectations, they hardly have the time to reflect upon these challenges. And yet, if he must think about it, there are the following few to contend with.

Firstly, big agencies have their names as calling cards, they don't have the constant challenges of 'who you are and what have you done' plaguing them. That is no longer a given when you are on your own. There is no major PR machinery feeding the campaigns they do and no paid interviews which look like 'organic coverage' either. In an age driven by media fueled noise, work cannot just created and left alone, it also needs to be spoken about.

Secondly, Hodiwala feels is that the right remuneration is another challenge. Big agencies undercut independents all the time because their overheads are spread across large resources in terms of talent costs. It's a fallacy to think that it's the other way around because any account that an independent takes on has to be of a certain size to merit its inclusion.

Thirdly, “Most definitely, awards. The sheer expense of entries makes it unviable for small and midsized agencies to play this game any longer,” adds Hodiwala.

Dealing with plagiarism

Acharya says, “In general, we’ve seen that clients who approach us are genuine and earnest. Most of our business has come through word-of-mouth, because of our credentials. We’ve won at least half of our business without pitching. But for the balance half, we’ve been very selective about pitching. Our experience has taught us to be doubly cautious when a junior member of the marketing team contacts us. We do not participate in a pitch when we are not sure if it has been officially called by the top brass.”

He quotes a recent instance. “A big builder from Pune requested the agency in question (Cut The Crap) to pitch. A junior executive from the company contacted them but then their marketing manager briefed the agency. The agency agreed, worked on the campaign — strategy and creative. But when the person concerned wanted the agency to share the creative with her first, the agency got suspicious. They insisted on presenting it to the CEO. That’s when the agency realised that everything wasn’t kosher. Despite all the work done and ready on hand, the agency refused to share it and opted out.”

“Another precaution we take is to keep everything online and on mail so that there is proof of dates. We never take a hard copy to the presentation so there is no question of leaving one behind,” tells Acharya.

Pannaswami, however, has not faced any such issue as such and feels that clients are professional that way.

Hodiwala says that thankfully from the time they have begun, they haven't faced this problem. Most clients in reputed companies are inherently decent and do not try these stunts like they used to do in the days gone by. “I remember at least two instances from my stint in bigger agencies where despite the clout they never bothered to do anything about it. Frankly, our options are limited as well because it's not like you can take legal recourse all the time with the resources you have at hand. Our way of dealing would probably be decided at that time with some amount of spontaneity built in, and it would also depend on the magnitude of the transgression,” he says.

“The world of advertising is buzzing with new methods and ideas at all times. We are an evolving bunch of professionals who are always curious and embracing change, and this enthusiasm makes us who we are — creative. It’s not just a department, it’s a culture. In such an environment, where we are exposed to hundreds of brilliant stuff, there is a subconscious overlap of ideas. Work gets influenced by many factors. At times, unintentionally two pieces end up looking the same. In such a situation, a higher level of evaluation needs to log in. At other times, I think the parties involved should resolve the controversy in good faith,” opines Menon.

Hemant Misra

Hemant Misra, Managing Director, Magic Circle, says, “For creative pitches, we have NDAs in place to prevent clients from using ideas. But no one follows the legal recourse in case of infringements since clients have legal departments, we don’t. We neither have the time nor the money to pursue such issues. And here small and large agencies are alike.”

Copyrighting the work

Misra says, “There are no copyright laws in India. So, no agency, big or small, can copyright their ideas. Stealing ideas is not very common since an idea has to be really understood and developed. And stealing some line is no big deal. Though I must admit I have never experienced it.”

However, Menon says that in their agreements, they maintain a clause that states the copyright on all jobs created by the agency rests with the client. It’s always been that way.

“There is no formal system of copyrighting work in advertising. We’re contemplating on registering film scripts with SWA — just for proof of dates. But most work can be tweaked a little and claimed to be original while in reality the core idea has been lifted,” says Acharya.

Pannaswami says that they don't have any copyright rules, but they do watermark their creatives when they hand over the pitch presentation to clients. Beyond that there's not much that they do. “I mean if the client is evil they can steal the idea and have a different rendition of it, right? But we haven't come across any such intent on the client’s behalf,” he adds.

Hodiwala honestly says that they have no copyright laws in place. “It's also much too time-consuming and will mean putting a system in place that works 24x7 doing just that. Is it advisable? Sure. Will it be worth the effort? I am not so sure. In fact I would be interested in knowing which large agency copyrights its work on a daily basis,” he says.

When a client cheats and refuses to pay

Misra talks about an experience from one of his previous stints at another agency, “I have had an incident of a large public sector client holding back Rs 1 crore of approved monies — and my large MNC agency only wrote letters and finally wrote off the amount,” he says.

“We would call social media to our help. Beyond that there’s little we can do,” tells Acharya.

Over the years, Three Bags Full has had a few bad debts. “But I wouldn't call them as cheating, they were more of disagreements, and obviously, and unfortunately, the agency suffered the most. In such times, trust and patience are the only mediators,” reconciles Menon.

Apparently, AAAI sends out a notice, which doesn't affect clients much. “We do take legal recourse, ensure that agreements are in place, minutes are recorded, approvals are in writing, but there's only that much protection this gives you. There is a lot of ambiguity in day-to-day work. And some things are nebulous,” says Pannaswami.

For example, Curry Nation had all documents in place everything, but a client refused to pay them because they said they weren't happy with the look and feel of the creatives. “So they didn't want us to pay the retainer for that month. This despite having innumerable meetings on the said creatives, iterations being done, etc. So that became a bone of contention and we resigned the business,” Pannaswami adds.

“We have been fortunate to not get into such a pickle yet but we are aware this does happen, though increasingly, on a much, much lesser scale. At most times, picking up a phone and having a frank conversation is the best way to deal with it. In case that doesn't work, then hell, we are creative people at the end of the day and do use our communication skills occasionally for our own benefit as well!” says Hodiwala.

One wonders, if the small agencies offer the option of partial payment to their clients so that it could help them receive their payments.

“As small agencies we only work with verified clients, follow up on monthly payments such that not more than a month is overdue or we stop work, take advances for third party jobs, etc — these are principles of work. We’ve not had any issue since we work with large well-intentioned clients,” says Misra.

Menon says, “As a small agency, we also get involved regularly on a project basis with our clients. With time, some turn into retainers and some just stay that way due to less ambitious marketing plans. Depending on the nature of business, we work on multiple payment methods with our clients. And this is done not only to recover money but also to pass on the payment convenience to the client.”

“We have faced some delayed payments but fortunately never non-payment. Hence there never has been a reason to do so,” says Acharya.

Pannaswami says that, yes, they do. “No client ever pays what's due in one shot. Payments are always broken up and paid in instalments,” he says.

“When it comes to projects, we have the system of  securing a 'reasonable advance' following 'phased payments' in place already. It's just a matter of sticking to your guns and insisting on doing the right thing,” adds Hodiwala.

Is AAAI of any help?

“Zero. One has to become a member of the AAAI to expect any sort of help. There is an unreasonably large membership fee. That apart, for some reason, AAAI demands balance sheet for previous years for granting membership. Being a closely held proprietorship concern, we are not ready to do that. But (a) Why the uniformly large fee for small and big agencies alike and (b) Why should a privately held agency share its figures with others? The biggest question that still remains is about its ability to protect the interests of an agency against clients since one hasn’t heard about such success stories,” clears Acharya.

Does AAAI have an authority to help the small agencies with their problems? “I truly wouldn't have a clue. Also, to be honest, while it's easy to blame the industry body, this may also be a good time to introspect and ask what have the owners of these agencies doneto align themselves in the first place? Do they acknowledge that it warrants a conversation? Most entrepreneurs have been creative people with little or no knowledge of how an industry body's writ runs anyway. The AAAI can most definitely do better in reaching out to us but equally until there is serious intent on both sides and a common minimum agreement, such meets can be an utter waste of time,” says Hodiwala.

Ashish Bhasin

When questioned, Ashish Bhasin, Chairman and CEO, South Asia, Dentsu Aegis Network and President of AAAI, says that out of the approximately 105 members of the AAAI, bulk of the ad agencies are small and mid-sized agencies.

“Every agency is encouraged to be a member through due diligence and recommendation. There is a tiered structure for membership fees wherein the annual fees for big, mid-sized and small agencies is according to their size — not one fee for all,” he adds.

Menon says that so far, their agency hasn't taken a problem to the body yet. The only interaction they've had is during the award season. “But I'd love to be guided by the management on various issues. It will be nice if AAAI had an exclusive interface for smaller agencies, where we could share our problems more candidly and stay prepared for any unlikely event,” he says.

AAAI provides assistance in understanding nuances of the business — for example, when GST was launched, with the help Ernst & Young (E&Y),presentations were made, notes were sent to members of AAAI, help was provided in understanding the GST tax levy. “AAAI provides expert advice and fights for common interests of the agencies, whether big, mid-sized or small agencies,” adds Bhasin.

Pannaswami says he isn’t sure how AAAI can be more helpful. Just sending mails to clients doesn't deter them.

“Though creative agencies face such clients regularly, there is a well-known defaulter in agency circles — they move from agency to agency. And despite AAAI requesting agencies not to work till the incumbent agency is paid, it remains only on letters,” says Misra.

Bhasin says, “Bigger agencies can handle themselves and can find a way for themselves — we are more supportive of the smaller agencies, as they need more support. There is also regional representation of agencies across the board, we are not just limited to Mumbai agencies.”

AAAI is a trade body and has no legal authority as such to deal with clients. The legal and commercial dealings are held between clients and their respective agencies only.

Isn't there a need for a legal body?

“Of course there is. I wouldn’t know if there are any plans afoot in that direction,” says Acharya.

Vistasp Hodiwala

“Great idea on paper but the initiative on the ground is non-existent at the moment. Also, what exactly is it supposed to fix? Most of us have barely enough time to turn up once a year for Ad Club meetings so unless there is a ground-up initiative from a few wise heads who have the trust of everybody, it's impossible to visualise such an entity at the moment. I would maintain that the best placed organisations to offer support are the industry bodies and maybe it's time to start that initial dialogue,” adds Hodiwala.

Bhasin negates, “We don’t need a legal body, what we need is that as agencies, big, mid-sized and small agencies, need to work together and our voice needs to be heard. We need to strengthen AAAI and have a representation of everybody’s interests, not just big or not just small agencies, but for all agencies. And AAAI speaks not just for big agencies or small agencies, but for all of its 105 members.”

Pannaswami reiterates, “There is a legal body required. Especially when media monies are involved. Most clients think of advertising agencies as banks and use the credit period offered to roll their monies and utilise services to create/ serve their communication purpose. But with media agencies working on wafer thin margins, even a day’s delay upsets the cash flow. And INS blacklists an agency if payment isn't made on the 60th day. So the onus of making the payment is always on the agency and never the clients. This is I feel is lopsided. I think both should be held responsible for this and even client should be penalised.”

Menon says, “We all have a constant need to be safeguarded, no doubt. Just the other day I was discussing with someone on how we should actually have a project insurance in place, it could also be worked out on a quid pro quo basis.” Anyway, for now, the agency (Three Bags Full) relies on the Arbitration and Conciliation Act by the Mumbai Chamber of Commerce to resolve any dispute or claim.

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