The art of crafting media and digital agency agreements in the modern world

Taking to the stage for the launch of ISA Media Charter, Devika Sachdev, Head of Brand Management and Advertising, Bajaj Electricals, along with Ankit Desai, Head-Media and Digital Marketing, Marico, emphasised the crucial aspects of navigating client-agency agreements, covering both traditional media and digital marketing.

As per Sachdev, the sharper one defines the client-agency agreement, the more accountable it hold both parties, because, upon mutual approval, the same becomes a contract.

“Even though the agreement can't actually solve all issues, it does lay a foundation to have a conversation on setting the path and tone of the relationship going forward,” she added.

Having said that she also emphasised that because the media landscape has various intrusions such as Agency Volume Benefits, inventory media, programmatic supply chain, etc. it is extremely critical for an agreement to be transparent, flexible and comprehensive with regard to covering not just the possible current, but also the future foreseeable scenarios as well.

“It's important that the agreement between the advertiser and the agency is signed before we kick off on the actual work. In fact, when an advertiser calls for a pitch with agencies which come in on an NDA, one should start discussing the terms of the agreement including all the information that should go into the annexures and cover not just the AOR but also the verticals/arm/affiliates of the group company, so that by the time an agency is shortlisted, it is a smooth sailing going forward,” she opined.

She also suggested that advertisers should seek an annual representation, preferably from the CFO, for a compliance audit so that complete compliance is assured by the agency to every clause, element or claim put into the contract.

It is post-audit that the agency gives the advertiser a management representation letter or a disclosure letter, which provides for an opportunity to identify areas where there is a non-compliance and set it right or alternatively if there is a change situation or a change circumstances that circumstance, that is really the opportunity to then correct it.

Furthermore, she also mentioned that when one closes out on the remuneration for the agency and the format of the remuneration, whether it is a retainer or on commission, the advertiser typically builds it into the copy of the mean agreement which then becomes a contract for 4-5 years typically, but since the remuneration may change over a period of time, it is advisable to mention only the fact that the advertiser will pay a fee and the occurrence or the periodicity of that fee and put in the actual fee into the annexure.

In her views, even though advertisers today may have mastered the media agency agreement or the contract for traditional media, digital media is still a relatively new space which allows for precision targeting and analytics but at the same time poses its own challenges such as ad verification, quality, ad-fraud, viewability and brand safety.

“As far as quality is concerned, we need to ensure that the inventory quality that we put into the contract is the basis of what we require because the concept of inventory quality actually goes far beyond just ad fraud to addressing quality of impressions and ensuring that you are on the right side with the right quality of audience because it reflects your standards and is mirrored in the contract,” she pointed out.

Touching upon the challenge of brand safety, she highlighted some clear red zones such as obscene, offensive, profanity, etc. around which any brand would not like to be seen and suggested that one should therefore define one’s white list and block the list and not just create but also update and review them on a regular level.

In terms of the ad serving, she suggested that one should clarify whether the charges are applicable per actual or planned impressions based on KPIs or at cost or a pre-approved rate card.

Taking the baton ahead was Ankit Desai, ISA, Media Forum Co-chair and Head-Media and Digital Marketing, Marico, who said, "When we are investing via programmatic media, all of us do want transparency. So, the starting point is, are we setting ourselves to get full transparency with our media partner when we get into that conversation? So, from a media agreement point of view, it's important for us to take that first step even when we are setting up the relationship."

Furthermore, he added, "Firstly, we go in with a disclosure model. Whenever you are getting into crafting your agreement with your potential media agency partner, the first thing that you need to do is ensure that you agree that it's going to be a disclosure-led partnership that you're getting into."

He emphasised that after having disclosure built into the agreement model, the next thing is to start breaking down costs into each constituent element of the programmatic piece that is being activated.

"The second thing is around the agency trading desks. One has to understand that the trading desk in itself is a sub-entity within the agency. So, it's critical as advertisers for us to be able to audit how the trading desk is actually buying, how they are actually transacting on your behalf when they are getting into arrangements with third parties," Desai said.

"The last one is around side platforms which are any other verification platforms that we activate. Side platforms and other reporting interfaces, including ad verification platforms," he added.

Furthermore, he said that the next one is around inventory media. Fundamentally the big draw for a lot of advertisers is that commercially they are getting a much better outcome than they would otherwise if they would have gone in and bought that inventory as a singular advertiser.

"Typically over here, the lines have blurred between the agency as a principal and as someone who is working for you as an agency partner. When they become the buyer, they purchase the media and then they are also selling the media to you as an advertiser. Therefore, it is important for us to know the pros and cons of this arrangement before we get into it and we sign off on it," Desai said.

Desai stated that clearly define in the contract what is and isn't considered to be inventory media. Clearly spell out requirements for the agency to disclose the inclusion of their inventory media plat. Moreover, clients should also consider limiting the use of inventory media to a certain percentage of total spending.

Lastly, advertisers should have access to data and supporting information for inventory media, as well as to establish and enforce penalties if their agency partners do not fulfil their contractual obligations in this area.

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