Creating the right payment model and ensure your agency is incentivised to deliver strong performance while also holding them to account with best-practice contract terms that improve transparency.
The contract you have with your media agency or vendor defines the parameters of that relationship and a weak or vague contract creates room for confusion and loss of media value.
With large amounts of money at stake, you want to make sure that your agency or vendor is working under clear terms laid out in a contract.
Almost every issue we ever see between an advertiser and its agencies or vendors comes back to the contract in some way and in our experience most media contracts have gaps or lack clear definition in critical areas.
Our Media Agency Contract products consist of best-practice knowledge and templates to help marketing and procurement leaders define agency and vendor relationships clearly, holding these partners to account for delivery and identifying how and when they make money.
One of the most important areas in modern media contracts relates to improving transparency and the advertisers’ rights to audit the agency’s media buying processes, account for additional rebate income and ensure that agency resource is being delivered in line with the resource model agreed.
We provide advertisers with specialist contract compliance auditing services for their media agency contracts, which consist of forensic examination of agency financial behaviours to ensure full delivery of the terms of the contract and highlight any areas of under delivery.
Whilst the contract defines the parameters of the relationship, what defines the performance of the relationship is the remuneration (fee) model, which determines how the agency gets paid for the work that it does.
We recommend all advertisers consider Performance Related Incentive Programmes (PRIP) which incentivise the right agency behaviours (as defined in the Scope of Work) and allow them to make additional profit based on exceptional performance. There is no one-size-fits-all in agency remuneration models and they have to be carefully calibrated to suit each advertiser in order to drive meaningful KPIs.
The media industry is changing rapidly and we advocate that advertisers should look to review and update their contract terms every 12-18 months to ensure they provide sufficient cover for the latest media agency innovations and the most up-to-date clauses on transparency. For advertisers looking to renegotiate their contracts with agencies we offer a best-practice Agency Renegotiation Process, which is similar to our Agency Pitch Management product but focused on securing improved terms and performance from an existing agency, rather than launching a competitive tender.
The objectives of the REMUNERATION & CONTRACTS service:
- Upgrade contract terms to provide greater transparency;
- Provide clear definitions of the parameters of the client / agency relationship;
- Secure all necessary rights to audit agency financial behaviours;
- Define the most appropriate remuneration models for media agencies to incentivise maximum performance;
- Calculate agency income based on their performance (buying, service & strategy) as part of a Performance Related Incentive Programme; and
- Design and facilitate productive renegotiations with media agencies and media vendors.
The questions that the REMUNERATION & CONTRACTS service will address:
- What does a best-practice media agency contract need to contain?
- How do I get better transparency from my media agency?
- What is the right payment model for us to use with our media agency?
- How do we improve the media agency’s performance?
- What is a Performance fee model and how can we implement a PRIP?
- How can we create direct contracts with our most valuable media vendor partners?