PHD Australia chief executive Mark Coad has called on agencies and marketers to have a good look at their contracts with one another, saying the whole industry has lost its way.
Speaking yesterday on a panel at an event by the Australian Association of National Advertisers and hosted at PwC’s Sydney headquarters, Coad urged agencies and marketers to take more responsibility in understanding the legal and structural relationship between them.
“I think we’ve lost our way – that’s my view on contracts,” he said.
“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 can’t also have your cake and eat it too, can you?”
“We’ll get a 12-tab buying spreadsheet on nearly every pitch we do, and we’re asked to put a number in a box; let’s say that number’s 100. If I end up buying at 110, I need to fund the gap. If I buy it for 90, the client wants the change, so am I principal or am I agent?”
Coad said any client who doesn’t understand whether they’re on a disclosed model or an undisclosed model, and what they’re paying and how, needs to go over 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.
The comments by PHD’s chief come as more and more CMOs are being encouraged to regularly review and update their agency contracts in order to gain more transparency, which is all part of the shift being pioneered by Proctor & Gamble’s Mark Pritchard from mass marketing to one-to-one, precision marketing.