Trust is a subject of high interest and concern in the marketing community, particularly since it’s the cornerstone of the agency/client relationship. Transparency plays a big role in this dynamic.
As a longtime member of the 4A’s (American Association of Advertising Agencies), PeakBiety honors the association’s position that transparency and contract compliance are core principles that must exist between an agency and its clients, particularly with regard to media neotiations.
Published on Jan. 28, 2016, the Transparency Guiding Principles were created by a working group of 4A’s agency executives. The principles distill and clarify the increasingly complex U.S. media negotiating landscape and outline recommended behaviors to guide agreements regarding these services.
This first-of-its-kind guidance should prove helpful as PeakBiety negotiates media services for our clients. The first nine priority principles address transparency in working relationships among clients, agencies and media vendors.
4A’s Transparency Guiding Principles of Conduct
Transparency Guiding Principles of Conduct 1, 2 and 3 address client/agency relationships for U.S. media planning and buying services.
- The default principle in all client/agency relationships where the agency is agent and the client is principal is full disclosure and full transparency in media planning and buying, unless there is an exception that the client has agreed to in advance and is covered by a separate agreement. Further, the client/agency agreement should specify that the client is the principal and the agency is the agent.
- The agency and the client can agree to a fixed price or other pricing arrangements for the agency’s other products and services through open and arms-length negotiations. These might include proprietary media (including pre-owned inventory) trading desks, barter, programmatic buying and other future models.
- The agency business is governed by contracts with clients. All terms of business between the agency and the client should be documented in a formal written agreement(s), and both parties should comply with the obligations to the other party that are noted in the respective agreement.
- The agency, (agency group and holding company) may enter into commercial relationships with media vendors and other suppliers on its own account, which are separate and unrelated to the purchase of media as agent for their clients.
- The agency should disclose and seek the client’s acknowledgement of any agency’s ownership interest in any entity and details of any of its employees who are directors of any entity that the agency recommends or uses as a provider of products or services to the client. In such cases, when the recommendation is made, the agency should demonstrate that the recommendation is as good as, and preferably better than, other independent alternatives that may be available to the client.
- Rebates and other non-transparent incentives on U.S. media spend are not accepted industry practice in the United States.
- Agencies operating in the U.S. should comply with all relevant U.S. laws and regulations, including those that apply as a consequence of the agency’s parent company, if any, being publicly listed on a stock exchange.
- The agency and client should discuss and document appropriate audit rights commensurate with the services and products provided, recognizing that the agency has confidentiality obligations to its other clients and stakeholders.
- The aforementioned principles will evolve and be applied based on new economic models for buying and selling media that will emerge in the future.
Transparency Guiding Principles of Conduct 4 and 5 below address separate commercial relationships between agencies and media vendors and other suppliers.
Transparency Guiding Principles 6-9 below address client/agency governance.
Member of the 4A’s
We’re one of the few agencies based in Florida to meet the strict requirements to be a member of the 4A’s (American Association of Advertising Agencies). There are close to 14,000 advertising agencies in U.S., yet only about 750 qualify to be members of the 4A’s.