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How should agencies respond to ‘bullying’ clients over payment terms?

VoxComm, a global coalition of agency trade bodies, said agencies were in effect being asked to act as banks for clients.
Simon Gwynn, Campaign May 27, 2020

Pernicious habits… falsely enhancing liquidity… flagrantly flouting contracts… the latest organisation representing agencies, VoxComm, didn’t pull its punches last week in a launch statement accusing some clients of truly terrible behaviour.
VoxComm, which includes the IPA in the UK, suggested bad practices have got worse because clients are feeling financial pressure during the coronavirus crisis.

The issue of advertisers changing their payment terms is nothing new: it was there in 2009, when the UK economy was fighting its way out of what was then the worst recession since the Great Depression. It remained an issue in 2014, when the European Union late payments directive came into force.

Bad behaviour between partners in the advertising ecosystem isn’t confined to clients either.

Rebates from media owners have been an ongoing source of mistrust for years between media agencies and advertisers, which have sometimes suspected their agencies of not always acting in their best interests.
Tackling this problem with more transparent contracts was one of the four key actions called for by Procter & Gamble brand chief Marc Pritchard in a landmark 2017 speech on cleaning up the media supply chain.
VoxComm has directed its ire back to clients. So how should agencies respond to “bullying” clients over payment terms?

Lucinda Peniston-Baines comments…
Founder and managing partner, The Observatory International
Without question, there are clients out there who are employing bullying tactics towards agencies on payment terms, so this is a welcome initiative by this group of associations to stem the practice. However, for this to work, it needs individual agencies to be resilient too and not break ranks by accepting unreasonable clients’ demands. Unfortunately, agency paranoia that if they say no to a client, another agency will simply pick up the reins, is not without foundation.

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