As the environment in which the advertisers and their agency partners operate continues to grow in complexity, it is crucial that advertisers have contracts in place that can navigate through the particularities of the varying marketing ecosystems to deliver value and transparency to the advertiser.

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Agencies often have an advantage during contract negotiations, as their lawyers tend to specialise in the niche area of marketing services, with the added advantage of knowing in advance the arrangements that the agencies’ commercial teams plan to make with their suppliers.

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It can therefore be very difficult for the advertiser’s in-house council to effectively challenge an agency on issues from a position of knowledge, especially with technical and ambiguous language used in the agreements and often opaque arrangements in place between agencies and their suppliers.

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Many advertisers turn to us to help bridge this knowledge gap and ensure that their agency partner contracts are delivering what they expect. Our team of audit specialists can help clients determine if their agency contracts give the expected level of transparency, pointing the way to robust audit rights and guidance on clauses to protect the advertiser’s interests.

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Key questions that an advertiser needs to consider when agreeing contracts:

• Does the contract give the advertiser the right to audit and how long do these rights last?

• Is the advertiser allowed to choose their own auditor?

• Does the contract have the breadth of audit rights to cover all agency network entities up to the holding group level?

• Who owns the advertiser’s data and financial information, especially post termination?

• Does it prevent the agency earning additional revenues on the advertiser’s investment over and above those agreed which could potentially create a conflict in interests?

• Are all volume related benefits clearly defined with timings for return

• Does the agency have vigorous controls and processes to manage the advertisers marketing investment?

• Does the contract cover all different types of arrangements between the agency and the suppliers / partners with whom they place the advertiser’s marketing spend?

• Are there any “carve outs” or side arrangements that may limit your audit rights?

• Does the contract require the agency to return all financial obligations post termination?

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However, advertisers can only truly know the strength of their agency contracts when it has been tested under the stress of a financial audit and your auditor requests information from the agency with the agreed contract in hand.

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Our clients are often surprised that the “transparent” contract they believed they had with their agency didn’t actually give access to the commercial information they thought it did.

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A financial audit will identify gaps in the current agreement, with these learnings then utilised to created robust and transparent contracts going forward.