ANA Releases Updated Template For Media Buying Agency Contracts

The ANA (Association of National Advertisers) has updated its media agency contract template for advertisers that includes new provisions and revised definitions intended to increase transparency between clients and agencies.

The new template updates the original, which was issued in July 2016 as a supplement to the ANA’s landmark report on media transparency, conducted with K2 Intelligence, and a follow-up report by Ebiquity and FirmDecisions that provided recommendations on achieving media transparency.  Both templates were developed by the ANA in conjunction with law firm Reed Smith, the ANA’s general counsel.

“While significant progress has been made in bringing more transparency to the relationships between advertisers and media buying agencies, much more is needed,” said ANA CEO Bob Liodice.  “The new contract template is more comprehensive than the original and contains updates that address the current marketplace.  We urge all advertisers to review the changes and incorporate them into their current media agency contracts, where applicable.”

Among other aspects, the new template includes language designed to reflect best practices on a global level so advertisers outside the U.S. can, with some local modifications, include it in their contracts, as well as revising and clarifying the definitions of several terms that had caused marketplace confusion.  These include updates to the definition of “Programmatic Media” that more closely reflects the definition used by the Interactive Advertising Bureau. Also, the definition of “Conflicts of Interest” was updated to include language clarifying that disclosures should be made about investments if the media agency or its affiliates have a financial connection to a company that provides services to the advertiser.

Other highlights include:

•     Revisions to definition of “Affiliates”: Agency conglomerates have complex structures often with hundreds of affiliates and multiple holding companies.  Advertisers should ensure the defined term “holding company” is the highest holding company entity possible.
•     Added notation to definition of “Principal or Inventory Mark-Up” and “Principal or Inventory Sale”: The K2 Intelligence Report found that mark-ups on principal or inventory sales (e.g., non-disclosed services, proprietary media, etc.) can be between 30-90 percent. The ideal scenario calls for only disclosed transactions, but agencies continue to offer non-disclosed services.  The notation clarifies that the definition is designed to put guard rails around “non-disclosed” agency services by providing for a capped amount of mark-up the media inventory seller (typically an agency affiliate) can make.  Advertisers need to ensure the agency is not improperly increasing fees by having multiple affiliates in the supply chain marking up costs as the media makes its way between advertisers and the publishers.  
•     Deletion of “Barter Inventory” from definition of “Rebates and Incentives”: Barter inventory has been removed from the definition of rebates and incentives following a debate about whether barter inventory should be considered a rebate or incentive.  To the extent that advertisers agree to a barter transaction, the parties should enter into separate written agreements covering such services.  Similar to other non-transparent purchases, advertisers should confirm that true value is received in barter and that there are no unreasonable mark ups by the agency or its affiliates.
•     Added definition of “Transaction Data”: Language was added to the template to ensure that advertisers have access to transaction data over which any vendor or media owner claims rights that limit an advertiser’s access and/or ability to leverage transaction data.  If access is denied by any supply chain participant, the agency should assist to remediate the issue and/or the advertiser may consider removing the vendor or media owner from future media purchases to ensure advertiser’s unfettered access and control of transaction data critical to measurement and ROI.
•     Added definition of Value Pots: “Value Pots” are considered Rebates and Incentives to which an advertiser is entitled its proportionate share.  A value pot is free or discounted media offered to agencies by media in advance on the basis of anticipated volume of media purchased by an agency on behalf of an advertiser, collectively or individually.  Value Pots are a rebate and incentive that were covered by the original definition of “Rebates and Incentives” in the original template but “Value Pots” have been added as a defined term in the updated version.  Value Pots should be completely transparent and an advertiser should receive its fair share as it should with all other Rebates and Incentives.
•     Auditor Nondisclosure Agreement:  The NDA between an auditor retained by an advertiser and the agency being audited has become a major battleground for agencies.  It is recommended that Advertisers attach an auditor NDA form as an exhibit to their media buying agreements with agencies.  The ANA intends to release a recommended NDA form in the future.