Why You Need To Review Your Agency Contracts


When was the last time you renegotiated – even looked at – your incumbent agency contract(s)?

If, like other marketers, your agency contract hasn’t seen the light of day in years, then it’s worth dusting it off and taking a look for significant opportunities that could not only save you money, but also grow your business and improve agency performance as well.

In the same way mortgages are renegotiated every two to five years, renegotiating an agency contract should be an opportunity to define or redefine terms based on the evolutionary requirements of your business and indeed the marketing business as a whole.

But before you say something like, “we need to focus on the business – not paperwork…” consider these compelling reasons that might make you think twice:


Your agency contract hasn’t been reviewed in the last three yearS (perhaps longer!)

For context here, we’ve seen some agency contracts that were drafted ten or more years ago and bear no resemblance to current business requirements. Even if you end up sticking with your original terms, your agency contract should – at the very least – be reviewed because well, it’s just good business practice. At the same time, it’s also an opportunity to look at the terms and decide whether they still make sense – or are indeed in the best interests of your business (today).


You’ve added or are adding agencies to your roster

If you’ve got more than two agencies on your roster, it’s worth contemplating language that addresses collaboration between each of your agencies. Today more than ever, agencies need to have clearly defined mandates that dovetail precisely with your marketing objectives for each area of your business. Defining those expectations and checkpoints within your agency contracts will help keep agencies focused and ensure your resources are collaboratively working together for the good of your business.


Access, Usage and Protection of Data

Think you own all your data and access to it? This could be another unwelcome surprise unless your contract was drafted or redrafted quite recently. Try asking your media agency for log file data that breaks down transaction data on your digital media. Or ask for a guarantee that none of the data the agency has collected on your business isn’t white-labeled and repackaged for other clients. All agency contracts should now explicitly call out data ownership, access and usage, as well as specific protocols for its protection.


IP Ownership

With advances in technology based marketing solutions, IP ownership has become a hot topic in recent years, so it’s important to have IP ownership spelled out in your agency contracts. If you’re just ‘assuming’ you own everything because you’ve paid for it, you could be in for a very unwelcome surprise. Marketing copyright and ownership can present something of a legal nightmare for marketers who aren’t diligent about the subject in their contracts, so if it’s not explicitly contemplated, you need to addresses it. And the sooner the better.


Pay for performance

While pay for performance terms aren’t new, they are comparatively new for many marketers. And for any pay for performance clauses to be really meaningful (for both marketers and their agencies) on an ongoing basis, performance terms should be reviewed, discussed and redrafted annually. If those terms aren’t reviewed and discussed the performance clause loses relevance and morphs into a bonus structure which will almost certainly be less effective.


Scope of work update

 Because significant new projects and initiatives have likely emerged since your agency contract was first negotiated, marketers should include clauses that allow for the redefinition of scope. Sounds obvious perhaps – but many marketers implement significant additions or changes to scope without considering these new services should be structured and paid for. A good example of this could be technology, digital and / or social media services that now need to be formally defined because of their increased size and scope.


Fee Structure

Are you sure whether your fees for services are still competitive and in-line with industry norms? When did you last benchmark your agency costs and services against standard industry rates? If that agency contract has been sitting in a drawer without an eye towards competitiveness, best practice would point to a benchmark study or insight around whether your negotiated rates make sense from when they were originally agreed


Resource requirements

In the same way your scope of work or fee structure may require adjustment, so too might the resources who support your business. Scope of work documents should specify both number of resources required as well as the seniority of those resources who will work on your business. Scope, fees and resources should all be called out in contracts and reviewed annually.


This is by no means an exhaustive list. And if you’re sitting there reading this and thinking ‘oh crap’ (and you may well be…) don’t worry! Renegotiating an agency contract need not be a complex process or something to dread. The important thing is to manage the process proactively and not wait until something goes seriously wrong and yes, we can help.

Proactively reviewing and managing all agency contracts can save thousands – potentially millions of dollars in the long-run – and countless unwelcome headaches. So, when was the last time you dusted off your agency contracts?


Stephan Argent is a founding partner of LE RICHE ARGENT, Canada’s leading Agency Search and Media Management consultancy. Read more like this on our blog ‘Marketing Unscrewed’. Follow me on Twitter @StephanArgent

Photo: Vilmos Vincze