Sharon Bergmann, Financial Manager at the Association for Communication and Advertising argues that contracts are a critical part of the day to day operations of ad agencies. Here she unpacks the importance of contracts in multi-agency partnerships participating in the pitch process.
I have spent more years than I care to remember about working in finance within the advertising industry. Over the years, I have experienced the many pitfalls and costly (financial and operational) mistakes that have resulted from the lack of having water-tight contracts drawn up between parties. And you can take your pick – among others between agency and client, agency and staff or between agencies partnering on a pitch. It is the latter that most often is formalised with a handshake over lunch at a trendy restaurant or must visit coffee shop.
In our profession, more often than not, agencies are partnering with other agencies and freelancers to deliver on pitch briefs and to service the business should the pitch be won. If one link in the chain breaks this could have a catastrophic effect, not only on client relationships, but also on partnerships that have been created.
If everything goes according to plan, there’s a good chance no one will ever look back. But consider for a moment what would happen should something go wrong down the road, and all that solidified the partnership was a handshake and a promise? A situation such as this could lead to messy unfulfilled expectations, reputational damage and legal costs. Not to mention the time and energy needed to solve these issues. Added to this, clients are not interested in, nor willing to entertain agency internal issues and politics.
Agencies should ensure they have guarded against any eventuality when partnering with third parties, failing which they run the risk of losing an account when faced with unresolved internal issues.
Pitches by their nature are exciting opportunities, but unfortunately the excitement all too often clouds good corporate governance. The only way to ensure protection for all parties is to have a signed contract in place prior to the commencement of any work. This is the safest route for all involved when considering entering a partnership for pitch purposes. The contract should among other things manage expectations and detail ways of working during the pitch process and beyond should the partnership be successful in winning the business.
Should a dispute arise, the foresight of having put a contract in place will provide protection and resolution processes to the parties involved.
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