Ikon wins ad industry test case with former client ordered to pay $939,000
Ikon Communications has won its legal battle against a former client, which claimed the agency had overseen a “complete flop” of a marketing campaign.
In a ruling handed down at Sydney Supreme Court this morning, Justice Ball ordered hair treatment brand Advangen to pay Ikon $939,055 plus interest.
The cross-claim against Ikon was dismissed.
Ikon, which is owned by WPP AUNZ, launched legal action claiming Advangen had refused to pay invoices following a 2015 marketing campaign for hair thinning product Evolis.
Advangen, owned by ASX-listed Cellmid, launched a counter claim alleging Ikon was to blame for a massive sales shortfall amid a TVC with misguided creative.
It blamed the agency for cobbling together a sub-standard campaign, including TV spots it claimed were more in keeping with a production of Gone With The Wind than a promotion for a hair thinning remedy.
The legal battle was regarded as a case understood to be without precedent in Australian legal history.
Ikon said it was extremely pleased the Supreme Court has ruled in its favour.
The agency’s CEO Lesley Edwards said it had been a particularly challenging time for the agency and its staff. She added she was exceptionally proud of her team and how they had managed themselves throughout the court proceedings.
“As an agency we pride ourselves in forming mutually respectful relationships with our clients,” Edwards said. “We are pleased that this matter has been resolved appropriately. We will continue doing what we do best – producing best-in-class work for our clients.”
She added: “As an industry, this was widely regarded as a test case that could have had implications on how agency-client relationships work moving forward. We are heartened that the courts recognized the thorough case Ikon presented.”
Partner of DVM Law Stephen von Muenster said: “Ikon was entirely successful and should be congratulated on fighting a difficult case. We now need to sit down and read the judgement and, importantly, understand the lessons learned for the media and advertising industry.”
Sanity prevails.
It is ALWAYS the client that approves and signs off on creative and media.
And with that goes responsibility (and success or failure) for having done so
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Wow. They guys at Advangen must be really pulling their hair out.
Well done Ikon, this was an absolutely ridiculous state of affairs. This was the advertising equivalent of a fat kid trying to sue Maccas.
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Wrong. There are no winners in this.
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thank god. A win for the good guys!
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While no one comes out fo this looking great, as said above – the ultimate sign off on any campaign is with the client.
If they didn’t want this campaign, they had every opportunity to say so, and only sign off something they were happy with.
The whole lawsuit smacks of sulking behaviour.
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Equally, don’t hire your creative agency to buy your media.
This stinks of a CMO not doing their job, and then looking around when the chips fall for someone else to blame. The reason you’re paid so much as a c-suite executive is that the buck stops with you.
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I know the ad industry is happy with the outcome but look at it from another perspective: you have a medical issue; not knowing much, if anything, about medicine, you end up with a specialist who is part of the world’s largest and best known medical practice; the specialist recommends radical surgery but of course leaves it up to you, the unknowing patient, to make the yes/no decision. Nervously, you take the advice and have the (expensive) surgery. But, when things should be recovering, you’re still in pain and with a large bill to pay.
It’s all well and good to blame the client but they no doubt put their faith in their ever-confident specialist. Why wouldn’t they be upset, they don’t even have the benefit of health insurance.
To me, the real failing here was for the client to turn to a media specialist (who no doubt put the work out to freelancers) instead of turning to mature, strategically focused agency.
A sorry tale. No winner here as others have already said.
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Ikon is a full service agency. They are media-only in Brisbane.
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Did it look Ike something from Gone With the Wind when the treatment and first cut was approved?
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But Cynic, in this instance I believe the client had planned to run the campaign for a far longer period but pulled it after only a coupe of months so with your analogy that’s like the patient stopping the surgery a third of the way in. And they were forced to admit in court that they misled the agency about sales results and that what they told shareholders (sales were positive) was correct. This looks like a co that just didn’t want to pay its media bills. I’d say there is a very clear winner.
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The only hole in the analogy is being the ‘unknowing patient’. Whoever is signing off these campaigns, providing the budget I would hope has something of a clue…
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You would hope so but there are some/many naive, or maybe just bad, clients. Turn on your television or iPhone and see what rubbish is out there.
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Your right, of course, the eternal exhortation is ‘take the medicine until finished’ but two months on the market will be giving you some indication of acceptance, just ask a retailer. If it really was working, why would you pull support?
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Well done Lesley and team . I have to watch this ad now ! Can’t wait to see Hair loss with the wind
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Ikon deserved to win this one – Advangen were grasping at straws.
But there will be other cases where the agency ‘stuffs up’, or in legal terms, ‘does not provide the services with the degree of skill. care and diligence expected’ and will be liable to compensate the client for the failed campaign.
I have published a detailed case note – headed: Is the advertising agency legally responsible if the campaign is a complete flop? This is the link https://www.lexology.com/library/detail.aspx?g=934c9b21-2bfa-40d6-a6aa-0fedae58c46b
I would like to thank Steve Jones and everyone who has commented because I relied upon the articles and comments to strike the right cord in my case note.
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