MFA won’t endorse new AANA contract because it is ‘unduly onerous’ on media agencies

The Media Federation of Australia (MFA) has hit back at the Australia Association of National Advertisers’ (AANA) latest media buying services agreement, which it has said is “improbable if not impossible to comply with” for media agencies.

The new agreement, which acts a template contract to govern the relationship between media agencies and advertiser clients, is an improvement on the previously “unworkable” version, according to the MFA, but still has “key issues” that make the agreement unfairly burdensome upon agencies.

Among the MFA’s concerns are the obligations the agreement places upon agencies around third-party relationships. Transparency is under the microscope thanks to the Australian Competition and Consumer Commission’s digital platforms report – which recommended an inquiry into “opaque” media agencies – the industry body acknowledged in a white paper responding to the AANA agreement, and should be addressed in contracts. But transparency may not always be “legally and practically” within the agency’s control.

Transparency, compliance and auditing are deemed costs the agency must bear in the agreement, with the advertiser perhaps agreeing to pay the cost afterwards.

The agreement also deals with circumstances in which an agency purchases media in advance and on-sells it at a later date. The contract mandates transparency around these transactions, including any mark-up, “notwithstanding the risk taken by the agency”.

If the contract’s current obligations were to be followed, media agencies would have to renegotiate numerous contracts with third parties, according to the white paper, and many of those third parties would likely not agree to the terms.

The AANA told Mumbrella that overcoming such issues requires having “frank” discussions with third parties.

“If any agency believes that a particular clause places them in a difficult position with an affiliate, their parent company or an independent third party then, rather than ducking the issue, they should say so and have a frank and open discussion about how to resolve that dilemma,” CEO of the AANA, John Broome, said.

“Similarly, both parties should have a frank discussion about how to allocate any costs associated with delivering accountability and transparency.”

Ultimately, the MFA does not endorse the agreement. It should be viewed as a starting point only, it said, since a “one-size-fits-all contract template solution is impractical” due to agencies’ and advertisers’ different operating models.

“Many of the broad and overarching provisions and obligations in the 2019 Agreement are unduly onerous on agencies, rendering full compliance … improbable if not impossible,” the MFA said.

“This may result in persistent technical breaches across numerous obligations owed to an advertiser and potentially placing agencies in a situation where they might, in order to comply with the 2019 Agreement, conflict with or unwittingly breach legal obligations.”

The AANA thanked the MFA for its “valuable input”, completely agreeing that the template is to be viewed as a starting point only, and implementing it in its entirety would in fact “negate its purpose”.


Broome is the CEO of the AANA

“So although the points of view coming to the negotiation table differ, the fundamentals of both the MFA’s and AANA’s respective positions are aligned,” Broome said.

“Such is the complexity in today’s media buying chain that achieving transparency is likely to be hard. Irrespective, it is a marketer’s fundamental duty to drive an in-depth analysis of where and how the media dollar should be spent and construct a contract to help deliver on that intent.

“We are confident that the template, the principals driving it, and the guidance notes we have provided are a solid guide to the areas that should be explored. However, it would be huge mistake for anyone to implement the agreement ‘holus-bolus’. Indeed, merely implementing it in its entirety would negate its purpose, which is to consider and discuss each proposition and determine its appropriateness to your particular relationship.”

Darren Woolley, CEO of consulting company TrinityP3, added that “renewed cooperation” between the MFA and AANA is encouraging, but explained why the two organisations cannot agree on one template contract.

“The new AANA contract makes every attempt to provide flexibility … but to provide a contract that can be endorsed by the legal representatives of the agencies is simply a ‘bridge too far’,” Woolley said.

“The AANA would be forced to endorse non-disclosure of the very practices from which they are seeking protection. And on the agency side, the holding groups have embedded a business model that makes it nigh impossible for the agency brands to sign up to strict transparency terms around third party arrangements. With this in mind the notion of ‘mutually beneficial’ is an unachievable utopian ideal if taken to mean satisfying the full wishes of the legal teams of both parties.

“It’s like believing in the Tooth Fairy and the Easter Bunny.”


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