At the start of a new brand-agency relationship, both parties are excited to start to collaborate. Finalizing the contract is not the priority and often delayed. Nevertheless there are many reasons why it is important to have a written contract at the start. Contracts clarify the rights, duties and obligations of both parties, and avoid ambiguity.
The standard UBA/ACC agency contract is an excellent starting point. On top of that we want to give seven tips on what to take into account when writing the contract.
1. Do it immediately
As a final part of the agency selection process it is important to develop an understanding as to how both parties will do business together. This needs to be included in a contract before the actual selection is made and publicly announced. If the contract finalization is delayed and agency resources are committed, there is often disagreement moving forward.
2. Be precise
Do not limit your contract to some general principles. Be precise, especially when defining the remuneration. All the details of the agreed remuneration model should be captured in the contract.
3. Describe the collaboration model
The way both parties will collaborate is as important as the remuneration model. Remuneration and efficiency in collaboration are intimately linked. Describe the governance model and how your teams will work together in an efficient and effective way.
4. Make it flexible
A relationship evolves in time. Quite a lot of circumstances can change. However, you don't want to rewrite your contract every time something changes. The contract needs to be flexible enough to accommodate future changes.
5. Involve senior management
It is important to include senior management during the agency selection process. And it is also important that senior management on both agency and advertiser side agree on the principles of the contract. This avoids management conflicts.
6. Make it comprehensive
A contract should be comprehensive. Yes it is legal stuff, but this does not mean it should be formulated in a complex way. Describe your agreement in simple language, easy to understand for everyone. And keep it long enough to describe what's needed and short enough to make it clear.
7. Review it when needed
Even if you include flexibility in your contract, it won't last forever. Review the contract on a yearly basis and evaluate if changes are needed. Some changes can be done in annexes. But after a few years the contract needs to be adapted to the new reality.
A good contract is key to a healthy and a long-lasting relationship between the brand and the agency. That is why you have to pay a lot of attention to it. Even if it is not the most exciting part of the agency selection process.