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Thursday, September 21, 2006

B2B Agencies Need Accreditation

A blue chip advertiser in a leading weekly magazine booked all their advertising through a one man band advertising agency. The client was the only substantial account on the agency’s client list. You can guess what happened. Payment of invoices got later and later until the point was reached when there was no alternative but to refuse to accept any more bookings. Neither the client not the agency was much amused. The agency argued that we could not be paid as he had not been paid by his client. Not only did this turn out not to be true, but when we pointed out that the once the agency accepted the 10% agency commission we offered, he was the principal, he became apoplectic with rage and threatened never to do business with us again. Our view was that it was a matter for him and his bank to fund his working capital, not a matter for us and ours.

In the end the client exerted some pressure on the agency and we eventually got paid. Amazingly the agency kept the account and it must surely be only a matter of time before the same scenario rears its head again.

Although it was a happy ending some uncomfortable issues are raised by this all too familiar tale. The first is that no workable accreditation system exists for business media agencies. Media owners have little choice but to trust agencies to continue to pay their bills. Many, if not most, business to business agencies are too small to pass any of the blue riband accreditation tests. With so many business to business accounts traded through tiny boutiques it is just not possible refuse business from any but the most reliable agencies.

Twenty years ago unaccredited agencies would have had to find a third party to bill for them if they could not muster an accreditation. The febrile competition in almost all business markets has extinguished this. It’s time that the industry got together to agree a common approach to managing the problem. In the first place media owners should write into their terms and conditions that credit information will be shared with other publishers. Publishers should agree to act in unison in refusing to do business with any agency that materially defaults on payment terms.


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