Marketing Briefing: ‘The answer is no’: Why agencies need to reject RFPs with egregiously extended payment terms
This Marketing Briefing covers the latest in marketing for Digiday+ members and is distributed over email every Tuesday at 10 a.m. ET. More from the series →
Every few years it seems like there’s an outrageous extended payment request that sounds the alarm bells and resurfaces the issues at agencies. In recent weeks, that’s come from a report about Keurig Dr. Pepper’s search for a PR agency and the 360-day payment window detailed in that request.
Agency execs, search consultants and industry analysts say that they haven’t seen a request as extreme as 360-days before and that it is a anomalous exception. That said, while most payment windows average between 45-60 days, requests for 120-day and even 150-day payment terms have been observed with great frequency. The last time extended payment windows caused a kerfuffle followed word in 2019 that General Mills had requested 120-day payment windows.
Despite the abnormality of the 360-day request, the focus from some clients and procurement officers on extending payment windows has many in the industry calling for agencies to reject participating in pitches with such requests going forward. (As reported by Adweek, Keurig Dr. Pepper has selected an agency for its PR pitch seeking the 360-day payment terms.)
“As an independent agency we deal with situations like this all the time, however these terms are just egregious and exclusionary,” said Jennifer Risi, founder and president of PR agency The Sway Effect. “With a 360-day payment term, the focus is now on the cheapest vs. the best agency. Agencies that respond to RFPs like this are not only being shortsighted, as this will strain internal resources like talent, but the relationship is likely to be short-lived.”
The 360-day request makes clear that the relationship will be a “transactional” one rather than a partnership, explained Marla Kaplowitz, president and CEO of the 4A’s, adding that agencies shouldn’t be treated as banks and that the requests puts agencies in a difficult spot as they have their own bills to pay.
“Agencies need to push back when it goes beyond 60-day [payment terms] – and 60-days is bad,” said Ann Billock, partner at search consultancy Ark Advisors. “There’s a whole chain of people who need to be paid [by the agency]. This will set off a chain reaction of people not getting paid.”
Lisa Colantuono, president of search consultancy AAR Partners, echoed that sentiment. “Every single agency should have said, ‘Goodbye, we’re not taking it.’ If everyone says no, well, then what happens? They have to go back to the drawing board. The answer is no. No goes a long way when you know how to treat yourself like your own best client.”
Agency execs and search consultants noted that procurement officers should try to find other ways to work with agencies to benefit the brands rather than focusing so narrowly on payment terms. Whether or not procurement officers will do so – especially when there are still agencies willing to put their hats in the ring for the contracts with extended payment terms – is yet to be determined.
“Marketers would be much better suited to try to push agencies to drive more value than get a financial incentive out of payment terms,” said Greg Paull, principal at search consultancy R3 Worldwide, adding that finding alternative ways to get more out of agencies whether it’s training programs or other incentives that doing so will be better for agencies and brands in the long run. “It’s been an on-going battle for procurement people to look for value. Payment terms have been one of their tools, but there are many other ways to drive value.”
3 Questions with Michelle Boockoff-Bajdek, CMO of Skillsoft
What’s Skillsoft’s marketing strategy in a talent-led, volatile job market?
First is building a strong, resilient and sustainable brand in market. Second piece in terms of our priorities is deciding data. That’s continuing to invest in marketing and analytic technology solutions that allow us to really do some amazing things, harvest some incredible insights and do a much better job of shining a light into the dark areas of the funnel. And then always looking how we can better leverage digital channels. We’ve seen traffic grow exponentially and we’re getting a lot of inbound [traffic]. A lot of that has to do with just getting smarter about our mix.
Skillsoft is layering in-person events back into its marketing mix. What has that experience been like?
When you don’t use a muscle, it atrophies. Getting back into this, rather than looking at it as a detriment that we haven’t done this for a while, it gave us a real opportunity to say, ‘What should face-to-face events look like now?’ Because we’re not going back to the way things used to be. We’re still operating in a distributed or hybrid world. How do we make these kind of events accessible? How do we create digital equity? At the same time, we’re seeing a real eagerness and interest in convening face to face, but not necessarily the way we were.
How have those events played out in real life?
I’m not sure everybody’s ready to go back to these massive, huge trade shows. This year, we launched a series called Perspectives Unleashed 2022. Rather than doing one big event, we held them regionally. We’ve done them in Washington, D.C., Amsterdam, London, Toronto and in New York. These have given us an opportunity to do a couple things: One, create smaller, more intimate opportunities for people to connect and network. Two, for us to really tailor the content to the audience in the room to meet their needs and have wholesome discussions about what they’re facing around largely, the future of work and skill. The third thing that it’s allowed us to do is experiment with different formats, types of speakers. — Kimeko McCoy
By the numbers
Gen Z is becoming more aware and intentional about the way they spend their time online, according to a new report from dcdx, a Gen Z research and strategy firm. Per the report, which is a deep dive into the next generation’s digital screen time, Instagram reigned supreme in being the number one app used by Gen Z this year. See below for more key findings:
- At over six and a half hours of mobile screen time per day, Gen Z in 2022 was 81% above the global screen time average.
- As a sign of [Instagram’s] continued relevance with future generations, young Gen Z’ers usage increased with a 42% increase in pickups year over year, alongside a 9% increase in screen time.
- Young Gen Z’ers continue to be YouTube’s power users, with 38% of young Gen Z having YouTube in their top 10 [apps] compared to 15% of older [Gen Z’ers]. — Kimeko McCoy
Quote of the week
“The social paid space is … increasingly less efficient and less powerful.”
— Laura Tedesco, The Honey Pot CMO, on why the brand is focused on organic over paid social within the current marketing landscape.
What we’ve covered
- The case for and against publishers continuing holiday-specific commerce coverage post-Black Friday weekend
- WTF is the difference between in-stream and out-stream video ads?
- Why this non-alcoholic beverage brand focused on experiential, working with bartenders to boost brand awareness with a sober Gen Z
More in Marketing
WorkTok, or CareerTok, is in full force. Combined, those hashtags on TikTok have over four billion views and it is benefiting Gen Z.
In this week’s Digiday+ Research Briefing, we examine how brands have been upping their TikTok investments this holiday season, how Lyft and the MSG Sphere are positioning themselves as ad opportunities beyond OOH, and how publishers are committing to building their events businesses in 2024, as seen in recent data from Digiday+ Research.
The beverage behemoth believes that if it can offer an interactive, easy-to-use tool that appeals to consumers, particularly younger tech savvy consumers, it can help the brand retain relevance.