M stands for “many moons” | Blogads

M stands for “many moons”

by henrycopeland
Tuesday, February 3rd, 2009

Group M, the parent company to some of the world’s largest advertising agencies, is proposing new terms for online advertising deals that could triple the time publishers have to wait to get paid for ads they’ve run.

While the industry norm, at least on paper, is payment within 60 days of a campaign’s launch, under Group M’s new terms, a publishers would have to wait fully 180 days before even complaining to the end advertiser that it hasn’t received payment. Here’s the relevant clause in M’s new terms:

Payments will be made in accordance with the payment schedule set forth in the IO or, if no payment schedule is specified, payment will be made pro rata in arrears on a monthly basis (not in a lump sum) based on advertising actually delivered. No invoice shall be sent by Media Company until on or after 30 days from the media start date, and payment shall be effected 60 days from receipt of the applicable Media Company’s invoice. … Media Company may notify Agency that it has not received payment in accordance with the foregoing provisions and whether it intends to seek payment directly from Advertiser pursuant to Section III(c), and may do so no sooner than 90 days after providing such notice to Agency.

In contrast, here are the IAB standard terms used by 90% of advertisers and their agencies today: a) invoice must be sent within 30 days of first month’s delivery or completion of the IO, b) agency will make payment 30 days from receipt of invoice and c) media company may contact advertiser (end client) for payment after this 30 day period is up.

Group M’s daughter agencies include MAXUS, MediaCom, Beyond Interaction, Mediaedge:cia and Mindshare. Their clients include Diageo, Volkswagon, Deutsche Bank, Puma, Mitsubishi, Sony, Ericsson, Bayer, Beiersdorf, Unilever, Motorola, IBM, Land Rover, American Express, Lufthansa, Nike, Kelloggs, Ford, Castrol, HSBC, BP, SAP, Kodak, Volvo, Kraft, Nestle, Kimberly Clark, Diesel, Rolex, Jaguar, Heineken, Warner Brothers… and many others.

The ramifacations are obvious. First, high overhead publishers who are already cash-flow thin will be stretched beyond the breaking point. Second Group M wants a license to sit on cash owed to publishers for 90 days before paying it out. (Group M, which calls itself “the leading global investment management operation,” seems also to be managing its own cash flow very aggressively.)

Other portions of the new terms have been getting some press, but as far as I can tell, nobody is squawking about this egregious cash grab.

Update: We got the terms along with an RFP on January 26. This pleasant note accompanied them: “Also attached are the new GroupM terms we will be using for all campaigns moving forward. Please take a moment to look through them. By submitting your proposal you are accepting to these terms for any IO for this campaign. If there are any objections, we need to know at the time of submission, as it may affect consideration for this campaign.”

Facebook comments

Our Tweets