Omnicom Group Passes the Buck

Welcome to business 3.0, that must be it, this ain't your daddy's business anymore. Now it seems that the little guy is supposed to finance the big guy. Maybe this is what they (the smarter guys in the room) were calling the "new" bank, I look in the mirror and see they must be talking about me.

Well at least it seems like the middle guys the ad agencies think they want to pass the risk onto the production companies and the photographers. Many trade groups and pundits have spoken out against this new model, here is what the American Society of Media Photographers had to say.

Omnicom Passes the Buck

It has been brought to the attention of the American Society of Media Photographers (ASMP) that the Omnicom Group, the world’s largest advertising agency holding company, has changed its terms and conditions in an effort to limit their agency liability and in so doing transfer that liability to independent photographers and producers. Basically, by disclosing their agency status and for whom they are acting, the advertising agency is only liable to the extent that their client has specifically paid them for any amounts payable to you. Additionally, ASMP has been informed that reps are being told that there will no longer be any advances on assignments.

These new policies are most probably the result of the market and governmental pressures experienced by major corporate clients such as GM who in their effort to avoid bankruptcy are now prioritizing their financial obligations and will make payment according to those priorities. In other words, some suppliers will be waiting significantly longer to be paid depending upon the client’s priorities. That being the case, agencies do not want to be left on the hook for reimbursement of monies expended on behalf of their clients, especially where the fear of bankruptcy exists.

These terms and conditions are simply not in the best interests of photographers, producers or clients. This action, clearly taken in anticipation of increasingly difficult financial conditions is a unilateral effort to shift the burden onto those who are least prepared to bear it. Should an independent photographer of moderate means be the banker for a Fortune 100 company? By eliminating their customary role as intermediate financier, agencies are removing value from the value-added chain, and that will ultimately lead to an overall dampening effect on commerce.

Meanwhile, there is no incentive for the agencies to make photographer friendly changes to their terms and conditions as long as photographers are willing to accept the current terms. Notice of these changes should be included in your blogs and discussed on related lists and social networking sites. The issue needs to become viral and requires significant support from key photographers in order to gain traction and effect change. If it is business as usual for the agencies, then nothing will be accomplished.

ASMP would recommend that photographers include in their paperwork a statement making it clear that there will be no grant of copyright license until all related assignment invoices are paid in full. Images should be registered with the Copyright Office immediately upon completion of the shoot and prior to first publication and/or possible infringement so that in the event that legal action – a last resort – is needed, recovery of statutory damages and court costs will be possible.

In addition, the Association of Independent Commercial Producers (AICP) recommends the following:

“If an agency's internal policy insists upon these payment terms (sequential liability), the production company should:

a) Make sure the advertiser ("client") also signs this agreement. If it is a rider, the terms of payment and the full contract price should be added to the rider. 


b) Be provided with the advertiser billing and contact information.


c) Copy the advertiser on all invoices.


d) Notify the advertiser of payment due as soon as terms of the contract (payment dates) are not met by the agency.”

As a possible course of action, since the agencies are shifting liability to their corporate clients, perhaps photographers should consider approaching the clients directly for advances and or other payments prior to the beginning of the assignment.

Ultimately, this is a case of the supplier beware!

A Photo Editor said," It certainly seems to
be the trend these days where citizens are held responsible for
corporations that can't pay their bills but an advertising agency
eliminating their traditional role as financier for advertising
campaigns maybe signals an impending overhaul of the way business is
conducted. "

My Friend John Harrington over at Photo Business News & Forum had this to say, " it is important that you understand how companies are attempting to negotiate with you either beforehand, or afterwards in unfoavorable purchase order language that changes substantively the terms under which your initial contract was agreed to. On more than one occasion I have had to have Purchase Order language modified to be consistent with the intitial contract."

And Nick Parish last week wrote in CREATIVITY ONLINE, ""If there is a problem here with people assuming risk and liability we need to come up with a collective solution to that," says Miller. "It's interesting to see what did go on in U.K. and will be interesting to see if production companies here act the same way on an absolute basis."

The production companies say the changes would erode their business model and force them to bear the weight of a client default more heavily than at present. Spokespersons from Omnicom and WPP did not respond to requests for comment.

"How can an ad agency go to a client and demand that they pay them up front and then stick this to us?" asks one head of a high-profile production company. "I didn't realize we were also in the banking business. When no one can finance anything, they're asking us to do it."