Omnicom Group, the owner of several major creative agencies including BBDO, DDB, and TBWA, has begun strict new enforcement of sequential liability clauses in contracts.
Under new standard language being introduced in Omnicom contracts, ad agencies will no longer assume liability for a project if a client doesn't pay. This could force a photographer to eat the cost of an ad shoot if a troubled advertiser fails to pay an ad agency.
Sequential liability was put into place 20 years ago to protect agencies from unpaid bills, but until now individual agencies have had some flexibility in enforcing it. The stepped-up enforcement is apparently related to big advertisers, including General Motors and InBev, who are reeling from the credit crisis and have been insisting on longer payment terms.
Trade groups that represent ad producers are not pleased. The American Society of Media Photographers (ASMP) issued an advisory to photographers March 18. In addition to the new sequential liability clause, ASMP said photographers are not being paid advances on Omnicom assignments.
“These terms and conditions are simply not in the best interests of photographers, producers or clients,” the ASMP said. “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.”
“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,” the statement continued.
The ASMP acknowledged there was no incentive for agencies to make photographer-friendly changes to their contracts if photographers were willing to accept the terms, and urged photographers to raise the issue on blogs 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,” the ASMP note said.
In the U.K., Omnicom suspended the new sequential liability requirement after its senior agency managers met with the local trade group Advertising Producers Association.
Commercial production executives told Adweek that Omnicom is the first major ad agency holding company to tighten contract terms. Representatives at Interpublic Group of Companies, WPP Group and Publicis Groupe said their companies have not yet demanded sequential liability clauses in commercial production contracts.
Omnicom agency insiders confirmed the change in language in all agency contracts. Production company sources told Adweek that contracts within Omnicom vary and while they may have had sequential liability clauses in them, in the past they were often ignored or removed at the operating units.
Amid the severe credit crunch, Omnicom clients are extending their own payment terms to ad agencies – DDB Worldwide client Anheuser-Busch's parent InBev is insisting on 120-day terms – and the holding company’s agencies are caught in the middle.
General Motors has told its ad agencies that it may take 60 to 75 days to pay invoices, according to an ad agency e-mail provided to PDN by an automotive photographer. GM, which is fighting to stay out of bankruptcy, was America’s second-largest advertiser last year.
