UK ad body slams 360-day payment terms demanded by Keurig Dr Pepper
“When I first heard this story, I thought it was fake news,” says IPA boss Paul Bainsfair of the 360-day payment terms that have stunned the industry.
A still from the most recent Dr Pepper ad campaign / Dr Pepper
One of the UK’s top advertising trade bodies has blasted the deferred payment terms demanded by US consumer goods giant Keurig Dr Pepper of its PR agency suppliers.
The Institute for Practitioners in Advertising (IPA) has joined its US counterpart the 4A’s in speaking out against the client’s practice of demanding 360-day-long payment terms with agencies.
Keurig Dr Pepper has been demanding that agencies tendering for its PR business agree to payments taking up to a year, rather than the more common 90-day period, as reported by Adweek. The company has offered PR suppliers the second option of financing – at their own cost – through an Atlanta-based company called Prime Revenue.
Paul Bainsfair, director general of the IPA, said that “while Keurig Dr Pepper does not operate as a distributor in the UK, we wholeheartedly support US agencies in denouncing this unacceptable behavior.”
He added: “When I first heard this story, I thought it was fake news. But sadly it is not, which just demonstrates to me – and to others leading UK agencies – that the brazen way in which Keurig Dr Pepper has requested Its payment terms shows how out of touch its corporate culture has become. Its supply chain’s ‘commitment to high standards of ... ethical conduct’ seems in need of an update. It is an example of virtual signaling at its very best.
“It is important to be clear what acceptable supplier payment terms are. For ad agencies in the UK, the standard position is 30 days. Anything above that should be questioned. Agencies are the business partners of their clients. They should not be expected, or even asked, to accept unreasonable payment terms. They have their own businesses to run.”
Keurig Dr Pepper is the parent company behind 7up, Schweppes, Dr Pepper and Sunkist. While agencies could remove themselves from the tendering process if they did not agree with such stringent payment terms, Bainsfair said it was not the policy of a “good client.”
“We have had instances in the past where IPA members have been asked to accept a variety of unacceptable terms, including payment terms, as part of a pitch. It is not unheard of. Those agencies that do not want to participate can remove themselves from contention. But they shouldn’t be expected to accept unreasonable terms in the first place. The outcome is usually that if that advertiser wants a relationship with a particular agency, it will listen to what is acceptable to that agency. Good clients attract good agencies.”
The 4A’s, meanwhile, has kept its remarks on the subject briefer, but made it clear it does not support Keurig Dr Pepper’s arrangements. “If, as it should, the company expects excellence and innovation to drive the growth of its brands, starting a partnership in this way with any agency is counterintuitive,” said Marla Kaplowitz, president and chief exec of the 4A’s. “4A’s is working with the global industry body VoxComm to help guide the thinking for the best outcome for its brands and stakeholders.”