Client on credit: Adland grapples with new crisis
“All advertising pros, especially those in servicing and finance, should go and spend time with the billing and accounts departments of hospitals,” wrote Prathap Suthan, Managing Partner/Chief Creative Officer, BangInTheMiddle in arecent LinkedIn post. The suggestion raised a range of questions. Firstly, where’s this even coming from? Secondly, what is the connection between advertising agencies and hospitals? Suthan’s post answered the same. “This is where they will teach you the fine art of getting your money out. Or where you can learn how to hound your clients for money that’s due to you,” he further wrote. It seems like the adland has been hit by a new crisis this time – clients holding back agencies’ hard-earned money. The post gathered quite an engagement, with people expressing their hard times around the same. Speaking of difficulty with clients, marketing consultant Sandeep Nair shared that he has gone through the very same pain. “One client, the CEO of a mid-level hospital, refused to pay a two- month backlog of retainer money because he said he didn’t feel like. ‘I’m not here to run a charity’ was his response when we told him that we had to pay the team’s salaries,” he wrote. A senior ad executive told e4m that she has had to face some similar instances with new age brands, as compared to legacy companies. “When it comes to the larger companies, most of them have set policies in place when it comes to disbursing such payments so we’ve never had to ask them twice about it. But the new-age startups do need some push from time to time,” she added. She feels that these issues are a part and parcel of the agency culture now, considering how prevalent it is becoming. Another person from a creative agency shared that he has also had to go through such cases. He shared that a client ditched the agency halfway through their website development project, and another, a restaurant owner, used the agency’s branding and communication strategy without paying the second half of the fee. “I agree, there are inadequate measures for smaller agencies to recover their money from clients. The last resort for most agencies is stopping work, but that’s not what anyone is in the business for,” he shared. Suthan, in his post, compared this situation to being treated like a football. He wrote, “They will also play football with you. Daily. They will delay. They will wangle. They will want a commission. They will want you to waive part of it. They will even throw an attitude and ask you to never come back. They will actually shoo you away for money that they have to legally give you.” The founder of yet another agency says, “I'm not merely a creative person any longer. And I can only imagine the stress that this sort of delay can cause on the system.” The person further shared that it has, at times, come to a point where the agency’s heads have had to deploy colleagues from account management to go and park themselves in the offices of clients - and not leave until dues were settled. “It's a terrible situation to be in. And one that occurs more frequently than it should, sadly.” This kind of situation not just affects the financial setup of the agency, but as per the experts, also takes a toll on the mental health of the ones who work on the said projects. For instance, Suthan shared that he has seen senior servicing people cry. Finance heads tearing their hair. And agency heads bleeding from loans they have to take to pay salaries – when large chunks of money are pending with clients. The creative agency expert agrees, saying “I feel it becomes severely demoralising - because everyone wants to see their work spring off the concept board and into the real world - so when that doesn’t happen, it makes the team question if all their hard work is worth it.” However, among all the adland veterans that e4m reached out to, quite a few of them have also been lucky enough to not have faced such situations in their advertising career. One of them said, “Honestly, we have not faced such a situation in our agency. Plus, there is a credit check that we run for new clients before we on-board them.”
Tags : Marketing Adland Advertising Agencies Pending Payments