Coty Asking for 150-Day Payment Terms in Global Media Review

Incumbent OMD Choosing Not to Defend its Business

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Fragrance manufacturer Coty is conducting a review to consolidate global media, according to people close to the process. As part of the review, the company is asking agencies to agree to 150-day lags in payment.

"We can confirm that there is an agency pitch but we are not going to comment how we are negotiating with agencies," said a Coty spokeswoman.

Coty is the latest in a string of big marketers to ask for extended payment terms, but its 150-day ask is aggressive compared to those marketers who have capped the terms at 120 days. Global candy giant Mars last year sought to extend the period before suppliers get paid to as long as 120 days, and a couple of years ago Mondelez International confirmed it was instituting 120-day terms. Around that time, Procter & Gamble Co said it would seek to extend payment terms from 30 to 75 days in new contracts with agencies.

According to its 2014 10-K filing, Coty's consolidated expenses for advertising and promotional costs were $1.07 billion and on par with spending in 2013.

The beauty giant, which was founded in Paris but is currently based in New York, has a limited number of contenders.

OMD, which supports Coty in the U.S., U.K., Ireland and Canada, has declined to participate in the review due to the terms of the brief, according to people familiar with the matter.

They're not the only ones. Agencies within WPP's GroupM and Dentsu Aegis are also choosing not to participate, according to industry executives.

Havas Media, Interpublic's Initiative and Publicis' Zenith have also been invited to participate in the review, according to people familiar with the matter.

Agencies declined to comment or didn't immediately respond to requests for comment.

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