Who would turn down the opportunity to work on an iconic retail brand that spent nearly $500 million last year and ranked No. 22 among all U.S. megabrands in 2009? How about Omnicom Group's DDB Worldwide and TBWA Worldwide; Interpublic Group of Cos.' Deutsch; and Publicis Groupe's Leo Burnett Worldwide, all of which are snubbing Sears, Roebuck & Co.
The reason is simple: Sears is demanding that participants relinquish ownership of materials and ideas they present during the review -- even if they don't win the business. That demand is so unpalatable that agencies are opting out -- and Sears stands to lose out, unless an enterprising agency can convince it to waive the requirement specifically for them.
While such provisions have popped up over the years, the one attached to the Sears review stands out because of its scope. "I have not seen language this broad," said Tim Finneran, exec VP-agency management services at the 4A's. "From time to time clients will suggest that they want the rights to use ideas. But the wording in this case is so broad that it is outside the norm. Here is a client saying to agencies, 'It's all ours whether we hire you or not.'"
It's so vexing that the 4A's took the unusual step of sending a letter to the consultancy on the review, Select Resources International, regarding the provision, which is tucked into the marketer's nondisclosure agreement. The group is asking Sears to allow the agencies to retain ownership of materials.
"The 4A's has been very clear about the fact that it's unreasonable and unfair for any client to expect ownership with no compensation for the agencies," said Mitch Caplan, North American CMO at Interpublic's McCann Erickson, and former chairman of the large-agency new-business committee of the 4A's. "If agencies are going give their ideas away, it sends the wrong message to the marketplace, to the industry and to agency employees."
Sears and SRI did not comment, nor did its creative agency of record, Y&R.
But agency execs who spoke on condition of anonymity said they attempted to revise the draconian nondisclosure agreement, only to receive what one agency exec called a "non-response" from Sears via SRI, which laid out concerns raised by Sears. The marketer's two major beefs are that it will be providing agencies with information about Sears and the retailer does not want any shop to use ideas formed on that information for other clients; and that because it's common for similar ideas to be presented by different agencies, Sears needs to be free to use those independently developed ideas without any agency believing it is specifically its idea.
Several agency execs said that those concerns are not only common, but easily remedied with a simple provision in the nondisclosure agreement, such as a clause that gives agencies ownership of materials while also protecting marketers should multiple agencies generate similar ideas. The 4A's, in its guidelines for best practices, offers sample agency-search agreements that include provisions specifically crafted to protect marketers from scenarios like the ones Sears mentioned.
In some reviews, agencies have been compensated with a nominal amount of cash -- say, $25,000 or $50,000 -- but even that is hard for shops to stomach, as it can cost multiples of that to prepare for a review.
The head of one agency that rebuffed the NDA said that with compensation "at least I'm getting a client who respects the process. That says that the client respects and values the intellectual property agencies create."
Marketers from Hilton Hotels to AutoZone to Kraft Foods have in recent years demanded that agencies relinquish rights to their ideas, even if they're not hired. Sears, of course, will not be the last -- as long as there are agencies out there that will sign what many consider egregious agreements.
"If agencies continue to agree to these NDAs, it certainly doesn't put any pressure on clients to behave otherwise," said Linda Sawyer, North American CEO at Deutsch. "Not only does it undermine other agencies in the long run, it undermines any agency willing to sign an NDA with an ownership-of-property clause, because it shows that agency is operating from a position of weakness."
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Contributing: Natalie Zmuda