AmEx imposes war clause

By Published on .

With the threat of conflict clouding business plans in 2003, American Express Co. is issuing letters requiring media companies to let it out of its contracts if war is declared.

The financial services giant quietly began adding the "war contingency letter" to its media contracts in late 2002. In a recent request for proposals issued for online media, the war clause is described as "a need for flexibility of canceling or postponing advertising should the United States go to war."

While a number of advertisers have discussed how the advent of war might change marketing plans and media companies accept they have to give advertisers latitude in these situations, American Express is the only marketer known to have formalized a war contingency in its contracts.

A spokeswoman for American Express said the instruction was provided to the company's agencies-which include Digitas and WPP Group's Ogilvy & Mather Worldwide and Mindshare-as part of its regular planning process. "We always plan ahead," said the spokeswoman. "It's commonsense planning. It's part of everything we do."

American Express, one of the largest advertisers in financial services, was also one of the most directly affected by the Sept. 11 attacks. Besides the costs of relocating from its headquarters next to the World Trade Center, it took a serious hit to its credit card business from the decline in travel after the attacks. The company spent $211.5 million in measured U.S. media in January through October of 2002, according to Taylor Nelson Sofres' CMR.

While media companies and agencies said they have not seen war clauses in contracts, they were intrigued by the possibilities, especially in the aftermath of Sept. 11, when TV media alone were estimated by CMR to have lost $300 million in ad revenue in one week.

"Post [Sept. 11], marketers have been sensitized to these issues," said Greg Osberg, exec VP-worldwide publisher of Newsweek, who's experienced "a few inquiries"-about shifting ad buys in the event war breaks out-coming in as part of positioning requests or insertion orders. He noted they concerned Newsweek's ability to move ads to another section away from that type of editorial or move them to another issue date the week war breaks. Mr. Osberg refused to say which marketers or categories had aired such concerns.

The publisher of a major consumer magazine who's familiar with the American Express RFP said he understood why the company would want the right to shift its advertising from a specific issue into another issue. But another magazine executive dismissed the importance of the American Express RFP, saying such dealings go on with or without contract clauses.

"A lot of advertisers for the longest time, have sort of said `We reserve the right to cancel,' " said Kent Brownridge, general manager of Wenner Media, "This is the old one-way contract."Among the broadcast media, network advertising chiefs rejected the idea of war clauses. "I don't think we'd sign a blanket clause like that," said Jon Nesvig, president of advertising sales of Fox Broadcasting Co. "[But] while we wouldn't agree to do that, we would certainly work with everybody," trying to place their spots in other shows, he said.

cancellations

Typically, broadcast networks adjust to marketers' needs in times of emergency, with make-good ads on other programs. But advertisers with time-specific campaigns, such as a movie studio opening a film or a retailer with a sales promotion, might need to cancel. During the Sept. 11 attacks, most advertisers merely shifted their media buys later into the fourth quarter-which had the strange effect of kick-starting a hot scatter market. "A general stipulation of how an agency or client might end the relationship or get out of a contract is very common and expected, but being very singular about a specific event like a war is unusual," said David Beals, president-CEO of Jones Lundin Beals, who frequently advises on compensation issues.

Wally Hayward, CEO of Publicis Groupe's Relay Sports and Event Marketing, noted a more common clause-typically used in sports and event marketing contracts-is a "force majeure" stipulation which covers wars and acts of God.

"Before [9/11], you would put in terrorism and act-of-war [language], but I never thought it would become an issue," he said.

contributing: jon fine, wayne friedman, kate macarthur, lisa sanders

In this article:
Most Popular