Creative agencies around the world are reacting to 360 day payment terms outlined in Keurig Dr Pepper’s new tender.
The global consumer products giant is running the pitch process in the United States and says that those unable to meet those terms are offered the option of financing it (at their own cost) through Atlanta-based, Prime Revenue.
VoxComm, the global body representing creative agencies issued a “red alert” to the industry.
“This is an egregious display of corporate bullying by Keurig Dr Pepper. Agencies are not banks and simply cannot be expected to finance a clients marketing budget,” said Scott Knox, Director of VoxComm and President & CEO of the Institute of Canadian Agencies (ICA).
“Shareholders of the corporation should be holding the leadership to account, especially when their own supplier Code of Conduct states that they are “committed to high standards of … ethical conduct.”
Paul Bainsfair, Director General of the IPA and Voxcomm member 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 such payment terms shows how out of touch their corporate culture has become. Their supply chain ‘commitment to high standards of …ethical conduct’ seems in need of an update. It is an example of virtual signalling 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 thirty 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.
“While Keurig Dr Pepper does not operate as a distributor in the UK, we wholeheartedly support US agencies/Voxcomm in denouncing this unacceptable behaviour. 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, they will listen to what is acceptable to that agency. Good clients attract good agencies.”
Keurig Dr Pepper’s brands include 7up, Canada Dry, Sunkist, Schweppes, Snapple as well as Dr Pepper. They also manage at home coffee products for Cinnabon, Krispy Kreme, McDonalds, and Newman’s Own Organics.
“I hope that the people responsible for Keurig Dr Pepper’s PR and reputation management will realise this brief is making the company look like the ultimate corporate bully. What they need to do now is bring their supply chain payment terms back into the real world and act like the ethical company they claim to be,” continued Bainsfair.
VoxComm stated that during talks with KDP it confirmed that it “would not change the direction of this review and felt confident in its partnership arrangements and processes.”
It completed the pitch process this week, with an agency already selected.