March 21, 2009--- The last week has seen ever-increasing concern and anger in the advertising community concerning a change in the way the Omnicom Group and its subsidiaries conduct business between Omnicom subsidiaries and suppliers.
Advertising Photographers of America (APA) reached out for comment from the Omnicom Group about the crisis. With the Omnicom Group being the world's largest advertising holding company, a change in terms and conditions affects the advertising community on so many levels. The policy of concern is called Sequential Liability. Sequential Liability simply means that the agency only pays the suppliers after it has been paid.
Quoted from The Association of Independent Commercial Producers (AICP) published guidelines dealing with this trend:
"Certain agencies have inserted a Sequential Liability clause in their contracts. Others have added a side letter to be signed by the production company. Still other agency contracts do not overtly refer to Sequential Liability as being in effect, but do refer to the agency "acting as agent for" (the advertiser), which suggests the same thing.
"If the agency is requesting the recognitions of a 'principal-agent' relationship, then the client (principal) should not be released from the obligation of payment until total payment is made to the production company. It should be clarified that even if the client pays the agency, the client remains liable if the agent defaults in fulfilling the payment obligation.
"Sequential Liability means that the agency as agent for its principal, the advertiser, is liable for payment to the production company only if the advertiser has paid the agency; otherwise the advertiser is directly responsible for the payment."
On Thursday, March 20, 2009, at 11:47 AM, APA spoke with Pat Sloan, Omnicom Director of Public Relations, to express the concerns of APA and others to the opposition of this policy. APA members are not able to finance major advertising projects and these terms and conditions are not acceptable. Director Sloan's statement is that there has been no change to their policy on this matter.
Sequential Liability has been policy in the industry for many years. The reality is that advertising agencies, many are Omnicom's subsidiaries, have provided advances and credit to production companies and photographers to begin awarded projects with substantial expense.
"Business as usual" must continue was stated to Director Sloan. APA members, independent photographers and small business owners, are not in a position to finance commercial projects of possibly hundreds of thousands of dollars.
APA adds: APA business practices have long promoted the inclusion of "statements of intent" to receive 50% to 100% of expenses before the start of a job. It is imperative that this practice continues without removal of advances by clients. Photographers should also include that the photographer owns the copyright and any license agreement must be paid before the release of images.
As creators of intellectual property, photographers hold the copyright on their images. It is imperative that registration of images be immediately submitted to the U.S. Copyright Office. Copyright law and licensing agreements with your clients provide you strong legal protection. APA recommends legal action only as a last resort but registration is needed to recover statutory damages and legal fees.
We must stand together and confront these terms and conditions because they are not in the best interest of photographers and their community of support. If even one accepts them, it will cascade and the role of advertising photographer will change to one of being a financial institution or bank for clients. We must not go down that heavily liable road.
The Omnicom Director of PR did promise to recommend a meeting to discuss these matters. It is APA's hope that a meeting will be arranged and discussions will continue to a successful resolution.
As previously stated, BE CAUTIOUS and don't be afraid to walk away. We must stand together.
APA National CEO
This statement represents the views of APA and not necessarily those of imaginginfo.com.