Best Practice Guidance: Agency Search Agreements (AKA New Business NDA’s)

I. Objective

The purpose of this position paper is to provide agencies with best practice guidance relating to obtaining formal agreements between an agency and a prospective client during the marketer’s search for agency resources or a marketer’s request for proposal. The position paper discusses confidentiality, ownership of agency ideas and work, reimbursement for agency activity and expenses and post-review feedback.

The 4A’s recommends that agencies execute new business agreements with client prospects at the outset of every agency search.

A sample Agency Search Agreement that illustrates some key terms that should be addressed at the beginning of a search is incorporated as an appendix to this position paper.

II. Background

Marketer searches for agency resources are an integral part of the industry’s dynamics. The 4A’s believes that it is prudent to promote a dialogue on best practices in order to facilitate effective, efficient and equitable agency new business activities.

The 4A’s has previously issued best practice guidance recommending that agency new business activities entail a detailed discussion of the prospective client’s business goals, marketing objectives and service expectations. We recommend that the agency search process fosters a two-way assessment of capabilities, compatibility and economic expectations. The 4A’s also recommends that agencies preserve ownership of new business search ideas, plans and work product.

The client search for agency resources can require a significant level of resource investment and information sharing by both the agency and the advertiser. The 4A’s believes that it is prudent to have formal agreement between the parties at the outset of an agency search.

III. Considerations

All parties involved in an agency search, including third-party intermediaries, should strive to structure the search process to be efficient, timely and equitable.

  • The key elements and terms of the marketer’s search process should be outlined upfront.
  • The exchange of confidential agency and client information should be protected.
  • Early dialogue and use of tools such as the “4A’s Standardized Marketer New Business Questionnaire,” the “4A’s Standardized Agency New Business Questionnaire” and the “4A’s Agency Prospect Assessment Guidance” should facilitate up-front discussion.
  • If speculative plans or work is a component of the search process, the agency participants and the marketer should have a clear understanding of the purpose, scope
    of the activity, deliverables and measurement standards that will be involved.
  • Agencies and the marketer should discuss the subject of remuneration and out-of-pocket cost reimbursement payable to the agency for participating in the review.
  • Effort should be made to adhere to an agreed-upon process for all phases of a search.

Best Practice Guidance: Agency Search Agreements
In advance of participating in a client request for proposal or agency search, the agency and client should execute a formal agreement covering topics such as mutual confidentiality, ownership of agency ideas and work, reimbursement for agency activity and expenses and client commitment to provide the agency with frank feedback following a significant review.

Key provisions that agencies should consider incorporating in new business agreements are outlined below:

Mutual Confidentiality
If it is likely that proprietary information about an agency’s process, plans, pricing, research, data, analytics, business, technology or any other form of confidential information will be disclosed to an advertiser (or an intermediary working on behalf on the advertiser), access to and use of the agency’s confidential information should be restricted and protected by written agreement between the parties.

In the event that the advertiser is likely to disclose proprietary information to the agency during the course of the search, the advertiser’s confidential information should also be protected by written agreement.

When a consultant is involved in a review, agencies should ensure that the consultant contractually commits to the mutual confidentiality terms agreed upon by the advertiser and agency. The agency should ensure that the consultant confidentiality commitment not only incorporates protections such as the confidentiality provision of the Agency Search Consultants Code of Conduct but also restricts access to and use of agency confidential information, without agency consent, by any third party.

Ownership of Agency Ideas and Work
If the agency is likely to develop speculative strategies, plans, ideas or other work product in the course of participating in an advertiser search process, the agency should preserve ownership of its ideas, plans and work product via executing a written agreement between the parties.

It is appropriate to note that the ANA/4A Guidelines for Agency Search strongly reinforces the best practice that agencies should retain ownership of their new business ideas and work and that clients should not request or require ownership unless the client is prepared to pay the agency fairly for the rights (ANA/4A’s Guidelines for Agency Search).

Reimbursement Covering Agency Participation and Expenses
In advance of participating in a marketer search, agencies and the marketer should discuss what level of remuneration, if any, will be paid to the agency for participating in the review, as well as what costs of participation in the search will be reimbursed. Advertiser payment to agencies for participation should specify that payment is solely intended to offset agency cost of participation in the review and does not alter the agency’s ownership of agency-developed presentation concepts and materials.

Post Review Client Feedback
Given the significant investment that an agency will make during the agency search process, it is appropriate for the agency to ask the marketer and for the marketer to agree to a contractual commitment to provide the agency with frank feedback as a condition of the agency agreeing to participate in the review.

The 4A’s encourages agencies to value and protect their information, ideas, work and economic interests. Best practice dictates that agencies involve competent legal counsel
and develop formal written agreements with prospects at the outset of the marketer’s search for an agency.

For additional information on agency search best practices we suggest that agencies and advertisers adopt the recommendations included in the ANA/4A’s Guidelines for Agency Search.

Adopted by 4A’s Board of Directors, September 2007. Amended October 2011. Amended December 2017.

Download Best Practice Guidance: Agency Search Agreements including Sample Agency Search Agreement

Download Best Practice Guidance: Ownership of Agency Ideas, Plans and Work Developed During the New Business Process

Download ANA/4A’s Guidelines for Agency Search

Download Agency Review Feedback Questionnaire Instructions

Download Post-Review Feedback