Dive Brief:
- Keurig Dr Pepper is defending its search process for a new public relations agency following industry pushback, according to PR Week.
- The marketer’s request for proposal (RFP) has become a flashpoint of controversy due to 360-day payment terms, meaning the winning firm would not get its full payment for nearly a year. Alternatively, agencies can receive financing at their own cost.
- VoxComm, a group representing leading agency trade bodies, called the ask “an egregious display of corporate bullying.” But Keurig Dr Pepper is standing its ground, resurfacing old questions around how much power agencies wield when dealing with demanding clients.
Dive Insight:
Agency trade groups are balking at Keurig Dr Pepper’s latest RFP, with VoxComm issuing a “red alert” in response to the matter. VoxComm represents top industry organizations from around the globe, including the 4A’s, PR Council and Institute of Canadian Agencies (ICA).
Like a lot of agency-client spats, the issue boils down to finances. PR shops that can’t accept the 360-day payment terms — or put in essentially a year of work before receiving their full compensation — must pay third party Prime Revenue out of their own pocket to get their compensation sooner. Prime Revenue is part of Keurig Dr Pepper’s Supply Chain Financing Program, according to PRovoke Media.
“This is an egregious display of corporate bullying by Keurig Dr Pepper,” said Scott Knox, director of VoxComm and CEO of the ICA, in a statement. “Agencies are not banks and simply cannot be expected to finance a [client’s] marketing budget.”
Knox also claimed that the RFP goes against Keurig Dr Pepper’s stated commitments to equality, arguing that agencies with more diverse ownership might not be able to adhere to the 360-day payment terms.
Despite the forceful criticism, Keurig Dr Pepper isn’t appearing to budge. VoxComm in the release said that the beverage giant declined to change course and remained confident in its partnership processes after the two recently held talks. Keurig Dr Pepper did not immediately respond to Marketing Dive’s request for comment.
“We have a history of mutually beneficial partnerships with a multitude of agencies, from large multi-national ones to small, niche-focused shops, and we will continue to meet the needs of Keurig Dr Pepper and our agencies,” Vicki Draughn, vice president of corporate communications for Keurig Dr Pepper, told PR Week in a statement.
Keurig Dr Pepper markets a variety of high-profile consumer brands, including 7 Up, Canada Dry, Sunkist, Schweppes, Snapple and Dr Pepper. It also manages the home coffee product lines for Cinnabon, Krispy Kreme, McDonalds and Newman’s Own Organics.
Agencies have often been at a disadvantage in these sorts of rows. But some are getting more frank when addressing their clients amid a windfall for the agency category.
A recent study conducted by the World Federation of Advertisers and Decideware revealed that nearly 70% of agencies are now comfortable pointing out areas that need to change a majority of the time versus 45% that said the same just two years ago. It’s a big step up in confidence but obviously doesn’t mean that the client will actually change its behavior.
