Keurig Dr Pepper called out for demanding 360-day payment terms in PR tender

VoxComm has spoken out against global consumer products giant Keurig Dr Pepper. The latter is currently running a PR agency search in the US, where part of the ask is for agencies tendering to accept 360-day payment terms. Those that cannot are being offered the option of financing, at their own cost, through Atlanta-based supply chain finance service Prime Revenue.

Keurig Dr Pepper’s brands include 7up, Canada Dry, Sunkist, Schweppes, Snapple and, Dr Pepper. It also manages at-home coffee products for Cinnabon, Krispy Kreme, McDonald's, and Newman’s Own Organics.

VoxComm is an organisation launched in 2020 to champion the values of creative agencies globally and includes 4As Malaysia. VoxComm has reached out to the marketing and procurement leadership at Keurig Dr Pepper to discuss that it is not in the brand's best interests to set this financial expectation. Unfortunately, during talks with Keurig Dr Pepper, the corporation confirmed that it would not change the direction of this review and felt confident in its partnership arrangements and processes.

Scott Knox, director of VoxComm and president and CEO of the Institute of Canadian Agencies, said this is an "egregious display of corporate bullying by Keurig Dr Pepper", adding:

Agencies are not banks and simply cannot be expected to finance a client’s marketing budget.

"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," Knox added.

Citing's Keurig Dr Pepper’s website, Knox said the company publicly states a commitment to equality. "How does asking a business a fraction of the size of theirs to bankroll marketing activity for a year create a culture of equality? There will be agencies owned by people of colour, LGBTQ+ and other diverse creatives that, because of the inequity that already exists in business, will never be able to afford to adhere to 360-day payment terms," he added.

Meanwhile, 4As Malaysia CEO, Khairudin Rahim, said: "Extended payment terms are an unfair business practice that damages the agency/client relationship, harms agencies' ability to hire and retain the best talent and puts smaller firms-especially locally owned agencies that often don’t have access to capital, at risk of survival."

He also told A+M:

Keurig Dr Pepper should firstly lead by example by paying their staff salaries one year later and allow their trade customers to pay one year later.

Separately, VoxComm also previously highlighted statements from the US and global brand associations that challenge this extended payment terms practice. It quoted a report published by the Association of National Advertisers in March 2020 which said extended terms often come with consequences, including strained relationships with vendors, reduction in flexibility, and higher prices. "…the business models and livelihoods of smaller players in the marketing supply chain can be threatened by extended terms. Such companies are not banks," the report added.

(Read also: Global ad agency alliance: 'Late payment is not smart, it's irresponsible')

At the same time, Stephan Loerke, CEO, World Federation of Advertisers, also said in May 2020: "It cannot be in clients' long-term interest, when reputation is so critical to ensuring you can work with the best possible talent, to unfairly extend payment terms."

Tamara Daltroff, president VoxComm and CEO EACA, also added this time round that if, as Keurig Dr Pepper should, expect excellence and innovation, driving the growth of its brands, starting a partnership in this way with any agency is counterintuitive.

Separately, the 4As recently called out Telekom Malaysia (TM) for requiring agencies to pay a non-refundable tender document fee of up to RM5,000 and a refundable tender deposit of up to RM20,000 per tender is part of its requirement. Khairudin also called the tender document fee and tender deposit "unjustifiable".

TM, however, said it will in the immediate term retain its tender requirements, which aligns with standard industry practices in tender processing. TM also previously told A+M that as a company that serves to create long-term value for all parties, TM will consider 4As Malaysia’s feedback as a measure to continually improve.

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