The Institute of Practitioners in Advertising (IPA) has publicly condemned the news that Keurig Dr Pepper is asking agencies to accept 360-day payment terms as part of a company-wide PR agency search in the United States.
Agencies that cannot accept the 360-day terms are being offered the option of financing, at their own cost, through Atlanta based, Prime Revenue.
IPA director general Paul Bainsfair has branded the ‘astounding’ ask as “unacceptable behaviour”.
“When I first heard this story, I thought it was fake news,” he added.
“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.”
Bainsfair feels that it is important to be clear about what ‘acceptable’ supplier payment terms are, adding that “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.”
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While the director general for the ad body recognises that Keurig Dr Pepper does not operate as a distributor in the UK, he “wholeheartedly” supports US agencies in denouncing the 360-day payment ask.
“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,” he said.
“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 brands include 7up, Canada Dry, Sunkist, Schweppes, Snapple and Dr Pepper. The group also manages at home coffee products for Cinnabon, Krispy Kreme, McDonalds, and Newman’s Own Organics.
Bainsfair concluded: “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.”
