Q&A: Contract Considerations During Wartime
On the eve of the attack on Iraq, DIRECT Newsline talked with attorney Douglas J. Wood about how advertising agencies will feel the impact of the war, especially if the conflict is protracted. Wood is co-executive partner of New York-based Hall Dickler Kent Goldstein & Wood, and specializes in issues relating to advertising, marketing and new media. He is general counsel of the Association of National Advertisers.
DIRECT: Have the agencies your firm works with seen clients cutting back on budgets in anticipation of war?
WOOD: There’s a lot of cutting going on in general, but I don’t think it’s necessarily war-related. Certainly budgets have been cut over the past year. I think people are talking more about the war and what that’s going to mean around the water coolers rather than in the executive suite. We represent an awful lot of people in the business and I have yet to have anyone come to me and say ‘check my contracts and see what happens in a protracted war.’ It’s just curious to me.
The standard forms [for the commercial and infomercial industries] don’t contain an event-of-war clause. It’s not even addressed, so it creates a lot of interesting legal issues that will come about if shoots are cancelled, if productions are delayed, if people can’t get [to shoots because of] transportation issues. There’s a whole lot of issues that are not being debated really, and whether they become an issue depends on if we have a three-day war or a 30-day war. I wonder whether [marketers] are considering all the potential problems that could spin from the war.
DIRECT: Such as?
WOOD: On the broadcast spectrum, there’s the whole issue of make goods, depending on how much preemption occurs and the like. If you’re a mailer, there’s a question of whether you’re going to be spending an awful lot of money for a terrible response rate because people are going to be too preoccupied to even bother with their mail.
Whether or not people are going to be more responsive to direct response on television or the Internet because they’re homebound more if they’re afraid to go to malls remains to be seen. But if that’s the case, then the question needs to be where are you going to shift your media. People aren’t going to stop buying things. Some people buy more when they’re concerned or depressed.
There’s opportunity. There’s no question that there’s going to be consumers who are buying. Can you get them to the mall, can [you] find a way to get them to open the mail or watch your commercial either by creative or timing or promotion? But if you’ve made your media plans, your production schedules, six or eight months in advance, its kind of hard to spin on a dime on the eve of war and reschedule things. And if you do that then you run into the problems cancellation provisions in contracts and costs associated with that. It’s an extremely complicated situation.
DIRECT: Are advertisers starting to consider the content of their creative and making it more appropriate for the times?
WOOD: We’ve seen a little bit of creative coming across that seems to be more toned down, a little bit of humor, looking at more homespun kind of stuff, not quite as aggressive or hard hitting. But again, these things are planned months in advance. The industry is kind of like an ostrich, with its head in the sand until somebody comes along and kicks them in the ass.
DIRECT: Do you think we’ll be seeing rah-rah waves of patriotism like we did after 9/11?
WOOD: Oh sure, and why not? It’s the feel good thing to do. [If a] CEO wants to feel good about his company and America, sure they’re going to do that. It’s the normal thing to do. But it will be interesting. Unlike the Gulf War, you’re going to see a lot more anti-war coverage, probably more than we’ve seen since the Vietnam War. It’s going to be a different market to make that decision. A patriotic flag waving has a downside because there’s a group of consumers who aren’t waving that flag. So you’ve got to consider that in the decision process of what you’re going to do.
DIRECT: What legal issues should agencies be considering contractually in the event of war?
WOOD: The problem is that there usually aren’t signed contracts, at least with media. If you’re a mailer, you’re going to have signed contracts with your mailing house and thing like that, and there’s presumably cancellation clauses in them if that’s what you want to do. But for the bulk of money spend on media, there’s no signed contracts. There’s contradictory forms that go back and forth in the mail and that’s going to become, if the war becomes contracted and people are questioning the value of the GRPs (gross rating points, how many eyeballs you have) and questioning the value of make goods, we’re going to see potentially some interesting cases that test industry practices.
