Are you playing with fire as an agency owner?

Agency Leadership Podcast

It’s business as usual in their 250th episode, as Chip and Gini continue to share their unvarnished opinions.

At the risk of this being their last episode, they have once again chosen to tell you what you’re doing wrong as an agency owner.

The hosts share specific examples of agency owners breaking or ignoring rules that they don’t like — or that clients may pressure them to bypass.

They talk about compliance, ethical practices, and risk management for agency owners. They discuss the ramifications of behaviors such as unauthorized account sharing, misclassification of contractors, and copyright violations.

Key takeaways

• Chip Griffin: “As owners, we think about using the agreements that we have and the rules that are in place to our advantage. We ought to be doing the same when those rules apply to us.”
• Gini Dietrich: “When clients ask you to do something that’s unethical or illegal, you have to be able to tell them no.”
• Chip Griffin: “When there’s gray area, you have to make judgments. But if it’s blatant, then I’ve got an issue with it. And I think you should too.”
• Gini Dietrich: “It’s not easy, but it’s ethical. It’s the right thing to do.”

Related

• How to think about HR risks in your agency
• How agencies can avoid common legal mistakes (featuring Sharon Toerek)

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini, this is our 250th and, and perhaps final episode.

Gini Dietrich: It’s not our final episode, but it is our 250th. That’s amazing.

Chip Griffin: It is, it is. It is amazing that we have managed to accomplish that. I think that’s more episodes than any of my previous podcasts that I’ve done.

I can’t remember how many I ended up doing with Media Bullseye. Cause we stopped, we stopped numbering podcasts and this one, we don’t number it. It’s just our podcast producer, who is my wife, Jen, keeps them numbered behind the scenes.

Gini Dietrich: She emailed us both this morning and was like, by the way, today is 250. And we were both went, Oh,

Chip Griffin: and neither one of us pays enough attention to our own show to know that.

So. I don’t know what that says about us. Well, hopefully we will not scare away all of our listeners, but, but we are going to speak some hard truths, I think, on this episode about,

I guess compliance is probably the best word, most polite word to use here. But I think observationally, we have seen a lot of agency owners

certainly over a long period of time, but particularly recently who don’t necessarily think that all of the rules should apply to them. Correct. And there’s something to be said for breaking the rules in terms of strategy or things like that. But when those rules are laws and regulations, terms of service, contracts, I would suggest to you that these are things that we ought to have more respect for as business owners because we expect that our own clients adhere to the terms that we give them.

And so, when we do things that are outside the bounds of the agreements that we have for laws and regulations that exist, it sets a bad example for our teams. It’s certainly not a good thing just from an ethical standpoint. And so, I think we need to call some of these things out, because they are creating risks, it’s playing with fire to some degree.

For many agencies, but it’s just flat bad behavior and we shouldn’t be engaging in that and, and pushing that forward ourselves.

Gini Dietrich: Okay. So I’m going to ask our listeners or viewers a question. If let’s say that you have an online course that you have spent time and resources and money to build, and you’re selling it to small business owners, other PR people, whatever it happens to be, and industry or something Like that.

And you find out that one of your students has shared their login with five other people on their team without paying for those other five courses. How does that make you feel? I’m going to guess pretty shitty.

And it doesn’t make you very happy that six people are going through your online course for the price of one. So with that in mind, I think that that sets the stage for the kinds of things that you have to think about from sharing seats, to 1099 employees, to copyrighted things, to taking things off the internet without, without attribution or credit.

It all goes into this big bucket of, to your point, the way that we should behaving as agency owners, as business owners, and as stewards to our clients, because in many cases, it’s illegal and in all cases, it’s unethical.

Chip Griffin: Yeah, and look, I mean, there are plenty of cases where agency owners come to me and they say, Well, look, you know, I’ve got a client who wants me to send my media list to them.

I’m not giving them that list because, you know, we put a lot of effort into that. And our contract doesn’t say that we need to turn over the media list. And so we own it. Or they’ll come to me and they’ll say, you know, the client isn’t paying on time. My contract says they have to pay on time. I want to stop work or a charge a late fee or do something.

And so so we as owners think about using the agreements that we have and the rules that are in place to our advantage.

Gini Dietrich: Right.

Chip Griffin: We ought to be doing the same when those apply to us. And so let’s walk through some of the very specific examples that we see a lot in the agency community. And we’ll start with something that is near and dear to my heart because I used to run a media monitoring business.

And so one of the favorite requests that we always got from clients back in the day was that they wanted the full text of articles, particularly for paywalled sites to be delivered to them. So they didn’t have to click over. They didn’t have to buy an account on the Wall Street Journal or wherever. And we always said, no, no, we’re not going to do that.

because that is a violation of both the terms of service for those sites as well as copyright law. And yet, it is very frequently asked, how can we easily get full text to give to our clients? That’s a question that I get from agency owners. It’s a question that we’ve seen in some discussion groups of late.

And we need to be forceful and tell clients, that is a violation of copyright law. And look, it’s not just that we don’t, we don’t feel comfortable with it. It creates a material risk. I know of agencies who have had to pay incredibly substantial amounts because of sharing full text of articles by email.

Don’t do it.

Gini Dietrich: Don’t do it. Yeah, I mean, I’m, of course, extremely sensitive to this because there have been so many times, like multiple times every week where somebody presents the PESO model in a workshop or in a speaking engagement, they put it in a book. Well, the, the nice thing about most publishers is if it’s published by a publisher, they make you get credit for it.

So, but if they self publish a book, they put it a PESO model in there. They put it on their websites and claim that they do the PESO model, even though they don’t, or they aren’t certified in the process. Like there’s all of this. It’s theft of the PESO model where people pretend like they created it or they change the graphic to match their brand so that it looks like it’s their model and their framework and that’s against the law.

It is against copyright law. We’ve actually offered it for free. If you use it as long in commercial use, as long as you’re not making money from it. So that means you can talk about it in a blog post. You can promote it on social media. You can even say that you’re using it internally for the most part.

What you can’t do is have it in an ebook and put it behind a landing page where you’re collecting email addresses. You can’t do training on it and make money from that. You can’t do a speaking engagement and talk about the PESO model as if you created it without attribution, because you’re getting paid for that.

So there are rules and regulations around this. And so when people ask for things that violate copyright law, my head explodes. I’m just like, no, like, don’t be stupid because I think you’re right. Like, my attorney, because of the, the feedback and direction I’ve given them, they’re pretty nice about it, but they could charge people for using it incorrectly.

What we do right now is we ask for attribution and a link and all that kind of stuff. And if they don’t comply, then we ask them to take it down. We don’t charge them, but you, there are lots and lots and lots of law firms out there that their sole purpose is to protect their client’s IP and their copyrights and they’re I’m sure

at least a good percentage of people listening to this have had an attorney come to them or a law firm come to them and say, you use this photo without attribution or without paying for it on your website and now you owe me 10, 000.

Chip Griffin: And, and like you, I create a lot of things, including photos. So I’m very sensitive to copyright issues, right?

As are most photographers because every photographer has their images stolen. Absolutely. There are literally groups on Facebook where you can take a watermarked photo that says, you know, proof do not remove or whatever in the middle of a photo and, and you will post it to a Facebook group and people will just remove them for you.

Because the AI is such that you can pretty much remove any watermark from an image today.

Gini Dietrich: That’s terrible.

Chip Griffin: And just do what you want with it. That’s terrible. And that is wrong. Now, look, do I think that, that some photographers have some crazy rules around, you know, how they sell their photos and that sort of thing?

Yeah. But you know what? That’s their choice.

Gini Dietrich: Right.

Chip Griffin: And, and It’s not the business decision that I would make in my photography business, but if that’s what their decision is, you don’t get to pick and choose.

Gini Dietrich: Right.

Chip Griffin: And this feeds into my second area, which is sharing of accounts. And again, as the owner of, or former owner of, a media monitoring software as a service provider, we sold accounts to different clients, and we charged more for different clients, we charged additional for extra users, and this is extremely common.

And yet, if you go into most agency owner communities, or solo communities, you will see a regular stream of people saying, we would like to join a share on X service, typically media databases, media monitoring, those kinds of things are the typical targets for this. And there are all sorts of groups put together to share a four or five ways one account. That is not okay unless the terms of service allow it.

Gini Dietrich: Right.

Chip Griffin: And, and it’s not up to you to decide if that’s, if that should be okay or not. You may believe, and you may be absolutely correct, that some of these services are overpriced. Not your call.

Gini Dietrich: Not your call. Right.

Chip Griffin: And so, I, I know that this is probably one of the least popular things that I’ve ever said on this show, but stop doing it.

I know a lot of you are. You shouldn’t be.

Gini Dietrich: You should not, definitely not be doing that.

Chip Griffin: If the terms of service prohibit sharing of accounts, which I pretty much can guarantee you all the providers do, then you need to have a conversation with them and say, Hey, can we set up a share? Some of the providers do have options.

Yes, that’s right.

Where they will either explicitly bless or quietly say it’s okay. And so if you’ve got that kind of arrangement with your provider, you’re not the ones I’m calling out. I’m calling out the ones who do it, you know, completely beneath the radar without getting an okay or winking a nod from the provider or something like that.

It is wrong. It is not for you to decide. Should you lobby the providers to make those options available? Maybe. Should you try to get them to offer lower cost options for small agencies or solos? Sure. Yeah. I mean, I will tell you at CustomScoop, we did detect people who were sharing accounts. We stopped them, but we did offer a lower priced option for solos and small agencies in order to be able to serve them.

I will tell you, candidly, that was probably not a good business decision because as always happens the lowest paying customers tend to be the squeakiest. We see it in our own agencies.

Gini Dietrich: Yep.

Chip Griffin: I guarantee you, if you’re an agency owner listening to this, your lowest paying clients are probably some of your most difficult to service.

Yep. Because that’s just how it is.

Gini Dietrich: Yep.

Chip Griffin: And so you need to be thoughtful about that as well. Look, if you’re going to be using these services and it’s essential to your business, you need to either figure out how to pay for it, how to price correctly to be able to sustain it, or you need to find an alternative method that is permissible and not just you end running the terms of service to try to meet your budget. I know that’s unpopular.

Gini Dietrich: Yeah, and I will tell you, you’re, you’re exactly right, because there are almost every service, not all of them, but almost everyone that we use in the PR industry will have what’s called shared accounts. So you buy a license for five seats, for instance, or three seats, and then they let you go out and quote unquote, resell it to other agency owners.

So they get, it’s a price of, let’s just say for argument’s sake, it’s 900 a year. You can go to, and you get three seats. You can go to two other agency owners and say, I have a seat for 300 bucks a year. I think that’s probably actually pretty low, but for argument’s sake, that’s right. So, but you have the opportunity to do that.

So go back to them and say. This is really expensive for just me. Do you have some sort of bundled program where I could resell it to some of my colleagues to be able to afford this? And almost all of them will do that with you.

Chip Griffin: I don’t know that I’d say almost all, but a lot of them will.

Gini Dietrich: I can’t think of anyone who doesn’t.

Chip Griffin: I can, but we’re not going to get into that.

Gini Dietrich: Well, in that case, I know who.

Chip Griffin: I know more than one, but yes, I’m sure you do know of at least one. In any case, before we get ourselves into any trouble here, we will move on to the next beating them out of the head and shoulders for our listeners. And so my next pet peeve is one we’ve talked about here before, but 1099 classifications here in the U S.

And so if you are an agency owner in the U S I would say there is a nearly 100 percent chance that you have at least one 1099 contractor on your roster. Many of you have a lot more than that. Some of you have only 1099s on your roster and you don’t have any W2 payroll employees. I can tell you that the vast majority of you are not classifying your contractors correctly.

And part of that is because the vast majority of you aren’t even thinking about the classification of contractors. You’re simply saying, I need to hire someone. I’m not hiring an employee. I’m just going to hire, I’m going to pay this person as a contractor. And you never, you never actually go through the steps to determine both at a federal IRS level, as well as a state taxing authority level, whether that is the appropriate classification of the individual.

And so, I would strongly encourage all of you to go through that exercise and determine if the 1099 contractors you have are properly classified. And I will tell you, if you have 100 percent contractors, odds are very good that they are not classified correctly.

Gini Dietrich: Yeah. And if you have a hundred percent contractors who only work for you, they’re definitely not classified correctly.

Chip Griffin: Right. Right. I mean, there are some, there are some easy things that, that are just glaring. Right. So, you know, if you’ve got someone who’s, who only has you as a client, that’s probably a bad thing. If you have someone who is working, you know, the majority of their time just for you. That’s probably not a good thing.

If you call them employees, which I’ve seen owners do,

Gini Dietrich: I have as well.

Chip Griffin: That’s not a good thing. Please do not call contractors employees, please don’t do that. And look, here’s the thing, as with most of what we’ve discussed, whether it’s copyright violations or terms of service violations or whatever, the vast majority of you are never going to get caught. That’s not a good reason.

Gini Dietrich: That’s not the point. Right.

Chip Griffin: And I will tell you that in this particular case. It is rare for an agency to get caught misclassifying 1099s. However, in those instances where an issue does arise, it’s insanely costly because what happens is whether, whether it’s state or federal that determines that you misclassified, they will then go back years and look at all of your contractors and reclassify them.

And that means you have to pay back taxes. Sometimes you have to pay back wages. Sometimes you have to pay back benefits. You have to pay penalties and interest and there’s so much that goes into it that it’s just not worth it.

Gini Dietrich: It’s not worth the risk at all.

Chip Griffin: So you should be doing the right thing. Classify your contractors correctly and you will be in better shape.

I know it’s going to be painful in the short term because some of you are going to have to set up payroll systems that you didn’t have before. Sure. And, and there is, I mean, frankly, one of the challenges is that there are a lot of people who don’t want to be employees. They want to be contractors in part because they are misinformed about the pros and cons of being a 1099 versus a W 2.

The reality is that people think that just because you’re 1099 you can write off all sorts of expenses. That’s not how it works.

Gini Dietrich: Nope. That’s not how it works.

Chip Griffin: Are there some theoretical benefits potentially, and there are certain cases, there are certain people who have special circumstances where being a 1099 actually is better.

But for the vast majority of people, it doesn’t make a material difference to them how they are paid. So some of it may be that you need to go through an education process. And I’m not saying you should never have a 1099, there are valid cases to have 1099s. You just need to make sure that you’re doing it correctly and not just

going that path because it’s the easy route. I think that’s the sort of the, the sum up of some of the messages here. Don’t do the things that are easy, figure out how to do things right, even if it’s hard.

Gini Dietrich: Yeah. And I would say as one last thing too, that when clients ask you to do something that’s unethical or illegal, you have to be able to tell them

no. I think that we tend to be people pleasers and we tend to not want to tell our clients no on things. But that for me is a line you just don’t cross. If you want my team to pull full text of articles of 50, a hundred, 150 articles every month and send it to your you and your team, I’m not going to do that because that’s not a risk I’m willing to take.

If I got caught because my team sent you a hundred full text articles that are behind a paywall every month, that that would take us down. So be, be willing to tell clients no and educate them on why, because unfortunately, not everybody understands that just because it’s on the internet doesn’t mean it’s free.

Chip Griffin: Well yeah, and look, I mean, I’m a realist. I do understand part of the problem is that if, if you say no, there’s probably someone out there who’s going to say yes. Okay. I mean, this is, and having come from the world of politics and public affairs where pretty much everybody from the top to the bottom believes that the rules are kind of elastic and, you know, you should, you should kind of just, you know, figure out how to do what you want to do and, and, you know, to heck with the consequences.

I came from that environment where it was really difficult to say no, because you knew as soon as you said no, there was another consultant or employee or vendor who would say yes. And I mean, honestly, it’s one of the reasons why I don’t do public affairs anymore.

Gini Dietrich: Yeah.

Chip Griffin: Because it, there was so much of that pressure constantly to just kind of bend the rules and do it, whether it was legal, ethical or not.

And it’s, it happens not just in public affairs. I mean, I, I know of specific instances, PR and marketing agencies get pushed on this all the time, whether it’s full text of articles or other things.

Gini Dietrich: Right.

Chip Griffin: And, and it’s up to you to make that decision. But I would strongly encourage you to, to err on the side of the angels here, do the right thing, and if it costs you business, so be it.

So be it. I can sleep better at night knowing that I’m complying with the rules than I could if I, if I was just, you know, raking in extra bucks because I was willing to say yes to whoever came to me.

Gini Dietrich: Yeah, I totally agree with you completely.

Chip Griffin: And look, I’m also not saying, I mean, there are, in some cases there’s gray area and when there’s gray area, you have to make judgments.

What we’ve talked about here are primarily black and white. Yep. It’s just, it’s binary, right or wrong, legal, not legal, comply, not comply. There is gray area. 1099. Perfect example. There are certainly clear cut cases and then there’s the gray area ones. And gray area, you’ve got to make your best determination and I’m not going to fault you if you make a legitimate, honest assessment and you come to a different conclusion than I do.

But if it’s blatant, then I’ve got an issue with it. And I think you should too. So

Gini Dietrich: Yup, 100 per cent.

Chip Griffin: Bottom line, stop playing with fire, pay more attention to compliance, don’t take the risk, do the right thing. In the end, it will work out for you. It may be a little painful in the short term, particularly if you have to make changes to what you’re doing today,

but please take this message to heart and, and change your behavior.

If you, if you heard yourself in any of these things that we talked about.

Gini Dietrich: Yes, it’s, it’s to your point, it’s not easy, but it’s ethical. It’s the right thing to do. So, abide by it.

Chip Griffin: And we expect it of our clients and the people we work with. Right. So you can’t, you can’t have that kind of a double standard where you expect others.

Gini Dietrich: Yep.

Chip Griffin: To abide by the agreements that you have with them, or the rules that are out there that favor you, and then you just flout the ones that you don’t like.

Gini Dietrich: Yep.

Totally.

Chip Griffin: So with that, that will draw to an end our 250th and final episode. Woohoo! And all the hate mail from everybody saying we don’t ever want to listen to you all again because you were mean to us.

Gini Dietrich: You were mean to us.

Chip Griffin: On that note, thank you all for joining us. I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich.

Chip Griffin: And it depends. Except on these things.