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Noorings: Reckitt Benckiser’s media pitch should be a wakeup call for the industry

07-June-2010
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Noorings: Reckitt Benckiser’s media pitch should be a wakeup call for the industry

It would be fair to say that Reckitt Benckiser was discussed more in the last weeks in media circles than it was in the last two years. Reason, the media pitch. Some call it ‘orchestrated by an ill-informed mind’, others prefer staying with ‘preposterous’, ‘unethical’, ‘anti-industry’, ‘humiliating’ and such similar sounding terms. Now, it is not the pitch itself that has exacted these responses. Though one would wonder why a professional, renowned corporate like Reckitt Benckiser would conclude a global pitch, align its media duties with a particular agency, shape it in India, and then within months, reopen the review.

There are no official comments coming, but there are many stories already floating on the reasons for the pitch. The most popular is that MPG had signed a CPRP-led deal with Reckitt, and the deliverables have not been met. Hence, a fresh media pitch. Not many have a problem with the story so far. The problem begins when the pitch clauses get known.

Alleged clause number one: a certain fee that the agency would pay to Reckitt Benckiser to participate in the pitch – some say Rs 3 lakh, some say Rs 4 lakh was asked.

Alleged clause number two: commit cost per rating points, in short, commit rates...

Alleged clause number three: for the first 12 months, the agency pays Reckitt Benckiser commission, because, and again allegedly, working with Reckitt would bring advantages like significant volume...

I must reiterate here that there are no official confirmations on any of the above mentioned. This is industry intelligence. But the last couple of weeks have seen heated discussions at various Advertising Agencies Association of India (AAAI) meetings pointing out the repercussions that a pitch like this can have on the overall industry.

The AAAI is said to have advised all its members to refrain from the Reckitt Benckiser media pitch until the advertiser changes the clauses. And many agencies have said that they have pulled out of the pitch.

Right now, there are too many fingers pointing at Reckitt Benckiser – how can an advertiser impose such clauses for a media pitch? Have we come to a stage where agencies would have to pay clients to show them their ideas to get that piece of business? What are clients like Reckitt encouraging agencies to do when they talk of how low can low rates on channels be, and then award the business only to those who promise the lowest rates? Worst still, and if this is understood right, what is this reverse commission that is suggested here?

The Reckitt Benckiser media pitch has attracted the worst comments that were possible on any pitch process. Some are not even discussing the idea openly lest it ends up giving ideas to other advertisers!

But the more I think, it is not this pitch or its clauses that are the worry. The advertiser has gone ahead and suggested unusual media pitch terms. She/he is within her/his rights, if not right, in doing so. And let’s face it – there were agencies that considered pitching until the AAAI intervened, and there were broadcasters who thought how this deal could make sense to them because even if they shelled out crores of rupees from their own pockets to get the Reckitt business, it would attract other advertisers.

The industry is so advertiser-dependant right now that even when an some idea looks wrong right in the face, the industry is willing to give it a shot if it can get it one new client.

The advertiser is thinking in all directions. Media procurement departments, by the very definition, are treating media like commodity and media service brands like salesmen; creativity, intelligence and strategy have gone out of the equation. The advertiser wants more from less, and honestly, there is nothing wrong in that.

But unless the advertising industry begins working together in a better way, industry growth will only be tougher. The advertising industry was not able to unite on something like a pitch-fee. What was the fear - someone can break the ranks.

So, here is the real worry - when the industry is this inward-looking, is it prepared to take on the bigger challenges that the advertiser is throwing at it every single day?

Gone are the days when agencies were competing with each other, or rather, such days better be gone. The competition today is with external forces, and only collaboration can help survive. Media service brand professionals will have to pick up the phone and speak to each other, instead of giving in to rate cuts and making obscure promises to win an advertiser. True, it is difficult to gauge what one can lose or win from this. Hopefully, over a period of time, there would be balance. But at least in the longer run, the media service industry wouldn’t be cutting its very own roots to keep a client happy. In the longer run, media would not be procured, but partnered.

The Reckitt Benckiser pitch signifies only one thing – the advertiser can do anything; the industry should be prepared.

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