The Pitch Fees issue: India adland – united at will, divided at work

The Pitch Fees issue: India adland – united at will, divided at work

Author | Nitin Sharma | Tuesday, Aug 26,2008 7:59 AM

The Pitch Fees issue: India adland – united at will, divided at work

In a complex advertising environment as India’s, there are serious issues like talent crisis, Intellectual Property Rights (IPR), scam ads and so on, that are daunting the industry. Perhaps in comparison, pitch fees might appear to be a minor problem. However, this is one point that advertising gurus have been fighting on for quite a while now. The Advertising Agencies Association of India (AAAI), in association with the Indian Society of Advertisers (ISA), had even gone to the extent of agreeing to certain terms and condition on pitch fees application a year back, but nothing materialised.

The topic is back in the discussion circuit of AAAI, and chances are that we would be hearing something on this very soon. Until that happens, exchange4media spoke to industry stalwarts to know their views on pitch fees. Being ‘united’ seems like a huge task that the AAAI would face on this. Industry leaders have stated that not even a single agency is against pitch fee. So what is the problem? Realistically speaking, the problem is in the ever-reverberating question, ‘What if there is a backdoor exit?’

But if there is complete unity, there is a ray of hope.

Madhukar Kamath, MD &CEO, Mudra, and President, AAAI, said, “As an advertising professional, who is a partner to the client in providing solutions for their marketing problems, there has to be a fee – whatever the amount is. This can be done in two ways – one is that each agency decides that it would not present its ideas unless the client compensates. Secondly, the AAAI gets the advertising fraternity on the table and frames a mandate, wherein everyone should ask for a pitch fee. As President of AAAI, I would like to mention that last year, we did attempt to resolve this issue by getting everyone on a common platform, but unfortunately it failed, mainly because there was no agreement on what the fee should be.”

Speaking on the upcoming meeting of the AAAI, where the issue would be raised, Kamath said, “This year, I would link the pitch fee with an adequate amount of compensation for the agencies, like the agency having a stake in the success of the brand, and I hope that the issue gets resolved.”

Piyush Pandey, Executive Chairman, NCD, O&M India & Vice Chairman, O&M Asia Pacific, said, “Pitch fees is a very small thing. I think the larger issues are to persuade clients into giving actual fees. In a business where there is dearth of talent, pitch fees is a minor issue. I think we must learn our way to be remunerated, and have some kind of understanding with the clients. I don’t think forming bodies and taking stances is a solution, because the problem of pitch fees will not get solved until 15-20 top line agencies come to a consensus.”

Prasoon Joshi, Regional ECD, McCann Erickson APAC and Executive Chairman McCann Erickson India, added, “There should be a pitch fees, especially when every two years a client is re-looking at agencies. AAAI can play a vital role in making pitch fees happen. But there has to be unity among the agencies, and also, the clients need to be informed about the benefits. I am not saying that every client is taking advantage of the situation, but there are few who do and in those cases, it’s unfair.”

Pratap Bose, COO, Mudra, is skeptical on the pitch fees issue getting resolved in India, because it has not worked successfully anywhere in the world. He said, “Industry bodies like ASCI and AAAI have not been able to put pitch fees into practice. There is a lot of grey area now open for negotiations, whenever the issue is raised. Either of the bodies needs to get a charter, wherein it is made mandatory for all agencies to sign. And if anyone does not comply, then that agency should face penalties. The big question is who is going to take the onus, and when is it going to happen.”

Suman Srivastava, CEO, Euro RSCG, is of the opinion that pitch fees is dependent on market forces. He said, “Pitch fee is dependent on market forces of demand and supply. The balance swings in favour of the party that is able to force its importance in the industry as against other stakeholders. In the advertising industry, the clients are more powerful than the agencies. A cartel in my mind will not work, because somebody in the industry will break the agreement.”

On more occasions than one there have been clients that have called for pitches and not reverted to the agencies. In some cases, the clients have also gone ahead with their own communication in-house after calling for a pitch. It doesn’t leave much of a choice for advertising agencies as well. Pitch fees would discourage such practices. And it is not long before we know whether the industry can get together and fight the problems that are coming in the way of pitch fees becoming a reality.

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