The big debate: Should clients pay agencies to pitch?

Given the high expense of pitching, could it be about time for clients to pay a fee to their pitching agencies as a standard price?

e4m by Misbaah Mansuri
Updated: Nov 21, 2018 8:33 AM
Pitching

In the ad world, acquiring new business is not always the most rational or effective process. For agencies, pairing new business is often a drain on resources and morale and doesn’t always result in the best association of the brand and creative partner.

 

While this has been an ongoing industry discussion, we thought we’d get some insight into potential solutions to make the practice of developing new partnerships more efficient, respectful and creative.

 

The pitch ‘perfect’ fee

 

Taproot India, Law & Kenneth Saatchi & Saatchi and Creativeland Asia are a few agencies that charge a pitch fee. But how much could a pitch fee range around? While this might vary depending on the client and agency, an industry source, on condition of anonymity, shared that a leading ad agency charges as much as Rs 30 lakh for a pitch fee for its ideas.

 

In 2010, Reckitt Benckiser had called a pitch for its 200-crore advertising budget with the condition that only those willing to pay a pitch fee of Rs 3-4 lakh could participate in the business. This led to a bitter fight between the brand and the advertising industry, with the Advertising Agencies Association of India (AAAI) advising agencies against pitching for the account.

 

AAAI had put out a roadmap to charging a pitch fee along with ground rules on how many agencies can be invited to pitch. However, the industry continued pitching for free in order to win businesses and so the idea didn’t really take off.

 

Of false pitches and stolen ideas

 

One common gripe about pitches is idea theft. There are cases where an agency’s ideas have been twisted and complemented with a cheaper agency. Rohit Ohri, Group Chairman & CEO, FCB India, agrees that a potential client stealing an idea during the pitching period is a common occurrence in the industry.

 

Ohri recounts one such incident when he was in conversation with an edible oil company that called for a pitch comprising five agencies, but decided to use ideas presented by all of them in their marketing plan.

“The CMO of the company told me that while I’ve chosen one, we got great ideas from the rest. I’ll make a wall with these ideas and incorporate them in our marketing over the next two years. So this is an exploitation of the good face of the creative industry.”

 

Vikas Mehta, CEO, PointNine Lintas, comments that of late, the space is seeing a rising number of pitches with no winners. “A pitch fee could act as a useful deterrent to such false pitches. It would also dissuade beauty parades where at times, one sees 10-15 agencies being invited to a single pitch,” remarks Mehta.

 

Ohri shares that a recent pitch by a company invited 70 agencies to participate. “The CMO came on Facebook Live and did the briefing. I think this is ridiculous because in such cases, everyone pitches in.”

 

So, would the pitch fee reduce the number of agencies being called at a pitch?

 

Subhash Kamath, CEO and Managing Partner, BBH India, says that only some unscrupulous ones call for pitches regularly, purely to scout for free ideas. And so, a pitch fee will definitely reduce the number of agencies being called for a pitch. “Some clients call for a ridiculous 8-10 agencies for a pitch, sometimes even more. The practice of charging pitch fees could help reduce that unnecessary fishing,” he adds.

 

Raghu Bhat, Director, Scarecrow M&C Saatchi, affirms that if pitch fees become a norm, it will definitely bring down the number of pitches. “It might even force some clients to spend some time making a shortlist instead of a laundry list. I believe too many pitches happening isn't a good thing. Reminds me of Henry VIII who
married 6 times in 33 years but still died unhappy.”

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Pitch or ditch?

 

Pitching can be an expensive exercise for agencies, given all the time and travel required, even if they aren’t asked to create finished ad products. Given the high expense of pitching and the rising likelihood that it may not succeed, could it be about time for clients to pay a fee to their pitching agencies as a standard price?

There are strong arguments in favour of pitch fee, given that the process has become increasingly complex.

 

Ohri opines that a pitch fee is important to compensate the agency for its time and effort. Mehta says that most responsible agencies give their all to a pitch already, so a pitch fee helps make it a two-way street. “Because a pitch needs to be about finding the best agency partner. Using a pitch process to find your next campaign idea alone, is not necessarily the best use of a pitch,” he asserts.

 

According to Bhat, a pitch fee seems like a perfectly logical idea but adds that clients might balk at paying for something they have been getting free all these
years. “A few clients do pay a pitch fee. It's a big help to agencies, no doubt,” he shares.

Rajiv Sabnis, Executive Director, DDB Mudra Group contends that the pitch fee would help with only the clients, serious about evaluating their current partner will call for a pitch. “The worry about shopping for ideas or hoax pitches will substantially reduce. The number of participating agencies will reduce dramatically and shortlisting will happen on the basis of credentials/ capabilities presentations,” he shares. Sabnis says that with it, there will be more conversations and fewer presentations.

To pay or not to pay?

 

What do the clients think? Would they pay for a pitch fee? We asked those on the other side of the fence.

 

Ajay Kakar, CMO, Aditya Birla Capital, acknowledges that it means a lot of investment of time and effort at both ends and it is reasonable and professional for an agency to ask for a pitch fee. “It is a barometer of the client’s seriousness. And limits the temptation to call for a beauty parade. Also, no one values anything that comes for free,” he opines.

 

Kakar recollects that pre-launch of ICICI was when they had first called for a pitch.

“20 agencies were invited at the same time and at the same place. And all 20 landed up. If that’s the eagerness of the agencies to pitch, why will a client say no?,” he argues and makes a powerful point on who will take the first call to break this cycle!

 

“I suggest that the agencies do it. And if there is a tempting brand, do test the client’s intent and seriousness. Ask for a pitch fee,” Kakar advises.

 

B. Krishna Rao, Category Head, Parle Products, states that a pitch fee according to him is not justified, though he admits to all the work that goes on the agency’s side.

 

“Though the industry has evolved, everyone is becoming very sensitive to the issue of cost. There are clients that are actually concerned about coming out with the best creative solution for the brand. For these serious set of clients, who are concerned about a long-term creative partnership, this pitch fee concept isn’t justified,” comments Rao.

 

Anirudh Pandharkar, Head of Marketing, VIP Industries, signals that it is also in the client’s interest to pay the pitch fee so that the client gets the best output from all participating agencies. “The agencies also then feel no hesitation in pulling out resources and prepare for the pitch in the best possible manner. This creates a win-win situation,” he says.

Rajiv Dubey, General Manager, Dabur India hints that the phenomenon of pitch fees is a personal choice of a client which is directly proportional to desperation of the agency to grab new business and demand and supply.  “Hope of additional business for the agency makes agencies agree to paying the pitch fees. Imagine a scenario that an agency doesn’t participate because of fee, it would be a lost opportunity for them. That’s why some of them agree, I feel.” 

According to Swati Rathi, head, marketing, Godrej Appliances, a pitch fee should depend on the scope of work involved and instead of being cast in stone should be worked out in mutual consultation for a win win situation. “Some times a pitch fee could be warranted, but not  always. Also pitch work alone can only be a part of the criteria, there are other significant factors like the kind of team involved to take the account forward, the kind of work done on brands they have been partnering, the role of a creative agency for the brand in context of its business or sector and hence the best fit etc. Most mature clients do not base their   decision only on flashy presentations and take a holistic approach when making a key decision like this,” she spells out.

From flashy presentations to pragmatic conversations

Industry experts opine that the pitch practice is notoriously flawed and believe that brands have to take a certain level of responsibility when it comes to the brief given to an agency, as a clear and well-written brief can have a lot of impact on the work.

 

Rao agrees that it all boils down to how concise and clear the brief is.

 

Mehta feels that the best pitch experiences are the ones that start with a presentation and end with a real conclusive conversation. “As long as there’s enough honesty from both sides, pragmatic conversations are usually the decisive ones,” he says.

 

Other industry experts are calling for substantive change to the traditional agency search. And rather than asking to formulate full-blown creative executions, they advise that clients should spend more time meeting agencies at their offices and quizzing them about their strategic visions.

 Sabvis suggests that the pitch process should be transparent with names of participating agencies revealed upfront. “The timelines provided to all potential partners should be the same. All participating agencies should be informed about the partner who wins the mandate along with the reasons for the decision. Pitch fees should be paid in advance.Whether agencies can show solidarity on this issue or whether they will break rank has been a matter of much debate, and speculation and this has held up the pitch fee concept from getting implemented,” he recommends.  

Ohri shares that we’ve been getting the sequence wrong. “I think, first clients need to check credentials of an agency, shortlist them, have chemistry meetings and then get into a pitch situation. While at this point it’s reverse; clients have chemistry meetings and then call for a briefing, which wastes a lot of time and effort.”

 

Kamath says that from a pitch, a client chooses a partner and not a campaign. “It's only after the client and agency start working closely as partners that the campaign actually starts to develop. But, during the pitch stage, it's very important to have the basic strategic conversations that can help you demonstrate your thinking,” he says.

 

Kakar believes that a client-agency relationship should ideally enjoy the same sanctity as that of a marriage. “Ideally, it should be a decision for life. So how do you make a lifetime commitment without getting to know each other first?” He advises that a pitch process should ideally be seen as that opportunity, by both sides. “Both parties must first do their homework to gauge whether they have matching values or ideology that they bring to the relationship.”

 

He points out that sharing of credentials can well serve that purpose. “An agency’s client roster, a client’s past work and remuneration track record. Having passed the test, if both parties are keen to take the talk to the next level, a strategy presentation can be a reasonable ask.”

 

Is there a need to ask for creatives and the whole nine yards? Kakar confesses that he has rarely seen or heard that a creative presented at the time of a pitch has seen the light of day.

 

“And nothing surprising about that. How can you expect an agency to come up with the creative if you don’t share the brief and invest the time that you would, in a real brief? Then why ask an agency to do that!”

 

 

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