Pitch Pains Part 2: Agencies need to pick their battles
On Monday, we kickstarted a major industry discussion, concerning both clients and agencies, with our article, ‘Pitch Pains Part 1: Unscientific, Chaotic & Exploitative’. Adgully took the mantle of raising a burning question 'Are there any concerns with the current pitch process?'. As we began to explore, a lot of points emerged during the discussions and it became evident that the problem is complex, chaotic, and prevalent on both agency and client side. The industry summed up the problem in three words as Unscientific, Chaotic and Exploitative!
So, if there is a problem, then there has to be a solution to it. We understand that no one person, agency head or a marketer can dictate a solution, which will be etched in stone. It demands a complete behavorial change on both sides if our industry ever intends to fix it.
So, in order to start a discussion on a progressive side, going from problem to solution, we reached out to the industry to understand what they think could be the right way to deal with this problem.
Introspection Within: Agencies & Clients
There are many issues within the agency parlance, which haven’t been addressed in the past. Often agencies get involved in pitches even when they aren’t invited. They often pitch for free and hence the rest of the participating agencies cannot even request a pitch. It puts the client in a better position. The eagerness of agencies results in more supply for the client than the demand and marks the beginning of a scenario where the latter is always in commanding position. While some clients, who are evolved, respect this relation and treats their agencies as partners, but often there are cases, when this eagerness and over supply allows the client to use agencies according to their whims and fancies. It is a major problem, and, both big and small agencies suffer from it. The first step to address this problem could be by generating more business from the existing clients rather than pitching for new ones. This is an ideal scenario, where a client looks up to its agency for round the clock solutions. Some of the long standing agency-client relationships are a result of such a mutual trust.
Tarun Rai, Chairman & Group CEO, Wunderman Thompson South Asia, says, “Reduce the number of pitches and improve the conversion rate.” He also points out the aspect of the client hindering this. He adds, “Part of the reason agencies end up pitching so much is because their current clients are putting pressure on them to reduce fees. When there is no growth from existing clients (in fact, fees are being pushed down) agencies start chasing new opportunities to meet their targets. If only our current clients would give even inflationary increases in fees the pressure to pitch would reduce and the quality of work would improve.”
Agreeing to this, Sanjeev Jasani, Chief Digital Officer, Cheil India, says, “Agencies need to pick their battles. Decide which pitches they want to go for and which ones they want to avoid.” He further adds “Focus on the big ones and put your best resources on them. Because if you win there you win big. For the lower value pitches, ask for a pitch fee. I know in this competitive market all this doesn’t sound realistic but it's far better than spreading your resources thin and cutting corners on your clients business later on after winning the business.”
When it comes to clients in the industry, they have always been demanding and the saying goes “Client is always right”. This pretty much sums up the situation. As mentioned in the previous story, the supply of ideas is much more than the demand, which allows the client to have multiple options and often take advantage of it. “When I have so many options out of which many are offered for free, why would I pay money for something similar?” This is a thought prevalent in the client’s mind. Hence it is very important that a system should be created that can streamline this and the agency client relationship. There have been instances, both spoken officially and unofficially, where clients take ideas from one agency and give to another agency whose fees are less. This takes us to the next issue which is ‘Idea Shopping’.
Idea shopping is a common occurrence in the industry, which leaves the agency disappointed and often cheated. As an agency, my IP is mine and it takes a lot of effort to come up with ideas as we don’t live in a perfect world where ideas grow on trees! A systematic procedure can be the solution for this issue. The problem has persisted for long and many-a-times, even big agencies do not raise their voice over it, then imagine a situation, what chance would a boutique or a young agency would stand in this case.
Hari Krishnan, President, Lowe Lintas, lists the following solutions:
- “AAAI has to become the IBF of advertising. Or a new autonomous body has to be created which is bestowed with more powers by the industry.
- Pitch fee to be made mandatory for all clients and the extent of fee should be determined by the defined marketing spends.
- All pitches have to be registered with AAAI and routed through them outlining the client’s chosen shortlist of agencies.
- Pitch fee payment by clients to be routed through AAAI.
- This was implemented in Sri Lanka (fortunate to have been a part of it) and in Malaysia by the 4As which is a body like the AAAI.
- It requires a concerted effort from the industry body and committed participation from all agencies to implement this successfully and to protect the future of the industry.”
What about pitch fee?
We all have heard of pitch fee, but the only thing is that only a handful have received it. The question is why should an agency be given a pitch fee or why should an agency even pitch without a pitch fee. There is no doubt that agencies put in a lot of effort to come up with ideas for a pitch. Often the information available to them is limited and there are time constraints. However this mainly happens as the clients control the process and aren’t charged for it. Well, one cannot completely blame the clients for it. Indian advertising is in a 'Red Ocean' scenario, where one survives by stepping on another. So, the agencies themselves do not want to ruin their relationship with the client by asking them for a fee. Well, this works in the favour of clients.
Once, if a pitch fee format is adopted by the industry, pitches will be taken more seriously by clients and will give them a better agency perspective. However the current situation is far from ideal.
Khushboo Solanki Sharma, Founder, Zero Gravity Communications, points out the current situation and says, “Except for national agencies or big 10s regional ones are never paid for the pitch they make. Like they say size matter here, we have come across so many cases where our pitch had been more researched, detailed, and with a creative approach, while nation agencies come and present their credentials, other case studies, and showreel. We get appreciated for thought and effort but not commercially.” She further adds, “I think it is more about who needs whom more and accordingly demand. The major concerns also arise on the number of ideas an agency should reveal during the first proposal.”
The solutions for pitch fee are in the hands of the agency itself. Naresh Gupta, CSO and Managing Partner, Bang In The Middle, says, “No pitch should be free. Let the client figure out what process it wants to follow and let it pay the agency it meets. A free pitch is a very bad idea which is stuck in the industry for decades. Since the industry has changed so much over the years why should the pitch fee process be the same?”
Rohit Ohri, Group Chairman and CEO, FCB India, adds to this and says, “Although everyone thinks pitch fee is a great idea, the real challenge is implementing it. There are several agencies who are ready to work without a pitch fee which makes the pitch fee system difficult to create and implement.”
What we see here is a possible Domino effect. The only way a pitch fee system can be adopted by the industry is when the agencies themselves understand that their self-respect holds a bigger value over just generating business; especially when you look at the bigger picture. Once the agencies take a stand on this, the domino effect will result in terminating idea shopping. With the industry taking a stand and more hands on involvement of industry bodies, idea shopping as a regular occurrence can definitely be curbed. Yes, agencies can choose to generate more business from existing clients however pitching as a system isn’t going anywhere. It’s a norm that is going to stay but if the agencies come together and take stance, clients will automatically take the agencies and their efforts much more seriously and the agency-client relationship can be balanced out. With this evenness, we can also see more transparency in the industry as a whole. This chaotic and unscientific system has been prevalent for far too long. With growth in technology and various mediums available to voice one's opinion, agencies should definitely come together and create pressure for change. It’s now or never!