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Dipstick: “Should clients pay agencies for participating in a pitch?”

Brands value the efforts being put in by the creative agencies at the time of a pitch. The question is whether agencies should be compensated for the ideation and manhours spent

Surbhi C & Neha Saraiya | New Delhi | November 28, 2011

Earlier we had presented what agencies had to say on the issue of pitch fee. This time BestMediaInfo looks at the perspective from the other side of the pitch table.

It was around the middle of 2010 when the controversy reached a flashpoint triggered by Reckitt Benckiser, one of India’s largest advertisers. Reckitt literally rocked the country’s ad industry by laying down that media agencies should pay – around Rs 4 lakh — to get on to the pitch list for its media account which was then under review. This had never happened before – and was almost blasphemous for the agencies. Not only that, it was also given out that the winner would also have to pass on the volume discounts paid by media owners. Needless to say, there were fireworks. And India’s leading media agencies hit back by boycotting the Reckitt pitch. The Rs 200-crore account finally moved to ZenithOptimedia, which did not join the boycott and also since ZO was Reckitt’s global media partner in many markets. Incumbent agency MPG India too decided not to defend the business.

BestMediaInfo revisits the subject and spoke to leading clients on this controversial subject, including Chander Mohan Sethi, Chairman and Managing Director, Reckitt Benckiser (India), the man who was in the eye of the storm last year. Read on…

Chander Mohan Sethi

Regional Director – South Asia, Chairman and Managing Director

Reckitt Benckiser (India) Ltd.

“We do not agree that the clients should pay for a pitch. A pitch process is carried out to find the best available options for servicing one’s business. While doing so, the requirements of a client are understood by the agency for pitching and making recommendations. This is true for any engagement with external partners across business functions. This is a standard business process which benefits all stakeholders.”

Sanjay Tripathy

Executive Vice President – Marketing and Direct Channels

HDFC Life

“Pitches reflect the creative capability of an agency. I agree that a lot of hard work goes into a pitch and agencies often fear giving away ownership of ideas in the hope of winning a review. But, in India, the concept of paying for a pitch will take time because that would call for certain expectations from clients and maturity level from agency. In other words, the client-agency pitch process needs to be slightly more structured so that it is fair for the agency and the client also receives a good deal.”

Krishnadeep Baruah

Director – Marketing

Research in Motion (makers of Blackberry devices)

“Fortunately for us we don’t do multi party pitches, simply because BBDO is our agency on record globally.  But if you are asking me for a perspective then I think one should pay for the pitches but it really depends. I have been through this earlier where you provide a concept and ask people to pitch. Till the first level of pitch, its fine not paying the creative agency but when you move to the next few levels where you are expecting market research and expecting the market planning function to come in and are looking for well etched out plans to be presented then one should pay for that. So for the second and third level it’s fair to pay but for the first level, irrespective of the work put in by the agencies, I don’t think that it warrants payments. The first level according to me is just like the sales pitch that any organisation would do gather business. But for the second and third level definitely payment is required.”

SN Rai

Co-Founder and Director

Lava Mobiles

“In my view one should not be paying the creative agencies for the pitches as one is not sure of what they can deliver for your brand. Globally too there are no norms in regard to paying agencies for the work that they put in during the pitch process. One cannot really pay for the things that one is unsure and undetermined about.”

Jiby Thomas

Co-Founder & VP – Marketing

Quikr

“I think ad agencies should not have a fee or be paid for pitching for new business as it does not address or solve the issue they face but can cause other problem. The solution lies in understanding why agencies feel they need to be paid. The reason cannot be that they spend time and effort in developing ideas and campaigns for the brand during a pitch. The ad agency needs to look at it as an investment and show of talent just like a design, interior firm, architect or several others who put in creative efforts in their pitch to bag a new project. What needs to be better managed is the pitch process itself. What ad agencies need is a formal agreement, which states that in the event of not bagging the business, ideas presented by them will not be used by the brand unless the agencies are compensated fairly for it. That is what agencies fear and feel let down about during a pitch. Thus, agency associations should have a formal pitch guideline to that effect.”

Info@BestMediaInfo.com

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  • Tarun Sareen

    Though I totally agreen with Mr. Krishnadeep Baruah, that one should pay for the pitches but it really depends. I have been through this earlier where you provide a concept and ask people to pitch. Till the first level of pitch, its fine not paying the creative agency but when you move to the next few levels where you are expecting market research and expecting the market planning function to come in and are looking for well etched out plans to be presented then one should pay for that. So for the second and third level it’s fair to pay but for the first level, irrespective of the work put in by the agencies, I don’t think that it warrants payments. The first level according to me is just like the sales pitch that any organisation would do gather business. But for the second and third level definitely payment is required.

    My simple take on this is, it has to be a 2 Pronged Approach,
    A) The Client should give in writing that they will not invite say more than 3-5 Agencies to Pitch in Stark Contrast to Clients calling 10-12 Agencies, in a few cases!

    B) The Agency should give in writing that they will not Pitch for other Competing Brands within the said period & Promise on Sticking to the Yardsticks given/stated/defined by the Client during the Initial Briefing in terms of Deliverables!!

    Now that would really be very fair to both the sides!!!

  • bestmediainfo

    @thatpallavi
    some sort of compensation for the effort, yes. Especially if the scope of work is large. Or a pre-agreed rejection fee.

  • bestmediainfo

    @vikramkharvi
    Definitely for PR nd advt both

Tarun Sareen / November 28, 2011,08:53 PM UTC

Though I totally agreen with Mr. Krishnadeep Baruah, that one should pay for the pitches but it really depends. I have been through this earlier where you provide a concept and ask people to pitch. Till the first level of pitch, its fine not paying the creative agency but when you move to the next few levels where you are expecting market research and expecting the market planning function to come in and are looking for well etched out plans to be presented then one should pay for that. So for the second and third level it’s fair to pay but for the first level, irrespective of the work put in by the agencies, I don’t think that it warrants payments. The first level according to me is just like the sales pitch that any organisation would do gather business. But for the second and third level definitely payment is required.

My simple take on this is, it has to be a 2 Pronged Approach,
A) The Client should give in writing that they will not invite say more than 3-5 Agencies to Pitch in Stark Contrast to Clients calling 10-12 Agencies, in a few cases!

B) The Agency should give in writing that they will not Pitch for other Competing Brands within the said period & Promise on Sticking to the Yardsticks given/stated/defined by the Client during the Initial Briefing in terms of Deliverables!!

Now that would really be very fair to both the sides!!!

bestmediainfo / November 29, 2011,12:24 PM UTC

@thatpallavi
some sort of compensation for the effort, yes. Especially if the scope of work is large. Or a pre-agreed rejection fee.

bestmediainfo / November 29, 2011,12:26 PM UTC

@vikramkharvi
Definitely for PR nd advt both

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