There’s an ongoing debate among marketers about whether agencies should be paid by clients for the time, effort and energy they put into the pitch process. The argument is that, even when agencies don’t get the contract, they still deserve some compensation for valuable time, human and material resources invested in the process, as they try to crack a brief and come up with the best creative solutions for their prospective client.
But is this also fair on the client? Why should a business pay for mere ‘ideas’ which may or may not eventually be adopted and activated?
Here are some of the key points from both sides of the argument:
Why clients should pay
- Paying would reduce the rate at which clients call for pitches, ultimately leading to a reduction in creative or technical churn within the industry. Paying for pitching readily assures an agency that the client means business and is not just out to waste time on a wild strategic goose chase which leads nowhere.
- Some clients would
stealtake ideas from a pitch process and run with it, without hiring the agency that originally presented the idea. This is intellectual property theft. If clients start paying for pitches, maybe they can then own the ideas generated for that pitch?
- It will save everybody’s time by reducing the long lists of agencies that clients usually invite to pitches. When you know you have to pay for everyone’s time, there’ll be more attention paid to the shortlisting of appropriate agencies who meet certain standards that will eventually receive invites and RFPs.
- The agency’s work is hard, long and now more complex than ever before. In today’s landscape, to pitch properly against the client’s business challenge, an agency has to present a much wider selection of creative work to properly demonstrate how an idea is going to work across all touch points. It’s much broader than it has ever been in marketing comms. Think creative, PR, outdoor, print, radio, TV, video, digital, experiential, events, influencers, AI, VR, and so on… All different ways to prove that BIG IDEA.
Why clients can’t pay
- Financial constraints on the part of the client. Especially in the era of zero-based budgeting, where clients have to figure out how much they think they can achieve in the year ahead, in terms of strategic objectives and what those objectives are worth in financial terms, plus, how much the tactical efforts to deliver those objectives will cost by year’s end.
- Several agencies are willing to throw themselves at brand managers, even go begging hat-in-hand for an opportunity to serve. This desperation means not all agencies will demand Pitch fees. Some in Nigeria may even be willing to pay so they’d be invited to pitch. No, not just Nigeria. A University in Singapore had indeed asked agencies to pay for a copy of pitch materials and for the chance to be included in the pitch.
- Lack of understanding on the client side about the true cost of pitching. An ISBA and IPA UK research from 2013 shows that while it costs agencies around £178,000 on average to take part in a large international pitch, clients believe it costs only around £31,000. To put this in context, most clients think agencies spend a 6th of the actual cost of putting together that sexy power point presentation with all its grand ideas and genius tactics. SMH.
- The problem of Intellectual Property ownership. There continues to be disputes within the marketing and communications industry about who should own the Intellectual Property (IP) of any pitch – the agency or the client.
- Even if brand managers appreciate a good pitch, the bosses who sign the cheques will only respond once they see the creative output of the pitch process. Many firms at different stages of maturity don’t recognise what they’re missing out on, and the value of an agency’s new ideas until they see the output of the pitch.
- The decision to hire an agency is never always about ideas only. The decision to hire is also about agency experience, their credibility and their fit with the client’s brand team. By FEMI FALODUN
A good guide for best practices on the agency pitch process is provided by ISBA & IPA (UK’s trade bodies on marketing communications) via thegoodpitch.com
What do you think? Are you convinced by either side?
Do share your thoughts in the comments section.