Can clients really be persuaded to pay for pitches?

24 Jan 2019  |  Jan Gooding 
Can clients really be persuaded to pay for pitches?

Kicking off her new column for Mediatel Newsline, Jan Gooding looks at ways the pitching process can be changed to the benefit of both clients and agencies

As she stepped down as chair of AMV BBDO, Dame Cilla Snowball remarked "Pitching is the lifeblood of the industry, but I think we should be paid for it and there should be greater control on the process."

This has troubled me throughout my career. Can clients really be persuaded to pay for pitches, and can agencies take back control of the process?

In the fifteen years I was a client I was never asked to pay for a pitch by any creative or media agency. Although I do recall making a number of ‘modest’ unsolicited payments to agencies who were shortlisted to thank them for their work.

It was difficult to justify the payment, given I had to pay it several times for work which effectively had no value to the company going forward. I know of clients who have paid a fee in order to protect themselves from subsequent accusations of plagiarism.

As we all know creative strategies and ideas can turn out to be quite similar between competing agencies. It has also been used as a way to encourage the client side to have a shorter list, because every pitch has to be paid for. When I paid a fee, I was motivated to simply create goodwill. Having come from the agency side, I knew it would be unexpected, appreciated, and hopefully positive for Aviva’s reputation.

I suspect the agencies regarded it as poor compensation for losing. I wondered later if I was simply showing I was a ‘soft’ ex-agency person. I was left with the feeling of having left an inadequate tip.

Are clients being unreasonable by not offering payment?

So, given agencies don’t currently seem prepared to ask for a fee, let’s come at it from a different angle. Why isn’t payment offered when they are invited to pitch?

I think the answer to this is obvious. Clients aren’t asking agencies to do anything they don’t have to do themselves i.e. pitch for business without being paid for it. Whether it is major corporate level deals or for individual consumers, clients would find it entirely usual that they bear the cost of making a priced proposal to win a customer.

In fact, in the insurance sector every service proposition is individually priced, even for consumers. It is seen as part of the cost of doing business and competing for customers.

And yes, it includes coming up with entirely bespoke propositions, enduring lengthy bidding processes and investing considerable time spent generating service ideas that we hope will make us stand out from the crowd.

What’s more, when it comes to corporate deals, we are also subjected to rigorous procurement hurdles to jump, and keen commercial negotiations. This is the nature of commercial life in the ‘business to business’ space.

Are agencies sufficiently valuing their existing customers?

Clients are often advised by their agencies to do more to reward the loyalty of their existing customers, and not squander their goodwill by offering the best deals to their new customers. I have a lot of sympathy with this view. We know that customers really hate it when they find the contract price and service proposition they were recruited on, changes dramatically in year two. When it is well known that more favourable terms are being given to new customers. It can literally feel like a loyalty penalty.

What’s more, I found that the energy and best talent of the agency, particularly the senior people, was often distracted onto pitch work, at the expense of my brand’s work. I knew I was effectively not only financially subsidising the pitch activity of my agencies, but their best talent was getting ‘burnt out’ because they were overly stretched by the additional demands being made on their time to work on pitches.

So, over time these observations changed my view. From an early instinct to avoid pitches and work with my agencies to feeling like a mug if I didn’t run regular reviews.

I suspect we would all agree that in the end it’s cheaper to keep an existing customer than find a new one, particularly if you can get them to buy more from you. I have often wondered how agency management evaluated the investment made in pitching, and what the impact of diverting that energy from their existing portfolio of clients was?

The discerning agency

Dame Cilla Snowball was perhaps the best and most direct account woman I ever worked with. And that included forthright discussions about pitches she was leading. There was one at BT, and one at Aviva, and in both instances AMV BBDO were the long-term incumbent. On each occasion she called and asked me ‘do we have a chance of winning?’. AMV BBDO pitched for BT and not for Aviva. She never asked me to pay a fee. But I guess what I admired and respected about her approach was that she made it clear that she was evaluating whether to do it at all.

I don’t know how she made those decisions, but she was the only person who was ever bold enough to make it clear that AMV BBDO participation was not a given. And demonstrating confidence and business acumen as a result.

She has also rightly talked about the need for a tight brief, timetable and commercials. All of which I would agree are as fundamental to managing the process at the client end.

Agencies need to be far more assertive in what they want from clients during the process than I ever experienced, including being paid if that is so important."

There is no getting away from the fact that running a pitch is not easy, and many clients are inexperienced.

Every time I led a pitch process, I usually found very few of my marketing colleagues had any experience of doing it. Particularly with regard to international pitches. I know it is not a popular view amongst agencies, but this is where the procurement people and intermediaries like AAR and The Observatory are worth their weight in gold. Their expertise, and project management skills, are absolutely vital in helping to steer the process in a way that is as positive and fair as possible for all parties.

The timetable, evaluation criteria and commercial objectives are where the procurement team and marketing consultancies provide a solid framework, and it is precisely designed to lead to a good outcome. I appreciate that doesn’t protect agencies from poor behaviour and decision-making. But it is people, not the process, that wastes time, energy and money.

Improving the process for everyone

So where do we go from here if this unsatisfactory cycle is to be broken to the benefit of clients and agencies?

First of all, I would suggest that agencies need to be far more assertive in what they want from clients during the process than I ever experienced, including being paid if that is so important.

Secondly, I think agency leaders need to take a long hard look at how they are using their precious resource of talented people and stop blaming clients for the choices they are making about their business model and how they are choosing to pitch.

Thirdly, we have seen from Uber and Airbnb the impact of ratings and reviews as a mechanism for rewarding those who behave in line with contracted commercial expectations. I would publish rankings of the best and worst clients and agencies to work with. I suspect the experience is consistent, whether it is with regard to behaviour in pitches or in an ongoing relationship. It would help agencies evaluate whether a client has business an agency even wants to win.

It has to be said that those of us who want to build long term partnerships with agencies, and improve working relationships, don’t currently have much of an incentive not to put their business up for pitch pretty regularly. There is a big penalty for being loyal and not jostling for the agency’s best deals, talent and attention through the mechanism of pitching.


Jan Gooding is one of the UK's best-known brand marketers, having worked with the likes of BT, British Gas, Diageo, Unilever and Aviva. She is also the chair of both PAMCo and LGBT equality charity Stonewall and the president of the Market Research Society. She writes for Mediatel each month.

@Jan_Gooding

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DraytonBird, Founder, Drayton Bird Associates on 21 Feb 2019
“When in the years before time began I ran an agency, clients generally tended to pay for pitches. One thing you can bet on. Somebody pays for them, one way or another. It has to come out of agency funds or clients' funds.”
KerryGlazer, CEO, AAR on 24 Jan 2019
“Superb piece, Jan - full of insight, experience, and common-sense, a thoroughly excellent read.
Having observed this part of our industry practice on a daily basis for 22 years and asked clients to make small contributions to cover some small third party costs on countless occasions on behalf of pitching agencies (which most have been willing to do), I have concluded that the bigger challenge is finding a remuneration model that will not only incentivise the agency to give of their best and properly reward the talent they offer, but will also work for the brand owner in terms of being seen to buy well and efficiently when it comes to their agency partners. If the prize of winning delivers healthy financial growth and security to the agency in the short to medium term (and certainly before the client decides to review their account again), the cost of winning it becomes much less of an issue. Congratulations on the new regular column, Jan, and thank you so much for the very kind name-check!”

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