To Pitch or Not to Pitch...walking the Ad Agency Tight Rope

Can you imagine going to the dentist and asking them to fill a tooth for free? Only if you're happy would you pay them and give them the rest of your dental work.

Or how about expecting an architect to design your dream home... and only if you're delighted would you decide to pay them for their time and creative ideas.

Today we want to talk about the practice of pitching for work...something if you're not in the industry...you may have seen in the hit TV series Mad Men.

The outdated practice developed in the 1950's, is still being used in the 21st century and occurs in the areas of business including branding, advertising, digital, design & PR.  It may happen in your business or industry and we think there are valuable lessons to be learned.

For more marketing cartoons check out Marketoonist http://tomfishburne.com/

For more marketing cartoons check out Marketoonist http://tomfishburne.com/

Hungry for business, agencies are expected to prepare a FREE or speculative pitch...an 'ideas circus' really where the client passively sits back while you showcase your best ideas in the hope of winning the business.

This creates a slippery slope for both Agency and Client. It is caused by agencies allowing it and by not creating an industry wide agreed process & protocol to protect themselves.

Clients (particularly in the SME space) are also responsible by creating flimsy briefs and expecting agencies to submit their best ideas for free, zero, zilch, nix, nada...gratis.

This year already a number of clients including IrishLifeBank of Ireland and BMW have 'put their accounts out to pitch' Iarnód Éireann went even further 'inviting' 5 agencies to join their pitch party. This is a far cry from the European norm where 3 agencies are invited in and the process is more thorough and transparent.

Preparing to pitch is a time consuming, expensive and risky exercise. It involves an agency doing research, strategic thinking and then developing a concept and creative execution that shows the client how they intend growing the business using using creative, media, process and pricing.

The Irish Design Industry conducted some interesting research in 2008 where:

  • 14% of design agencies always pitch for free
  • 7% frequently pitch for free
  • 19% occasionally pitch for free
  • 55% never pitch for free 

Source: A study of the design sector services on the island of Ireland.

At ChangeAgents we believe that all agencies should point blank refuse to do free pitches.

Why because...

It's Bad for Clients

  • It's the Marketing Manager's lazy way of finding an agency
  • The agency does not develop a deep knowledge of the clients business internally or externally 
  • Often the business does not have a Marketing or Branding strategy in place to provide strategic direction to the creative execution
  • Typically the Brief from the client is lightweight and without depth & insights - and ends up harming not helping the business 
  • If you don't pay for something you won't value it - clients who low ball their agencies need to look inward and ask themselves if they see marketing as an investment or a cost
  • It creates an imbalance in the relationship between client & agency and is detrimental to everyone
  • Pitches are typically done to committees - made up of subjective people who have little experience in objectively evaluating the creative work and capabilities of the contenders. Typically committees always default to the least risky option

It's Bad for Agencies

  • Big agencies like Droga5 now only pitches new business if they get paid. Why? They know they win 60-70% of the time when they are, versus only 20% when they're not.
  • If you give away your agency's product, you're saying it has no value, and what does that say to your creative team?
  • By caving in... agencies pit themselves against each other to the benefit of the client and it becomes a race to the bottom
  • Even though it's fantastic to win a pitch you can be sure that the client will put the account out to pitch again in the future
  • Before the relationship even begins it builds distrust between the Agency & the Client

The Solution 

If clients are serious about building a brand they must STOP taking short cuts and pay for the expertise. If every agency demanded to be paid to pitch or to produce spec creative, it would become the industry norm. Of course, that assumes that there are no (and never will be) agencies out there who are desperate for work....

As an alternative to pitches many companies engage in Tender processes. Although probably a fairer more transparent process - tenders tend to be very technical and are done by agencies that are good at ticking boxes Vs actually doing amazing creative work.

The environment for great ideas happens when you're willing to take risks. To do great work the agency needs to speak its mind and not become a 'yes agency.'

Scott Bedbury, the previous Marketing Director of Nike & Starbucks and author of - A new Brand World - believes that a good client recognises an agency needs to make a buck.

It's not a big chunk of wisdom to grind down an agency to the point they can't hire great people. His predecessor at Nike took pride in beating down the agency and paying them less.

During his 1st month at Nike, Scott doubled the agency fee and doubled it again 6 month later. By making the agency feel valued, Wieden & Kennedy developed their best work and coined the legendary positioning "Just do it" It went onto to change the company, inspire a generation and grow Nike sales from under $1bn to $5bn on Bedbury's  marketing watch.

It's time for companies to drop the corporate mask and actually have a real & meaningful conversation with the agencies they want to entrust to build their brands. Get out from behind the desk and visit them, find out what they're passionate about, find out how they work and about the work that they've done as well as the results achieved. 

How the relationship starts out tells you how it will end. It's vital that both parties pay close attention to this. See if there is a 'click' as well as mutual trust, understanding & respect. Both sides need to understand one another's requirements are, what needs to be achieved and what the preferred way of working is.

We think it's time that the Marketing Institute Ireland and the Institute of Advertising Practitioners in Ireland IAPI (ad agencies representative body) sat down together and mapped out a "Code of Good Practice" that creates win win for both agencies and their clients.

God knows it's needed!