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Industry head calls for clients to ditch the creative pitch when selecting agencies

Posted by: Creativematch Graduate Recruitment

Date added: Mon 11 Sep 2006

Reputation, credentials and chemistry are the key criteria that Martin Lucas, Chief Operating Officer at Saatchi & Saatchi and IPA Finance Policy Group Chairman, believes should form the basis of agency selection rather than a drawn out and costly pitch process.

Creative pitches are wasteful, lengthy processes and it's time for a rethink, says Saatchi & Saatchi's outspoken COO Martin Lucas, in this fortnight’s IPA online newsletter Adnews.

 

According to the IPA, creative pitches cost agencies approximately 11% of their gross income and, Lucas says, the process is wasteful,  uneconomic and unfair.

 

Lucas, also Chairman of the IPA Finance Policy Group, thinks clients should reassess their behaviour and treatment of agencies in general: "Is it fair that clients should continually demand agencies to deliver more work for less money whilst at the same time failing to improve their own processes around ad development? Is it fair that they can expect multiple briefings often because the marketing plan they are working on is still a ‘work in progress?" he asks. 

 

New Corporate Governance legislation and the joint industry guide on sustainable business practices, Magic & Logic, have made agencies raise their game in many operational aspects. Lucas believes that it is time for the client community to do the same, particularly when it comes to agency selection.

 

Lucas says of Magic & Logic (cover pictured): "What a relief that, at last, a guide that has been jointly produced by the procurement, client and agency trade bodies, has vocalised our industry’s pecking order and come to the very sensible and obvious conclusion that change can only happen when clients want it to. I think it is time that clients also look at some of their own behaviours in order to improve the way that they operate with their agencies.

 

"Do they think it is fair that:

 

  • They should continually demand agencies to deliver more work for less money whilst at the same time failing to improve their own processes around ad development? Clients must be realistic about what their budgets can buy.  When you agree a price with your builder, who you know and trust, you don’t try to add lots of additional extras without expecting to pay for them.

 

  • They provide multiple briefings and rebriefings often because the marketing plan they are working on is still a ‘work in progress’. With plans that are not yet fixed you can guarantee a haphazard and unstructured work approval process which is often subject to changes on a whim resulting in unnecessary and usually and unbillable re-work. Agencies can accept that change happens during the development of material. What kills them is the instances when clients believe that any number of amendments are acceptable and possible, regardless of timeframes/air dates/print deadlines! And regardless of the agency workload and costs in turning it around.

 

"In the face of these behaviours you tell yourself it is a learning curve and you are building a relationship… and then just as that learning curve is starting to bear fruit, say twelve to eighteen months in, the key client executive moves on.

 

"So, in writing this piece I particularly want to pick up on the pitching point, when there are many other areas in the guide for the industry to address about how each of the parties can work together more fruitfully.  

 

"To set pitching in context, Marketing Week magazines recent research shows that the average UK marketing manager stays in their post about three years, an improvement on the previously accepted eighteen-month tenure, but the situation in the US, where many decisions on agencies are taken, is far worse. According to executive search firm Spencer Stuart’s recent report, the alarmingly brief average tenure of a Chief Marketing Officer (CMO) at the top 100 branded companies in the US has shrunk from 23.6 months in 2004, 23.5 months in 2005 down to 23.2 months this year.

 

"The impact on the agency of frequent client changes is lots of uncertainty. At its worst you wonder if you will keep the business because new appointments often lead to change and the inevitable ‘not invented here’ syndrome.

 

"Even if the business is not put under review, new faces often mean new ideas and new marketing plans and again the agency faces uncertainty. Worse - the new broom sweeps away the existing campaign, often for no good reason, and commissions new work, which good as it may be, usually means a change in the brand’s market presentation – a zigzag when customers nearly always prefer consistency.

 

"Tenure for marketing managers is a big issue. Clients could improve the effectiveness of their own organisations and their relationships with agencies by giving people longer to produce successful results. 

 

"In a re-pitch there is still hope it can work out. But all too often pitches are used to trawl for ideas when there is no real intention to appoint. It is a way to keep the incumbent agency on its toes and to renegotiate the fee.

 

"If you are an agency, the IPA estimates that 11% of your gross income will be spent on pitches. The more enlightened procurement professionals are waking up to this and realising that while they blithely cause these costs in an agency search because it’s other people’s money, it's quite another matter when they’re the agency’s client and the expense is a part of the overhead.

 

"The IPA also estimates very conservatively that third party expenses add up to a collective loss of £32 million a year for the losing agencies if you calculate that there are 716 pitches a year, with four agencies taking part, and each spending approximately £15,000 on average on out of pocket costs. This is a huge waste of resources. 

 

"Media agencies too are victims of these excessive demands with massive costs involved in the underlying analyses required to produce highly sophisticated media strategies and plans, when in the end it turns out the client decision is all about low price and discounted fees.

 

"So why do we do it? Why do agencies still enter these lotteries and waste resources. There surely must be a better way to choose an agency. Surely the best way is on reputation, a credentials presentation and chemistry.

 

"Campaign’s leader (25th August 2006) quoted that 56% of the creative work produced for pitches is never used. I believe it is more than that. Of course it is difficult to quantify but in my experience nine out of ten pitch ideas never see the light of day. If clients are employing agencies to produce ideas that will make their businesses more profitable, why are they orchestrating a process that wastes so many? Why are agencies in a situation where so many of their best ideas are presented to clients other than their own?

 

"But what we also know is that many creative pitches are too lengthy. They are a drain on both client and agency resources, and most of the agency work is usually done outside ‘normal working hours’. That’s weekends to you and me.

 

"In a previous life I was involved in a creative pitch for a large high street brand. Without naming names, there were four agencies involved, all of whom are in the top twenty, all with excellent reputations and credibility in the sector. It could have been a pitch based on reputation and credentials, but the new incoming marketing director wanted a creative pitch and so we had one. The process took several months and involved several rounds of ‘tissue meetings’ and creative presentations between the four agencies at the first stage. Two were then dropped. More presentations followed with new people involved within the client company before finally one agency was appointed. I don’t believe the creative work ever ran. So what was the point of this lengthy process?

 

"Of course there are pitch savvy clients, and I am working with one at the moment, who are happy to put their money where their mouth is and pay for certain expenses incurred by agencies in the pitch process. This demonstrates commitment and inspires goodwill, loyalty and enthusiasm in return.

 

"David Pattison is right when he says “we need to put the business back into the ad business”.

 

"The IPA, through its New Business Group, is working hard with its trade body partners to make this happen. There is a wealth of best practice advice available to everyone including an IPA Pitch Pack (available at

www.ipa.co.uk

) and a confidential pitch advisory service which in its first year has dealt with 12 formal and 6 informal complaints.

 

"As agencies we need to start to show clients that there is another way. That pitches are wasteful and that the new way is to base an important decision on agency selection on three key criteria: reputation, credentials and chemistry.

 

"If we work together in real partnership, then together we can eliminate the waste."

 

For more information visit the

IPA website

.

 

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Life doesn't have to be a pitch, says business guru

 

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