In a recent interview with FE, the global CEO of Ogilvy, Devika Seth Bulchandani said that her biggest lament about the advertising industry is the way new business pitches are conducted. “There is no other industry that conducts pitches the way ad agencies do,” she remarked, while advocating the need for the industry to come together and find a better way to solicit business. Bulchandani is definitely not the first creative leader to raise her voice against the waste of resources that goes into an advertising business pitch. Creative agencies in India and other markets have, for years, campaigned for a more efficient way to conduct business pitches.
Advertising agencies have also begun advocating and demanding a ‘pitch fee’ as compensation for the time and effort spent on creative work for potential clients. This is still not a widely accepted trend, as there are no rules that govern a business pitch in advertising, and brands are not always willing to pay.
Some newer agencies like the 18-month-old Talented, launched by former Dentsu Webchutney leaders, PG Aditya and Gautam Reghunath, are now looking to bring a shift. About 70-80% of pitches the agency has been part of in recent years has been done for a fee. “It is purely about respect for creative time. If there is creative work involved and time spent, we want to be compensated. However, it is important to note that the fee doesn’t cover the ideas presented to the brand,” says Talented co-founder & CEO, Reghunath. Though “theft” of ideas was a menace back in the day, he believes, few brands would try that trick today.
The pitch fee itself is not a large sum, say industry leaders, noting that it could range anywhere between 5 lakh and15 lakh. It is certainly not a revenue stream, especially for the larger agencies, but is merely a token of respect.
Not just Talented, but several other agencies, including large networks, today demand a fee for their work on business pitches. Only a few brands, such as Amazon and some Tata businesses are known to compensate agencies for pitch work. The trend is gradually changing, as newer advertisers recognise the value.
Towards greater efficiency
Even though most agency leaders would like to make pitch fees the norm, it is difficult to change the way the industry has operated till now. According to Narayan Devanathan, group chief strategic advisor, dentsu India, that is not always because clients are unwilling to pay. “‘Requiring brands to pay a fee for business pitches requires respect from both parties,” points out Devanathan. First, agencies don’t command the premium they should for the power of creative problem-solving they bring to a pitch process; plus agencies are willing to undercut each other, and it’s easy to figure why a pitch fee remains a pipe dream.
Further, the value of creative problem solving cannot be measured merely in terms of time or the cost of people involved. Brands also need to pay for the skill. “You wouldn’t ask a skilled doctor to do a demo surgery on a body part for free before choosing them. By the same token, agencies should value and price their skills fearlessly,” asserts Devanathan. That said, he recognises that these steps cannot be taken at an individual brand or agency level but rather should be part of mutually agreed-upon principles of doing business by industry bodies.
Often brand managers shortlist 2-3 agencies but invite several more for a pitch, rue insiders. Vanaja Pillai, president at 22feet Tribal Worldwide and head of DEI at DDB Mudra Group, stresses the need for greater transparency. “The practice of inviting a whole lot of agencies is quite unnecessary. There are a few things that are critical to evaluating whether or not a brand-agency relationship has potential – interest, relevant experience, strategic and creative prowess, team chemistry and commercial suitability. A credentials conversation and an opportunity discussion can address those parameters. Only if agencies get through this first level is there a need for brands to ask them to invest in a response to a specific brief,” she suggests, adding that the more agencies demand pitch fees, the more efficient everyone will be in the process.
Sandeep Goyal, CMD at Rediffusion argues that streamlining the pitch process will likely put smaller agencies at a disadvantage. “There is a reason the industry hasn’t been able to agree on a process. It will be beneficial largely to the dominant agencies. If they have to pay a pitch fee, brands would rather pay the bigger agencies than upcoming ones,” he says.