Life is a Pitch.

Campaign Asia has been conducting a poll which asks the question “Will we see more business pitches in 2012?”

By far, the answer is Yes, more pitches than 2011.

Ad agencies continue to pitch and do speculative work to grow their businesses, some just to keep the lights on. Given the pressures on agency new business directors to generate revenue, what's a new business person to do?

We like to raise the age-old question: To pitch or not to pitch?

Perhaps it is time for the industry at large to do something dramatic and take a firm stand on the issue. I only know but one agency that declined pitches when clients required to see creative work up front—that’s BBH when they first entered the Asian market. They insisted that clients buy into a strategy first. They had my utmost respect. Now I’m told that there methodology “varies from country to country and pitch to pitch”.

Understandable, I suppose, given what Chris Kyme of KymeChow in Hong Kong has to say about pitching. “Deciding not to pitch, can also go wrong if not handled properly. "Sorry, we don't pitch” can come across as arrogant, which doesn't work well in Asia.”

Very often we forget that conceiving a big idea for a brand and living with it long enough to believe in the idea takes time. In most pitch instances, What appears to be the case in most pitches, is that execution appears to be ahead of strategy since it's what decides the conversation. People are throwing strategy to the wind.

Life a pitch for advertising agencies

I think it was Singapore's advertising guru Rod Pullen who said it first: “Life is a pitch.” He’s right, in more ways than one. When it comes to pitching for new business with full guns blazing, the cost to agencies is high both financially and professionally. We are our own worst enemy.

Across Asia, advertisers are asking for and getting, market and competitive analyses, positioning statements, media and advertising strategies, media budget recommendations, as well as complete creative campaigns, all for free.

So why do ad agencies put up with it? Surely common business sense dictates the practice should stop. It’s not good for the potential client, the agency, or for the agency’s existing clients. You would never consider asking a prospective surgeon for a free probe into your heart or your brain, or a lawyer or an accountant for free counsel. We all know there would be a bill to pay. Yet agencies are willing participants.

“We bent over backwards to win a pitch”, said Chris Kyme reflecting on his previous experiences in a big 4As agency, “including revising creative work before being assigned, to promising the earth in terms of servicing. And that told the clients that, once the relationship commenced, they could treat us how they wanted as we were desperate for their business.  It sent the wrong message and nearly always went wrong from there”.

I wonder, if every agency demanded to be paid to pitch or to produce spec creative, would it become the industry norm? Of course, that assumes that there are no (and never will be) agencies out there who are desperate for work.

On the surface, the idea of pitching looks good.

‘Spec’ presentations help the client assess how the agency can perform within its specific business arena. But consider these other negatives. Often, the agency that is handed the business is the agency that spent the most time and money on a free presentation. Or the agency which is most desperate for the business.

Every hour that goes into these presentations is one hour removed from doing the work for present clients who pay the agency’s salaries and overheads. And just how fair is that?

Chasing an account that you hope could change your whole business may cost you your present one. To undermine existing client relationships further, remember the cost of the presentation has to be met from somewhere. Most often, it gets charged as a new business expense, which increases the agency’s overhead. And who pays for the agency’s overheads? The existing clients of course.

While most agencies pitch and do spec work for free, five year-old hot-shop Droga5 now only pitches new business if they get paid. Reason? They know they win 60-70% of the time when they are paid, versus only 20% (the average for other strong agencies) when they're not.

Droga5 is more selective and only pitches if they believe they have a greater than 50% chance of winning. But how much do you charge a client for pitching?  I believe you should charge just enough to make the client take you seriously. I also believe that clients should expect to pay at least a nominal fee for spec creative.  After all,  if you give away your agency's product, you're saying it has no value, and what does that say to your creative team?

Admittedly, the agency which elects to join the free product sweepstakes may, once in a while, win the big one, but the relationship has begun under a cloud. In effect, the agency has deliberately chosen to begin an important and hopefully long-term relationship by surrendering its bargaining power.

Are agencies giving away their intellectual property for free?

How on earth can ad agencies expect to attain the level of respect that other service professionals regularly garner if we persist in both giving our product away and expecting our existing clients to pick up the tab?

Sure, the Internet is here and new creative opportunities abound because of it. But it’s also caused some problems for the ad agency. Given what can be done at breakneck speed on the computer, many clients expect everything faster and cheaper. I continue to hear ad agency executives complain that they aren’t given enough time to produce great work:  “Deadlines are crazy, the budgets are insufficient and the briefs from clients are not worth the paper they are printed on”.

Some clients might be less than honorable and have been known to steal your thinking (from pitch work),” added Mr. Kyme. “But it's a small world and word gets around. I prefer the pitch process to happen via discussion and relationship building. But it's up to each agency. When you're running a big shop, and it's Cathay, who would say “no” to that huge account? You'd go flat out!”

Perhaps if ad agencies spent less time chasing the elusive prize account, and realize the potential in current client business, they’d produce better work for them. I continue to believe that judging an agency on the work it has done for other clients is a more accurate measure of the agency’s potential. For certain, clients would place more value on an industry that valued itself enough, not to give away its intellectual property for free.

In their effort to maintain excellent relationships, most advertisers in Asia believe it is important to evaluate their agencies regularly, and to make efforts to repair problems before resorting to parting company.

Choosing the “right” ad agency: The process

Sometimes client-agency relationships do come to an end. Clients may be faced with a requirement for a new agency, an additional agency, or a different type of agency. When rifts in the relationship appears and simply cannot be healed, clients will call competitive pitches.

However, pitches sometimes do require a huge amount of time and money to be invested,  and quite often, these are misapplied to the pitch process by both client and agency. If the process is faulty, it can lead to unproductive solutions that have to be undone at further expense and disruption to the brand.

I remember a client in Singapore once telling me, “Choosing an ad agency is like looking for a wife in a bar.  Often times, the agency that makes the best presentation is not the best long-term partner. The values that first attract you may not be the ones last. And what you see may not be what you get”.

To produce a win/win for all parties and make the pitch process a successful and sensible one, the following outlines several key principles which should be followed.

1. Before the pitch process begins try to make the relationship work before resorting to a pitch. Make it a priority to deal fairly with the incumbent agency, and if at all possible, avoid full creative pitch, which can be costly and time-consuming for both parties.

2. Be realistic. The client should consider what the company’s presence will mean on the agency’s client roster and what it will mean to the agency. Will the company be the smallest account in the shop? The largest? Neither is ideal. Is this agency staffed to handle the account? More important, are they really committed to doing great work on the business?

3. To start the pitch process, the client should form a multidiscipline decision-making team. The team should make it very clear to the pitching agencies as to the communications objectives, the agency’s specific role, scope and budget, and to the established firm and realistic timetable.

4. When it comes to briefing and selecting the agencies, the client should write a clear, concise and well thought out brief. Most importantly, the client must ensure that the criteria for evaluation/decision-making at each stage of the process is clear and agreed by all parties in advance, to take an agency from its consideration list, to its long list, and to its short list.

5. In managing the pitch process, both client and agency need to be open about the issue of pitch fees and expenses and both need to respect the established rules of the pitch. Of key importance, as noted by Chris Kyme, is “chemistry”. The client should hold several meetings to get to know the agencies.

6. Know what it will be like to work with the ad agency day-to-day. Many agencies have a new business team whose sole purpose is to get into and win competitive pitches. Once the account is in the door, they have no involvement in the day-to-day running of the account. They just move on to the next courtship leaving the client in the hands of  'junior' members of the agency.  It is recommended that you ask who will manage the account day-to-day.

7. If an advertisers work isn't as good as it could be, they should not expect a simple change of ad agencies to solve it. It takes teamwork to create bad advertising. When a relationship with an ad agency fails, it is a time for reflection. If the problem is the work and your organization changed the work, it shares responsibility with the people who created it. If the problem is in day-to-day working relationships, try to assess whether your company's people have contributed to it. It is key for the advertiser to determine who can say 'yes' and who can say 'no', and reduce the number of people in the decision chain accordingly. Above all, the client should try to make the ad agency relationship collaborative and keep the number of team members small.

I’m not a believer in premarital creative.

8. If the ad agency can solve a client’s problems after just a few hours contemplation, it's probably just luck. Or it's not really a strong, strategic solution. Most likely it’s just charmingly seductive flashy stuff. Advertising that looks good but is based on an imperfect understanding of the market is destructive. To understand a marketing problem some research may be required to gain an in-depth understanding of the marketplace. From that comes a positioning statement, and from that, on-target advertising.

9. Making the decision on which agency is best for the advertiser, is not an easy process. The client needs to be formal when it comes to scoring and evaluating the pitches. It is also recommended that clients conduct pro forma contract discussions to manage expectations, and avoid embarrassment after the pitches. And most importantly, clients should offer the losing agencies a debrief.

10. After the pitching takes place, the advertiser should manage all the pitches with sensitivity, and treat documents with respect and absolute confidentiality. Remember to be scrupulous on issues of intellectual property and manage the transition and hand-over process with care.

The big question is this:

Will you look forward to talking with the selected agency every day? Hopefully,  If you follow the guidelines noted above, hopefully you will avoid the many pitfalls of ad agency selection.

Mike Fromowitz

OCTANE