David Wethey is Chairman of Agency Assessments, an agency search and relationship consultancy in the UK. David will be a panelist at our upcoming event called The Art of New Business on October 10th. Here he shares his thoughts on the pitch process, in particular, why he feels it needs to change.
Anyone observing the agency/client relationship over the past few years (especially long term residents of the global jungle like me) would have to be struck by three phenomena – none of them particularly encouraging:
- The balance of the relationship has become skewed to a master/servant level never seen in the last 40 years with, I believe, client respect for agency expertise at an all time low
- The pitch circus has become nearly as important in terms of agency focus as the day job of handling clients – and the defining criterion in most pitches is now subjective reaction to the speculative creative work developed by candidate agencies
- Agency scope of work has become largely commoditised, as increasingly powerful procurement departments have taken control of fee negotiations.
I have been a client-side pitch consultant for many years, watching clients demand, and agencies offer more and more free creative. I now strongly feel that pitches should be faster, less expensive, involve fewer agencies, and be based on proven expertise, fit, strategy and affordability, rather than on which agency can come up with the most convincing free ideas. Giving away creativity is not just a bad idea for agencies. It also makes it less likely that clients will choose the best agency for them – ie the one that ticks all their boxes. We have devised a proprietary and much better-balanced new system of running pitches called Mutual Decision™. The name recognises that an agency’s decision to negotiate with and take on a new client is just as important as the client’s to choose a new agency
We also need to do something fundamental about the commercial basis of the relationship.
I think it is now clear that the industry took a huge leap into alien territory when it moved from commission to fee in the 1980s. The commission system had many faults – not least the fact that the commercial relationship was effectively between media owner and agency, not agency and client. Commission also didn’t measure input cost and effort. What commission did, however, was act a pretty effective performance kicker. The better the brand did, the more the client tended to spend on media – so the agency benefited too.
But the input-based people/hours fee remuneration method – purloined from the creativity-free zone inhabited by solicitors and accountants – is the superglue that threatens to stick the communications industry to the floor of commoditisation. Before long, ads and ideas will be traded on some commodities exchange alongside wool and base metals.
Of course clients call the shots. The brands are theirs, and it’s their money. But there are agencies that have earned the right to premium fees by dint of a superior track record in creativity and effectiveness. Better pipers can call the tune, for the excellent reason that they regularly outperform their less talented rivals. Winning service providers – from film directors to kitchen designers – are generally selected on their record, and that enables them to charge more.
So why does our industry give crackerjack, award-winning agencies two or three weeks to prove they are creative? Worse, why do we expect them to work for the same money as their mediocre competitors? A more civilised and rational pitch system will produce more productive and long-lasting partnerships. Within these relationships there needs to be a compensation regime that fully reflects outputs and deliverables, but also recognises quality, added value and results.
Want the opportunity to meet David and ask him questions? David will be a panelist at The Art of New Business, our event that will be held in London on October 10th 2012. Sign up to attend here. You can also follow @theartofnewbiz and join our Linkedin group.