Resistance threatens to scupper introduction of pitch fees in Hong Kong

<p>Opposition is mounting against a scheme hatched by the Hong Kong </p><p>4As, requiring clients to pay a HK$20,000 pitch fee to help </p><p>defray the high cost of securing new business. </p><p><BR><BR> </p><p>Both agencies and clients have criticised the plan, despite its </p><p>endorsement by the 100-member Hong Kong Advertisers Association (2As), </p><p>which comprises mainly banks and insurance companies. </p><p><BR><BR> </p><p>2As chairman Anthony Lau (HSBC) said it was "not unreasonable for the </p><p>prospective client to bear a small portion of the cost" of a new </p><p>business pitch, which some estimates placed at between $30,000 </p><p>and $50,000. </p><p><BR><BR> </p><p>However, clients and agencies questioned the feasibility of the policy, </p><p>particularly its introduction in the early days of Hong Kong's economic </p><p>recovery. </p><p><BR><BR> </p><p>"The fundamental problem is most clients in Hong Kong don't respect what </p><p>agencies offer and their role in the marketing process," said Mr Ian </p><p>Thubron, CEO of M&C Saatchi, a non 4As agency. While he applauded the </p><p>principle of the policy, Mr Thubron added: "If you address one symptom </p><p>of the problem - through pitch fees - I don't think it's going to work. </p><p>We should be reinforcing our value and worth to clients and </p><p>marketers." </p><p><BR><BR> </p><p>Agencies were sceptical that the policy - requiring clients to channel </p><p>payment through the 4As secretariat before the presentation date - would </p><p>work in practice. </p><p><BR><BR> </p><p>Pointing to the difficulties of getting clients to settle media bills on </p><p>time, they said it was unlikely that 4A members would turn down a pitch </p><p>request if the cheque failed to arrive as promised: "I can't see O&M or </p><p>JWT delaying a pitch because the fee wasn't paid on time," said one </p><p>agency chief. </p><p><BR><BR> </p><p>Opposition has also been voiced by advertisers. </p><p><BR><BR> </p><p>"The problem with charging a pitch fee is that the focus will be on </p><p>developing a lot of billings merely from the exercise of learning about </p><p>a client's business," said Mr Michael Geraghty, VP of marketing of Web </p><p>start-up emaimai.com. </p><p><BR><BR> </p><p>"(A pitch fee) would reflect a lack of confidence in their ability to </p><p>get the business." </p><p><BR><BR> </p><p>Mr Geraghty, who is in the process of agency selection, said only one of </p><p>the 11 agencies which pitched had mentioned such a policy: "I wasn't </p><p>surprised by their policy because I wasn't impressed by their </p><p>presentation," he said, adding that this agency failed to make it to the </p><p>company's shortlist of two agencies. </p><p><BR><BR> </p><p>Coca-Cola, which recently put its multi-million dollar Hong Kong summer </p><p>promotion up for pitch, was equally critical. </p><p><BR><BR> </p><p>"I see it as poorly executed if a company like Coca-Cola has to pay </p><p>$20,000 for each agency to pitch for its summer promotion," </p><p>Coca-Cola Hong Kong country manager Scott Price said. To date, none of </p><p>the four agencies briefed by Coca-Cola have notified the soft drinks </p><p>giant that they plan to bill the company for the pitch. </p><p><BR><BR> </p><p>Gillette Hong Kong business director Blanco Wong maintained the policy </p><p>needed to be refined. </p><p><BR><BR> </p><p>"It wouldn't be reasonable for agencies to ask for a pitch fee at the </p><p>first stage," he said. </p><p><BR><BR> </p><p>"Perhaps only agencies on the shortlist should be allowed to charge a </p><p>pitch fee, and there should be a minimum billing amount, like $5 </p><p>million of business," he said. </p><p><BR><BR> </p><p>See also story on page 3. </p><p><BR><BR> </p>