The Hong Kong 4As announced early this month that effective
immediately, all clients calling for a pitch would have to pay each
participating ad agency a fee of HK$20,000.
The idea behind this move was prompted by calls from the industry for
precisely such a pitch fee, exacerbated by the regional economic crisis,
which meant that while agency costs were rising, revenue was
falling.
Agencies often spend hundreds of thousands of dollars preparing for and
producing material for pitches, and a fee paid by the prospective client
obviously off-sets some of these costs.
It is a logical solution and a noble idea, but as the saying goes, the
road to Hell is paved with good intentions.
The devil lies in the details.
How is such a pitch fee procedure going to be policed?
Having long witnessed the silent abuses of the existing media commission
system, where agencies undercut each other in a desperate bid to win the
business, what is to prevent the same from happening with the pitch fee
system?
Sure, the fee is to be collected and administered by the 4As itself (the
idea being that the money is then passed on to the agencies concerned),
but what is to prevent an agency from promising a client that should the
business be awarded to them, part of - or possibly all - the pitch fee
would be returned as a "thank you" gesture?
Or what if one of the participating agencies opts for - and the client
agrees to - a simple credentials pitch?
Does this put them at an unfair advantage over rivals to whom the client
is paying the fee?
That the 4As is requiring the fee to be paid upfront and in advance
prior to the pitch presentation taking place creates another
dilemma.
Say your pitch is scheduled for 8am on a Friday morning. Say that by
5:30pm the preceeding Thursday, the cheque has yet to arrive at the 4As
office.
What then? Does the agency get a call forbidding it to proceed with the
pitch? Or to delay it?
What if the cheque never arrives? The preparation has already been done
by the agency, the money already spent. Who is responsible for bearing
these costs?
And with clients suffering their own financial problems related to
falling sales and the overall economic depression of the past two years,
being made to pay for pitches is likely to put a damper on the normal,
healthy activity of account shifts.
For non-4As agencies, the imposition of a pitch fee for 4As agencies
might be a blessing in disguise.
There are 20 agencies in Hong Kong which are fully paid-up members of
the 4As.
There are hundreds which aren't.
Sure, there are clients which specifically seek 4As agencies, but there
are probably far more who aren't particularly bothered.
And let's face it - there are also hundreds of agencies who aren't
particularly convinced of the benefits or need to be a member of the
4As.
And if a client realises there are savings of anything up to HK$100,000 by calling in five non-4As agencies to pitch, as opposed to five
4As agencies, then the pendulum might just be prompted to swing the
other way.
But then again, if a non-4As agency is up against 4As agencies in a
pitch - is it fair that the pitch fee doesn't apply in its case?
There are those agencies which would join the 4As, but for the minimum
income stipulation.
No one is disputing the fact that a pitch fee is a good and necessary
idea.
The problem lies in making it a blanket rule for all 4As members,
instead of simply a recommendation, left up to the agency's own
discretion.
