Over the past few years, there has been a growing movement on the
client side for agencies to be more accountable for the campaigns they
create.
Evidence of this new direction is underlined by the slow but gradual
change in the way payment is made for advertising services rendered.
Led by the big multinational companies like P&G, clients are
increasingly calling for the commission structure to be replaced with a
performance-based fee system.
It's the client's way of motivating its advertising partners to do the
best they can - for if the campaign fails, then the agency suffers
too.
Fair enough, it seems.
However, the tables have been turned and agencies are now calling for
accountability of their own from clients.
In the latest MEDIA-CNBC Asian Advertising Industry Poll (see page 6),
54 per cent of agencies across the region favoured the introduction of
pitch fees, with 72 per cent saying the client should pay up to
US$5,000 per pitch.
This is more than the HK$20,000 (about US$2,600) per pitch
recommended earlier this year by the Hong Kong 4As.
The 4As recommendation, however, fell on sceptical ears - most clients
stated they wouldn't pay and agencies didn't believe it could be
enforced.
This reflects one simple finding of the poll; that almost 50 per cent of
agencies have never received a pitch fee.
But it doesn't take much imagination or calculation to realise that
chasing for new business requires the use of expensive resources.
According to the poll, 67 per cent of respondents said they pitched
between six and 20 times per year.
The amount of money spent, therefore, adds up over time.
Advocates for the pitch fee argue that it would stop clients from
calling for unnecessary pitches and inviting unnecessarily large numbers
of agencies to participate.
It would also stop companies from calling for a pitch with the intent of
simply stealing ideas.
These are valid points.
Afterall, everyone wants to be treated fairly.
Even the clients with their push to replace commissions with fees are
looking for accountability.
If the clients can demand accountability, so can agencies.
Theoretically, this is true.
But there are two, sad, irreconcilable realities.
These are that as long as ad agencies are clamouring for accountability,
pitch fees can never be enforced under the current environment.
