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Global agencies pour cold water on pitch fees

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After setting off a firestorm yesterday over its intention to introduce pitch fees to clients, independent agency The Bees Group has not drawn similar enthusiasm from its globally aligned competitors.Shih Wing-Ching, a shareholder of The Bees, said the agency was exploring a range of new ways to incentivise and retain staff, introducing, among other things, a nominal fee for every pitch the agency participates in.READ THE STORY HERE.While the move was widely applauded across social media, globally aligned agency brands in Hong Kong did not see much benefit in following suit.Pitch fees are a hotbed issue in the ad industry, right across the Asia region, usually because of unregulated pitching practices.Malaysia is unique in the industry, where it has had a system of mandatory pitch fees installed several years ago.The Hong Kong Association of Accredited Advertising Agencies implemented mandatory pitch fees around eight years ago, but reverted back to individual pitching methods and that system still holds today.But many argue the practice should be reintroduced.Responding to yesterday’s story, some independent agency executives in Hong Kong said 4As agencies were stuck in an “unhealthy ecosystem” and a “vicious circle of cost cutting” that needed to be reversed.But change, it seems, is unlikely to happen soon.Angela Ng, executive director of the HK4As admitted that the association did have a history of charging pitching fees, but said the system failed to gain consensus among members about how the system should work."We've been trying to apply the charge, but it is hard to impose it on every single one of our agency members as they vary in different internal operations," Ng told Marketing."The HK4As is a big family. Seeking consensus has never been easy."PHD Hong Kong CEO Ray Wong, also a media committee member of HK4As, agreed that gaining a consensus is difficult.“The lack of transparency in the individual pitching process remains a major barrier to the implementation of pitch fee. It is hard to be monitored.”Wong admits that advertising is now being driven by clients and increasingly procurement, in order to get more creative ideas for lower commission rates.Melanie Lo, chairman of HK4As media committee and CEO of GroupM Hong Kong, said a fee was more relevant for independent agencies.“Local and international agencies use different modes of operation. Mandatory pitch fees are more applicable to independent agencies as they tend to be more flexible than global ones.She added that bigger markets like China are yet to embark on this process, making it harder for Hong Kong.The Malaysia experienceWhen Malaysia implemented mandatory fees, the 4As president Datuk Vincent Lee, said too many pitches, too much money being and time being wasted, were key factors behind the move.“There was the unsettling of staff because of pitches, and some clients were not professional in terms of stealing ideas,” Lee told Marketing in a previous interview.“Most important, it was to make our industry more professional.”Lee said the 4A’s was able to enforce the fee structure effectively because it had a united organisation with strong leadership and “good press support”.

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