Pitch fees? Why not, say clients

Earlier, most agencies Marketing asked thought they should be compensated a fee for pitches. While several had their doubts if the practice would take off in Singapore, clients are saying they are open to taking it up. (Read:Why pitch fees are unlikely in Singapore)

Clients’ take

"In my opinion, pitch fees is a delicate issue," Rahul Asthana, sector leader and marketing director, Baby and Child Care ASEAN, Kimberly-Clark Corporation said.

On the one hand, giving pitch fees recognises that agencies spend resources to land an account or project and therefore should be compensated for it.

On the other hand, pitch fees are also the promise of future revenue if the agency lands the account and the revenue from that will far outweigh what they will spend on landing the account, he adds. There is a concern that pitch fees will make the client-agency relationship more transactional in nature. Agencies should let their ideas speak for themselves instead of spending too much money landing the account, he said.

Yvonne Tey, director, trade marketing at SingTel global advertising, while open to having pitch fees, said that there should be a market standard set instead of having different agencies setting different prices.

"By no means should pitch fees be co-related to quality of work or the investment that goes into the pitch", she said. "It should simply cover basic materials and costs for pitch itself."

Tey also commented that an ideal pitch should be about "the thinking, concept and ideas behind a campaign" and should also depict how the agency is able to work with the client to take the business to another level.

Earlier, when contacted by Marketing, a spokesperson from the 4As said that in principle it has always been an advocate of agencies charging a pitch fee for their work, "although enforcement is not in its charter."

But is that the main issue?

While the jury is still out on whether or not the Singapore advertising scene requires pitch fees, some say that this is not the biggest issue in the local market.

Based on R3 data, Singapore has recorded a 91% increase in number of accounts that changed hands between 2010 and 2012, significantly more than other Asian markets. Out of this, government business accounts for 50% of the business.

Goh Shu Fen, principal consultant of R3 said that what should be asked currently is whether or not the market has too many on going pitches.

She asks the industry to question as a whole if it is the number of pitches, quality of pitches or the manner it is run that they are unhappy with.

"Open tenders have been designed for ensuring transparency and is a methodology applied for all types of procurement," Goh added.

Hence, despite putting pitch fees in place, that government organisations will still have to call for an open tender and this would mean handing out an amount for all participating agencies.

"The pitch fee idea is fundamentally flawed idea because the quantum implemented in most cases is so low, that the pitch fee is not usually the key factor in deciding how many agencies are shortlisted," she said.

She also added that overall, the pitch is an imperfect process in itself for finding the right partner, let alone landing on ideas clients can run with.

Richard Bleasdale, regional managing partner of The Observatory Asia believes it will make a huge difference in improving pitch practices.

"The concept of pitch fees is picking up around the region and The Observatory has always been in favour of them," he said.

With pitch fees in place, there is a likelihood that pitches will be run more professionally, with greater transparency and with smaller and more focused groups of agencies involved, he opined.

Agencies will also be recompensed for their time and effort which might eventually lead to them taking the process more seriously, he added.

However, according to Bleasdale, this can only be successful if it is an industry wide adoption managed by an industry body. This would be "critical" to the process and for pitch fees to work most effectively.

He added that the industry bodies should also consider the following issues:

-        How would the industry setup and manage such a process?

-        Would the process be the norm or optional?

-        How much would be paid?

-        What would the payment be for?

-        How would the payment be made?

-        When would the payment be made?

*Yvonne Tey, director, trade marketing at SingTel global advertising has since left the role.