A few days ago, I had a heated conversation with a friend.
The argument? Pitch fees, or more simply, fees that creative agencies desire that clients pay as compensation for their time and efforts spent developing creative concepts in a bid to acquire a project or account.
That debate filled me with curiosity: why are pitch fees such a contentious topic? does every agency that pitches for an account deserve to be paid for their time and efforts, even when they are unsuccessful? Or do clients not get any real value from these unsuccessful pitches and there is no actual business case to justify paying pitch fees?
To get a better sense of the answers, I asked four industry leaders in marketing (split across the client’s side and the agency) about their thoughts on pitch fees:
Adereti “Tiny” Adetayo. Creative Director, Yellow Brick Road.
I believe that agencies should be paid pitch fees. In the process of pitching, agencies transform into ‘The Avengers’; They assemble their top talents and allocate resources to be able to get a pitch done. Many agencies even have pitch budgets that they pull from when a pitch arises.
Not paying pitch fees is like asking for a solution and not wanting to pay for it or going to a tailor and asking them to sow a dress for you and then saying “if i like it, i’ll pay.” How many tailors can you do that with?
To begin with, the whole idea of pitching is fundamentally flawed. What usually happens is that it is set up to be similar to an examination. Which means that in actual fact, pitches are not a good way to test which agency is best for your brand.
What should be done instead is to find out what the agency has done in the past and figure out if it’s a good fit for your business. There are two things that help you select the best agency for yourself. 1)Conversations– do desktop research, speak with industry people and find 3 agencies and then make some time out and sit down with them to get a sense of what they bring to the table. The primary idea of pitches is to find out whether you are getting the best work and the best minds, and you can get that by simply making conversations. 2) Check the credentials of the agency including their showreels and you can already begin to tell whether they are the right agency for you.
There is something called a pitch mindset that can create an illusion of extraordinary creativity. It’s not business as usual and is ultimately counterproductive. Agencies can assemble their best brains, commit all the resources possible and win a pitch but this does not and will not reflect the reality of what day to day work with them will look like.
The argument about clients not paying because the non-winning pitches don’t add value is flawed. Once you call a pitch, you are saying “I have shortlisted the possible people I can work with. Come and help me choose.” One way or the other you get value from pitching. A pitch process is not about the creatives in themselves, it’s an assessment of the agency. Think of it like a beauty pageant or a dating show. The minute I turn up, if you realize that I’m not the person you should be working with, you’ve realized something. That’s value! The pitch itself is the value. You are calling on people to come and help you choose from amongst them. It’s like the show “The Bachelor” and saying that only the girl that ends up getting picked gets shown on screen.
Pitch fees help offset some of the costs that the agency would incur while being involved in the pitch process. So that compensation, the “thank you for your time,” is necessary. The only reason clients can get away with this is that agencies in Nigeria are hungry. If agencies took more time to assess the time and resources they have on ground and take a good look at some of the companies calling for these pitches, a lot of agencies will simply walk away.
Muyiwa Babarinde. Head of Marketing, Savvyt
In my opinion, pitch fees are a delicate issue. As a marketing lead and in light of the current business environment and the macroeconomic conditions of the country, most marketing professionals are not looking to make any unnecessary expenses. I am looking to do more with less. It’s not all roses and flowers now in the industry and the country at large. We are operating in an economic climate where even premium brands like Baileys are releasing sachet SKU’s, in order to access new segments within the market, so that tells you how tough things are.
Agencies need to understand that many clients are bleeding. A look at the recent H1 report of most companies shows this. As such, focus on ROI and efficiency is at an all time high and a lot of marketing managers are hard pressed to justify to their management teams who are often non-marketing people, why funds should be disbursed for ideas that will not be executed. Every spend has to directly contribute to improving your bottom line and this is what informs the push backs against expenses like pitch fees.
Something that needs to be discussed more often is what I consider to be an inadequate supply of strategic talent in some agencies. When you have a situation where hardly any one in an agency has sufficient specific context of how businesses outside of the creative industry operate, a considerable mindset gap exists that eventually creates an “us versus them” outlook. This only leads to frustrations between both parties.There is room for agencies to invest in getting senior talent that can bridge this gap in understanding core business needs and the way that clients calculate ROI.
On the other hand, I understand perfectly how agencies might feel especially when they have invested valuable man hours and effort in pitching without any sort of compensation. I think the situation is worsened by the fact that a lot of clients don’t even give adequate feedback after a pitch, so agencies can’t even pinpoint what exactly can be done to improve their delivery for subsequent opportunities. This leads to a never ending cycle of distrust amongst both parties.
So to forestall against this distrust, clients can be more transparent about their expectations, about how the judging process will be conducted and how long the entire process will last before a decision is made. If we want to foster better collaboration between clients and agencies, then there has to be a lot more communication and transparency about the pitch process.
The truth is that pitch fees can help activate a better level of competitiveness and increase the output from all participating agencies. Even long term, this could have strong cost:benefit ratios, as the agency that eventually wins the account will most likely show a higher level of commitment to the brand, because they believe the brand genuinely cares about their work, and is interested in making the relationship a true partnership
Ifeanyi Dibia. Creative Director, X3M Ideas.
There are so many schools of thoughts about pitch fees and whether or not clients should pay them. Having been in the industry for a while, my view is that regardless of the circumstances there must always be a clause in any pitch agreement that makes allowances for a rejection fee. If you are coming to a creative or an agency for a project, you are having the conversation because they have come highly recommended, so after putting so much time and effort into the project, some payment must be made even if it’s a third of the total billable cost. From the agency’s point of view, if you call for a pitch you have to be willing to spring for a pitch fee.
Agencies go above and beyond for pitches. It’s like a first date, a lot of work goes into it; the competition with other agencies, the tension, the time, the research. It’s only fair that compensation is given in exchange for the investment. Idea theft is an issue and there have been historical examples of this but many clients are getting smarter at tweaking ideas to the point that the ideas are almost unrecognizable. The real problem that I see is that many clients are merely testing the waters through pitches; they want to get a feel of how people think about their brand, crowdsource ideas, or sometimes, there’s a new head of marketing who wants to prove that he/she is working so they organise a pitch. In many cases, they are not really looking for an agency. Clients can be notorious at ghosting. They call a pitch, act like it’s urgent and once the pitch process is done, they become elusive.
I also believe there are solutions in regulations. Stronger laws and policies in the marketing sector that govern how pitches are handled. It shouldn’t be a flat rate or a one-size-fits-all policy. A policy that segments clients into big, medium and small organisations and tiers the pitch fees according to their size and needs will suffice.
Edidiong “Didi” Uwem-Akpan. Head of Marketing, Rensource Energy.
I am of the opinion that brands should pay for pitches because you are befitting from people’s time and energy on a subject that concerns you. It’s a different thing if you just call for proposals or credentials and then you can decide who you want to work with on the basis of those. That process requires more administrative work from the agencies and that’s fine because admin departments are already functionally set up to attend to these sorts of requests. For pitches however, there’s an extensive amount of work that goes into it. There are so many tradeoffs that these agencies are making to deliver the pitch.
Overall, marketing is a very subjective discipline especially the creative elements in marketing and a lot of times you hear marketing managers say “I liked agency A’s research and strategy, but preferred agency’s D creatives.” so the “winner” in many cases ends up being a subjective choice. In more developed societies, pitches are paid for and while I understand that many businesses are going through a rough time, I think the more responsible approach is to take time to look at the portfolio of a number of agency’s to see the work they have done and then make a decision. It should boil down to one of two things: either pay for pitches or look through credentials, pick an agency and solve whatever problem you are trying to solve with that agency.
Join the conversation. What do you think about pitch fees?