What Do Advertising Agencies Lose When They Pitch For Free? Khalid Nayeem and Emaad Ishaque Khan discuss

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How do creative and advertising agencies become brand custodians? What do advertising agency teams require to be able to sell creative commodities? What are creative agencies putting at stake when they pitch without charging any project fee?
Business development experts Khalid Nayeem, Group Director of Accounts – Spectrum VMLY&R; and Emaad Ishaque Khan, Business Directors – Synite Digital give their views.

KHALID NAEEM
Group Director of Accounts – Spectrum VMLY&R

 Q.1 What is your opinion on the approach of clients when it comes to giving custodianship of brands to advertising agencies?
Long term relationships are built on mutual trust and respect, both of which take time to develop. Those advertising agencies that have put in the time and have earned the trust and respect of their clients become brand custodians. We usually see such relationships develop between major MNC’s and globally-affiliated creative agencies.
However, with time agency-client relationships have taken a new shape and form. Currently these relationships are often based on a specific project approach, where more and more clients are now looking for short-term project-based solutions that allow them to get ad agencies onboard at a fixed project fee which is much lower than what a long-term arrangement would demand. This way the agency is hired on an ad-hoc project basis to tackle a specific issue. This ad-hoc-ism nullifies the concept of being a brand custodian. Neither the client nor the agency expects the relationship to stay for the long run. And by doing this, brands are able to create a demand for such creative agencies that want a piece of the action.

Q.2 How are advertising agencies able to mitigate such a situation in their favor?
All agencies want to pick up new business along the way. Agencies that are lean and nimble make the most of the situation and tap into clients to gain a quick project or two. This way once the project is over – and it has delivered results – the agency has gained enough critical mass to be considered for a long-term project with the same client. This way the agency gets tried and is tested to be given another chance. An agency does not become a brand custodian overnight or when appointed on a 1-year contract.  

Q.3 How does this translate into pitches being unpaid?
Generally, all pitches are unpaid. More and more brands are now being driven by short-term goals that are set up by their procurement divisions, in order to maintain transparency in doing business. Now, appointing more than one agency has become a common practice for major clients. And generally, 1-year contracts are a norm.

“An agency doesn’t become a brand custodian overnight.”

Q.4 What are creative agencies putting at stake when they pitch for free?
Time, effort and resources. Every agency participates in a pitch to win. There is no system of compensation for an agency to participate in a pitch. It all comes down to the time (man hours), effort and resources a creative agency puts in hoping to win the pitch.
Having said that, agencies participate in the pitching process and provide all sort of confidential information the client demands to show that the agency is secure in terms of financials and can support and fund client projects without demanding advance payments. In such cases, unfair payment terms outlined by the brand’s procurement departments are reluctantly accepted by advertising agencies as a sign of compliance to participate in the pitch process.

Q.5  What needs to be done to rectify this situation? Or how can pitches be handled to make the process less taxing on the bottom line?
Each creative agency sets an expense budget for a pitch and is likely to remain within the allocated budget. But there are times when a certain client located out-of-station may require receiving the presentation in-person which will mean the agency team will have to travel to a different city. It is a given that major pitches literally juice-out the agency’s resources.
Having said all that, participating in a pitch has a high similar to nothing. And there is only one way to make it work…go all out to win.

Q.6 Creativity is an abstract commodity that is not easy to sell. What kind of skill or knowledge do creatives and business managers in advertising agencies need to have to be able to ‘sell’ it?
The agency team must have its ear to the ground and know what is happening in the category in order to be able to provide a winning solution. If it has experience in the same category then it is easier for the ad agency to come to grips on the requirement. If not, then it must do its homework quickly to gain knowledge to make it work. There is no cookie-cutter solution and no two pitches are similar. Ideas that hit the nail on the head always work and they can be presented in a short list of deliverables without wasting time working on a wish list that is in the pitch document. Good clients see beyond the creatives and the strategy…they are able to judge an advertising agency’s capability to make a decision.

Q.7 What kind of a role can PAA play in this?

PAA has so far been silent on this issue.

 

EMAAD ISHAQUE KHAN
Business Directors – Synite Digital

Q.1 What is your opinion on the approach of clients when it comes to giving custodianship of brands to advertising agencies?
I believe brands never give custodianship to advertising agencies. Agencies need to prove their competency and take ownership from them. Even then, the custodianship is given on an interim basis till a direction for any campaign is cracked. After such a campaign is delivered, the brand team again takes over as they are the ones to better understand the brand’s continuously evolving requirements.

Q.2 What role then advertising agencies play?
If the advertising agency is competent, they will end up playing the role of a consultant and an advisor. Brand teams are constantly involved in the brand and they do not need a third wheel. The requirement is that of a partner who can tackle their objectives from different perspectives and come up with original and novel ways to communicate the brand’s message.
If the agency is not as capable, then they become a trusted vendor that the brand team can go to for solutions when they are stuck in a particular task. This is a dangerous path for agencies, but unfortunately the easiest, if they are not competent enough.

Q.3 What are your views on the fact that pitches are an unpaid intellectual commodity in Pakistan?

It’s simple. If the client trusts and believes in the agency, they will not only be willing to give the agency their money, but also their full support.
The concept of unpaid pitches was initiated by advertising agencies who wanted to prove themselves and hence, decided to invest in pitches, which eventually became an industry norm. It stemmed from a will of the agencies to prove themselves but due to their lack of competency; it has become more of a burden for them as no ground-breaking ideas are pitched. Rather, client expectations are honoured and the direction that the brand team had decided or were planning to take, takes a more polished shape.

Q.4 What are creative agencies putting at stake when they pitch for free? 

Creative agencies are not putting anything at stake. A credible agency does not need to pitch for free. It pitches because if they win the pitch, the resulting (revenue) numbers or the relationship that they are able to develop with their clients will justify the effort. An upstart or an agency that needs to prove that they are good enough will pitch.
Basically ad agencies are primarily putting their name and their livelihood on the line when they pitch for free; hence the investment, high stakes and hopes attached to pitches. Regardless, the work needs to speak for itself as there is only a limit for proving oneself. The work needs to market the agency too.

“In an industry where the craft is lacking, saying you will learn by trial and error and from people who themselves are there to fulfil the requirements of the clients is setting up the junior lot in the industry for failure”.

Q.5 What needs to be done to rectify this situation?

First and foremost, anyone who joins the advertising fraternity needs to understand that it’s an industry with its own set of principles, rules and processes that need to be learnt.
We are in an era where we learn broad-based principals in university and join the workforce. The workplace actually hones our skills and knowledge-base. Practical understanding, knowledge of the workplace and basic principles are extremely important, which set up the base on which one starts their journey in advertising. These need to be learned from professionals who know the craft of advertising.
In an industry where the craft is lacking, saying you will learn by trial and error and from people who themselves are there to fulfil the requirements of the clients is setting up the junior lot in the industry for failure.

Q.6 Creativity is an abstract commodity that is not easy to sell. What kind of skill or knowledge do creatives and business managers in advertising agencies need to have to be able to ‘sell’ it?

In my opinion, creativity is not an abstract concept. It is the art of looking at the same problem from a different perspective; a perspective that no one else has explored or tackled the problem from.
Goes without saying, the process starts from the creative brief, which is where the role of a strategist comes into play as the go-to-person for creatives when they need to set boundaries.
Although hard work comes with the territory, yet it’s the perspective with which a creative tackles any problem and comes up with solutions which eventually goes on to differentiate the good creatives from the average ones. The good ones will always end up selling your product and create new territories for the brand team to explore, hence increasing their footprint.

Q.7 What role can PAA play in this?
With the advent of the digital medium and how it has taken over as a core communications medium, PAA as our association needs to identify current best practices and help agency practitioners inculcate learnings through credible platforms which will eventually help us create more meaningful advertising for our clients. In the changing media landscape, every individual is doing all that is possible to increase their learning base. This needs to come forth in a more structured manner from the PAA.
A great example of this is the IPA (Institute of Practitioners in Advertising) in the UK. All its objectives are centred on helping agencies and agency practitioners to continuously develop themselves; be it individual courses taught by industry professionals, insights and learnings for pitches or client briefs that are relevant etc.; everything is provided by the platform.
This kind of support will help us improve the quality of advertising and also the quality of agency professionals who will lead Pakistani advertising in the years to come.

3 COMMENTS

  1. I enjoy what you guys are up to. This type of clever work and reporting! Keep up the superb work.

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