The Hindu Business Line : To fee, or not to fee?

The Malaysian Advertising Agencies Association recently made pitching fees mandatory and even limited the number of agencies invited to a pitch. Not only that, the client must put in a deposit of $2,654 for each agency invited to the pitch - all with the purpose of treating a pitch more professionally and making clients aware of the agencies' credentials before inviting them.

In India, the Advertising Agencies Association of India (AAAI) has also decided to tread the same path. In the general body meeting held in January this year, AAAI's executive committee passed a resolution that allowed agencies to charge clients a fee if they call for a creative pitch. But nothing can be achieved unless the body of advertisers agree to this. There is a meeting planned with the Indian Society of Advertisers (ISA) and agencies are hoping pitching fees will be made mandatory .

`Resources wasted'

"Pitches a tremendous wastage of scarce resources "_ Sam Balsara

With the purpose of encouraging genuine clients, it is the deployment of resources towards a pitch which is being cited as the primary reason for the pitching fee exercise. Sam Balsara, immediate past president of the AAAI and Chairman and Managing Director, Madison Communications, says, "There are too many pitches being called for by advertisers and more importantly, too many agencies are called for each pitch, resulting in tremendous wastage of scarce and expensive agency resources."

"Pitching is an expensive pastime "_ M. G. Parameswaran

Says M. G. Parameswaran, Executive Director, FCB Ulka: "AAAI is an industry body that helps regulate the relationships ad agencies have with the various constituents. The body is of the opinion that at times clients tend to call for pitches when they are not fully warranted. Pitching is an expensive pastime for agencies and clients, especially if you factor in the time and effort."

Considering the large number of pitches being made, the purpose of imposing a fee is more to streamline the pitching process whereby a fee is expected to be a token. According to Vivek Sharma, Vice-President (Sales, Marketing & Services), Mirc Electronics, "The pitching process should not be a horse-and-pony-show where a large number of agencies are called for multistage pitches. Clients need to do their homework and arrive at a shorter list of agencies which are going to be suitable for their brand. Charging for a pitch fee depends on the complexity of the pitch and its length."

Most agencies too think the pitching fee should be treated as a token gesture to begin with, before creating slabs based on the size of the account. Suranjan Das, Vice-President & Client Services Director, JWT, says, "Agencies are not fighting for money. It is just a gesture to show that the client cares for them and puts a value on their time."

While most agencies do spend time and money on the pitches, is it reasonable for them to charge a fee at all? Maybe or maybe not, especially if there is a third party such the AAAI which is also involved and demands a part of the pitching fee.

"A third party cannot decide "_ Bharat Patel

Bharat Patel, Chairman, Procter & Gamble India, and Chairman, (ISA) says, "Pitch is a wrong term. I would call it speculative presentation. P&G does not believe in speculative presentations. As a principle, a third party cannot decide what the fees should be. It is up to the agency and the client to decide that. I don't believe having a third party has ever worked and neither do we recommend our members to go for it. For P&G, it is not acceptable to pay, though, and most MNCs never do it. In fact, there is no cost in a pitch. It is not like they are making a campaign which is free of charge. We are in the process of meeting the AAAI and according to the recommendations made, we will be making the changes."

More Stories on : Advertising | Industry Associations

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Museum of Misteaks

The glamour in IT

Kaan Kholo

To fee, or not to fee?

The issues at play

When brands go to college ...

You merely have to be observant