That emotion may well bring about the downfall of the advertising industry..

Ramesh Narayan

We seem to live in a constant state of fear.

We are afraid of death, and afraid of what life might throw at us. We are afraid of failure and we are afraid of the transience of success. We are afraid of taking decisions because we are afraid of their consequences. We are afraid of making choices because we are afraid of having to live with them.

So what does this have to do with the marketing and advertising industry? Everything, I am afraid.

The immediate provocation for this seemingly philosophical beginning is the news story that Reckitt Benckiser, one of the largest advertisers in India, has called for a pitch. So what's so terrifying about that? Every marketer worth his MBA degree is doing it on an annual basis. And every advertising agency would give an arm and a leg to be invited to one.

Well, this time there is a twist in the tale. Reckitt is charging advertising agencies about Rs 2.5 lakh if they want to make a pitch to them. And that's not all. They have also said that agencies, if selected, should be prepared to give them 2.5 per cent of the commission they receive from the media.

Let's examine this proposition from all angles, and also see why I spoke of fear being the key.

First, as the agent provocateur is an advertiser, let me say that if I had to divide the proposition into two parts, namely, the fee, and the rebate in commission, I would call the first preposterous, and the second honest. To begin with I have gone on record to write and say that the very notion of a pitch is fairly ridiculous. I feel it stems from a basic fear to take a decision by oneself which in turn stems from the fear of its consequences. I am not even talking about the babus who run public sector undertakings and are bound to go through the motions of calling a “tender” for everything. I am talking about the cream of our marketing talent. I refuse to believe they are incapable of assessing an agency's skills without calling for a pitch. It is just more convenient to take a leaf out of the Government, set up a committee, take a joint decision and then sit back secure in the knowledge that if things go horribly wrong, one can lean back on the principle of collective responsibility. Fear.

As far as Reckitt goes, the very idea of the company to ask for a pitch not just without having the corporate ethics to pay for ideas but with the apparent chutzpah of asking the agencies to pay to have the privilege of these marketers viewing them is a sign of the pathetic times we live in. I think it is a display of completely misplaced priorities thinly veiling a deep ignorance of what best practices should be. Good companies should be teaching industry how to manage and motivate good professional partners. That's what corporate leaders are all about. I did mention the word ‘honest' with regard to their asking for 2.5 per cent of the commission agencies receive from media. I meant that at least they were forthright about their demand. I don't approve of it. I have never understood the attitude of a large advertiser seeking a “kickback” (let's be blunt) from a professional partner – unless the remuneration system is based on a pre-determined fee, not commission, and is supported by an equally transparent and fair performance-based incentive scheme.

But then why do agencies participate in such debasing “free shows”? Think about it. Advertising agencies put on public display their only stock in trade… ideas. They willingly do a market survey, albeit a “dipstick” survey, present strategy, creative ideas, and even the actual rendering all for free. And they fully know that even if they are selected, the marketing team would suddenly grow into very brave boys and girls and dictate strategy to their agency, asking only for an execution or an implementation. The answer is simple. They are afraid that if they don't go and dance at this free-for-all, the agency next door would. And might even get the business for its pains. And that is not an acceptable alternative. And so they ignore their instincts that scream that it is wrong, and the industry body's rules that spell out that they need to charge a fee when they make a pitch and go ahead and pitch for free anyway. And then allow themselves to be arm-wrestled down on their commission or their remuneration package. Fear.

And what of our august industry bodies? The Advertising Agencies Association of India (AAAI) foolishly mandated a pitch fee knowing fully well it lacked the teeth and the will to enforce it. From zero tolerance to scam advertising which is making a mockery of our awards for creative excellence to a united front against advertisers who wish to attempt possibly ruinous forays into the very fabric of the industry. And may I remind the respected Indian Newspaper Society (INS) that it has a well documented rule against rebating of commission from media. We chose to go look the other way all this time because it was all in the realm of subterfuge and speculation. There was nothing official so far. Fear.

Now that one advertiser has publicly sought a rebate thus contravening this very fundamental rule of accreditation of agencies, may we look forward to an immediate dis-accreditation of any agency this advertiser empanels, and an embargo on the clients' advertising? Anything short of this would be an abject surrender at the altar of business.

So where do we go from here? I believe it is still not too late for well-meaning members of the industry and their associations to rein in such adventurism on the side of advertisers and agencies, and apathy on the side of the media. One must agree that a decade-and-a-half of such practices have left the advertising industry scrabbling for good young talent on the one hand and professional respect on the other. This is the time for the advertisers and their industry body to stand up and be counted as good leaders who care more for the long-term health of an industry than the immediate prospect of a few rupees. This is the time, probably the last time the agencies have, to put up a bold and united front and completely isolate this advertiser or any agency that succumbs to such pressure. This is the time for the media to stand up and put an end to this vicious cycle of squeezing margins that debilitates itself as well. This is the time to forget fear and decide to live with the prospect of exciting uncertainty in the short run, and stability in the long run. Then this could be a time to thank Reckitt Benckiser.

(Ramesh Narayan is a communications consultant.)

Related Stories:
The state of the ad industry
For the Love of advertising

(This article was published in the Business Line print edition dated July 15, 2010)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.