The wacky world of agency new business may have reached new extremes.

–In India, Reckett Benckiser is reported to be asking agencies to pay $6,500 to be eligible to pitch for Reckett’s media buying account (and, in a demonstration of how quickly even really bad ideas can travel, Thomas Cook in the UK is rumored to be contemplating a similar idea).

–In the USA, Prudential is reported to be paying $300,000+ (each) to multiple agencies that were invited to submit creative concepts (the $300,000 fee is payment for ownership assignment to the client).

Are Reckett and Thomas Cook exploiting their buying leverage, or are they soliciting bribes which will ultimately work to their detriment? Will best-in-class agencies agree to pay for the privilege of pitching?

Is Prudential enlightened? The Pru review does include Prudential’s in-house agency as a 4^th contender and it is not clear that there is a going forward assignment for the agency winner. Is the Prudential approach prudent?

What gives?

What is your point of view?

Agency reviews have reached a new pinnacle in their demand for dollars and resources to effectively secure a piece of business. And the scary part is that the first date is becoming the most expensive relative to time spent with our potentially new partner.

It’s amazing that prior to even kicking off the courting period you are forced to re-cut cases, develop team videos (with our untrained actors and actresses, also known as the agency staff), and answer 50–100 questions about the agency and its unique set of experiences, skills, and capabilities. Now don’t get me wrong; if this is what it takes to get a date, well, let’s just say I chased my wife for 6 years until she would finally go out with me. So determination has never been an issue. However, it didn’t cost tens of thousands of dollars in time and effort to get that date, even though the end result was still priceless.

Today agencies are at the mercy of the review process. The competition is tight, and you win by a whisker. From your first submission to your last follow-up effort, it takes time, money, and ingenuity of all orchestrated with complete PERFECTION. And remember, once you have clear sight on the prize, you are then forced to negotiate the value of your idea(s) with someone who will probably not be your direct client at the end of the day. So how do we start to bring this world into check and control costs? I am not sure that the approach of our friends in the Netherlands with their boycotting of reviews is the most productive to building a relationship.

What we can do is begin a process of identifying the assets for a meaningful first date. This is not to say we need to rule out videos altogether or even large RFPs; however, we should define which “one” would result in a stronger review for the client. We also need to take a closer look at the actual RFPs and answer key questions such as: Do they align with the ultimate brief and the decision-making criteria? Does each question have a purpose or is it potentially redundant? Has all information been collected for the RFP prior to its distribution to the agency? Have milestone dates been confirmed with the stakeholders? If an automated program is used for RFP/RFI submission, is this the best way to judge the agency’s chemistry with the client or company? By narrowly focusing on these key questions, we can potentially move closer to an efficient first date.

Until then, we will continue to build our 1,500-page RFP cookbook and log hours editing our teams so their inner beauty shines through. By the way, does someone know of a good acting coach?

Michael L. Miller
EVP, Chief Growth Officer
MRM Worldwide

Recently our agency was included in an RFP for a national advertiser.  One of the conditions in the RFP required the agency to relinquish its ownership rights of any work presented in exchange for a $5,000 stipend. We advised the advertiser that we wished to retain the rights to our work and we would decline the $5,000 stipend.  The advertiser responded that the condition was non-negotiable and if we did not agree to it we would be excluded from the review.

 As a matter of policy we will not give up our ownership rights to intellectual property for anything less than full payment for the work. 

 We went back to the advertiser and explained that we were a signatory to a letter from the 4A’s to search consultants asking that ownership not be a required when an agency is asked to provide spec work.  We provided the advertiser with a copy of the 4A’s position paper which provides a clear rationale for the reason for and fairness of the policy. 

The following is the advertiser’s response:

“As I said on Friday, we really appreciate you making your position known on the issue of ownership.  It helped to broaden our perspective on the issue.  Our thought has always been that we have such high standards as a company; we would never harm potential partners by doing something so unethical as using work that we did not fairly and equitably pay for, so we have always been most concerned about potential harm to the brand if we did not retain ownership.

 But, in reading your note, it became obvious that all potential clients may not adhere to our same standards.  So, in the spirit of partnership, we have revised the negotiation portion of our RFP.  It is similar to the language you inserted  but just written in general terms so it that can apply across the RFP to all agencies.”

 This is a case of a non-negotiable really being negotiable when supported by a rational and fair position.  The 4A’s position paper was very valuable. 

Managing Partner; 4A Member Agency

I’ve looked at the Review Central reviews of reviews, and I have a concern.

I don’t see any agency in a review situation being willing to post comments on that review, negative or positive. It would be burning a bridge with the client and/or the consultant that would impact negatively against the agency and BizDev person.

That said, how is this site going to acquire value if agencies aren’t willing to post? I see this as a well-intentioned experiment, but I would be surprised if it gained traction beyond a few posts from small-scope reviews. Does the 4A’s have a plan to gain wider adoption by member agencies?

Thanks,
Josh Davenport
Bernstein-Rein

I was surprised about the article that appeared earlier this month in the New York Post, “Ad Firms Face Problems on Guarantees,” that discussed the practice of media agencies being pushed by clients in new business pitches to guarantee future pricing in media. We’ve seen a number of these high profile pitches in the past year.

I was told by a media agency head that this was common practice in Europe and was now filtering its way into the US.

This is a deplorable practice for two reasons:

• Every agency buyer knows that if a client demands lower costs, it’s all about lowering the quality. And this can be done by stealth … a practice that ends up hurting marketers just to please procurement. In the end the client’s business suffers.
• In the US, no media buying agency can guarantee any price. Agency deals don’t apply here as I understand they do in Europe. Client contracts and rates are negotiated based on their volume and commitment on an individual or legacy basis. If an agency or client can tell me exactly what the market is going to look like next year and read my mind as to what we are going to negotiate, then they really must be geniuses.

I found it illuminating that the New York Post article did not include any comments from the media sellers’ perspective.

How do media organizations view media rate guarantees made by agencies? In the media marketplace advertiser, agency and each media property must collectively agree to terms. Are media service agencies that guarantee media rates fairly and transparently representing all of the essential constituents in the media market place?

Concerned Media Executive

There is currently a self described “Procurement Intelligence Firm” circulating an RFI for an undisclosed healthcare marketer. The consultant is asking agencies to provide information—including information that may be deemed Confidential Information (CI)—as an initial step in a process of identifying agencies to participate in an RFP for a “Fortune 500″ healthcare account.

The 4A’s and the ANA Best Practice Guidance for Agency Search cautions against reviews for undisclosed marketers.

In the past, “consultants” have conducted RFI’s and RFP’s for undisclosed advertisers as a means to obtain information for the consultant’s database.

Without knowing the marketer, an agency cannot evaluate the potential merits of participating in an RFI or RFP; therefore agencies should proceed with caution when they are asked to participate in a process that does not disclose the marketer.

Tom Finneran
EVP, Agency Management Services, 4A’s

Several 4A’s members have recently indicated that they have been approached by a consultant and board member representing the interests of company that is reported to be finalizing the acquisition of consumer brands and/or ramping up the planned introduction of new products for which the company needs the services of a marketing services agency.

Several members indicated that the consultant met with their agency and provided category reviews and competitive landscape updates to the agencies. It is reported that the consultant then convinced agencies (in Florida, Pennsylvania, and perhaps other locals) to pay him monthly retainer fees for consulting services with the promise that the agency would be assigned the business without a review and that the agency would begin work as soon as the acquisition/new product launch agreements were finalized by the marketer. Members report that the consultant indicated that launch authorization was anticipated shortly. After collecting fees for several months members indicated that the account never materialized.

Agencies should conduct thorough due diligence, check references, meet with client representatives before investing agency resources in opportunities that seem to good to be true.

Tom Finneran
EVP, Agency Management Services, 4A’s

In recent weeks there have been several reports from 4A’s agencies that they have been contacted by consultants that have suggested that the consultant could get the agency into a review-HOWEVER- prior to the agency receiving the RFI/RFP the agency had to agree to pay the consultant a double digit percent of the agency’s fee if the agency got the assignment.

In each of these instances the agencies involved declined to participate.

Pay for play is a consultant conflict of interest that is not in the best interests of agencies or advertisers.

The joint ANA/AAAA “Rules Of The Road” for Agency Search Consultants notes that “Agencies should not be required to pay a fee to a search consultant in order to participate in an agency review conducted by the consultant” (To view the “Rules OF The Road” for Agency Search Consultants see the Guidance Section of Review Central or visit the 4A’s Web site’s Agency Search Information Center).

Many agencies will not participate in Pay for Play reviews and most leading agencies have policies against Pay for Play participation.

It may be a recession but that doesn’t mean that inequitable and ill advised tactics like Pay for Pay should be considered as appropriate practice by either agencies or advertisers.

How does your organization respond to Pay for Play proposals?

Tom Finneran
4A’s; EVP Agency Management Services