Pitch Fees—Who Should Pay? What is Fair?
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 4th contender and it is not clear that there is a going forward assignment for the agency winner. Is the Prudential approach prudent?
What is your point of view?