THEN

Marketing circa July 1997: the pitch

John Allert, of Allert Corporate Communication, blames the campaign pitch for lowering the status of design, claiming that by charging nothing (or at best the cost of materials) for ideas presented to clients, bigger agencies encourage the perception of design as a commodity, not a service.

“What I am attacking is high profile design companies who have no financial requisite to price slash or price cut to attract work,” he says. “I can only surmise they are more interested in the profile of the commission itself than they are in making money… It devalues design, not just for those companies, but also for lesser known companies who are trying to establish credibility in the market place.”

Larger firms, Allert argues, have a corporate responsibility, like solicitors, accountants or any other service provider, to set and substantiate a benchmark of professional fees.

Zoo’s Ed Spencer believes that by charging only for time and minimum costs, you get an inferior product, as does Neologica’s Tim Mansour. “When they do that, what they get is crap; so to get good quality work, you have to pay.”

While there is validity to these arguments, the marketplace is not likely to overhaul this practice at any time in the near future.

“When we’re doing a pitch, it’s a very, very expensive exercise for us,” says Craig McCann (Ogilvy and Mather). “I think it’s really just the competitive market. If everyone was to suddenly decide ‘we will charge this amount of money’, it’s just not realistic.”

“The pitch process is here to stay,” Tom McFarlane (M&C Saatchi) agrees, “and I think it’s a naïve comment, personally. I mean design companies pitch for business, don’t they?”

NOW:

Darren Woolley, managing director, P3

Today, parts of the industry are still complaining about the pitch process and, in some cases, with good reason. There have been a number of poorly run and managed pitches recently where the process has become protracted, cancelled mid-process or undertaken with questionable governance and diligence.

But for the vast majority of creative providers, and I include media, creative, digital and design agencies here, pitching is a part of the new business process. In regards to the accusation of “lowering the status of design” it is not the free pitching that creates the perception of design and creativity as a commodity, but the continued failure of the industry to develop an acceptable alternative remuneration model to the resourced-based remuneration currently in place.

Success-based remuneration or intellectual property rights rewards based on the value the creative creates, rather than simply relating it to the cost of the resource commodity required to manufacture the idea.

Of course there are issues on both sides in relation to embracing a new approach to remuneration.

On the marketer side, there is a feeling that by paying for the resources they should own the intellectual property rights, a commercial philosophy that has thrived since the renaissance. When results-based payments are discussed, many marketers are uncomfortable with paying the agencies on results as the creative component such as packaging design, advertising and the like, makes only a small contribution to the success of the campaign and that, in the case of a highly successful campaign, the creative providers could be over remunerated for their contribution to that success.

On the creative provider side, their concern that they are being under remunerated for the value they create under the current system is balanced by the business need to guarantee being remunerated for their costs, rather than open themselves to possible loss when an idea does not deliver value for the marketer. In the face of potential loss, the creative provider will align with the marketer, championing the line that their creative contribution is only a small factor in the failure.

Ten years ago, it may have been reasonable to think that free pitching was making creativity a commodity. Today, pitching is the primary new business tool for creative providers. But now, it is how they are remunerated that is the main driver. Adhering to a resource-based model is to position creative processes as a manufacturing process. But until there is an acceptable model that rewards creative for the value it creates we are stuck with a model that is based on how much it costs plus, of course, the ubiquitous profit margin.

Thanks very much for your time…