Marketers buy advertising agencies on value and not price

At the Caxton Awards earlier this year I spoke about how creativity is valued and the fact that agencies were unnecessarily discounting their fees to win business, a message picked up by Paul McIntyre at AdNews TV.

CommBank’s Mark Murray and Lion Nathan’s Jon Bradshaw comment on the fact that they have seen agency discounting, but agree that it is not the driver of the agency selection process.

So why do agencies think it is important to discount?

No all marketers are as enlightened as Jon and Mark. We have had many clients tells us that they have told agencies that they lost a pitch on prices as this is less confrontational than saying they didn’t like the work or the strategy or the creative, or that simply the chemistry was all wrong.

Likewise we have had dealings with procurement and sourcing people who have either deliberately or inadvertently made price the main driver. Deliberately in that they have made agency pricing the focus of the RFP / RFI or inadvertently in that in developing score cards have placed too high an emphasis on the weighting of the pricing.

Negotiation is another area were agencies can be given the impression that selection is based on price. Procurement practices like reverse and online auctions based on price or heightening competitive pressures with strategies of having agencies undercut their competitors send messages to the agency that price is more important that quality and quantity of the people and the work they produce.

Then there are some of the independent marketing and procurement consultants in this category that unlike TrinityP3, are paid on the percentage of savings they achieve. This model treats agencies and their personnel like commodities and represents false economy as any idiot can achieve lower costs at the expense of having highly qualified and credentialed resources committed to your business.

I am sure there are plenty of other example too. In response to this story I saw an anonymous comment on a blog naming several pitches where this has happened.

Have you seen or heard of anyone selecting an agency on price? If you do not want to comment here, send me an email in complete confidentiality to people@trinityp3.com

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About Darren Woolley

Darren is called a Pitch Doctor, Negotiator, Problem Solver, Founder & Global CEO of TrinityP3 - Strategic Marketing Management Consultants and a founding member of the Marketing FIRST Forum. He is also an Ex-scientist, Ex-Creative Director and a father of three. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com
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