edition 74 june 12, 2007
the lowdown on pitching fees

     In asking agencies to pitch for their business, advertisers are increasingly asked for, and are considering paying, pitch fees. In this edition of P3 e-news we look at the costs of pitching for agencies and discuss when marketers should pay pitch fees for their participation. – paying pitch fees to agencies? – P3 knows the marketplace – free webinar download – woolley speaks consumers  
paying pitch fees to agencies? There are always times when an advertiser should go to the market to select a new agency. But this is not a process that should be entered into lightly. Going out to the market place comes with several risks and costs to both advertisers and their agencies. Before we consider if the advertiser should pay pitch fees lets look at the cost to the agencies, which include: internal human resources Like most companies these days, agencies do not have a significant capacity within their human resources for speculative work. While few agencies appoint external staff for a pitch, the head hours invested in the pitch process is a cost to the business, with the majority of the costs quoted for the pitch process comprising these human resource costs. disruption to the agency The opportunity to participate in a pitch can be great for agency morale, but many agency managers are rightly balancing the potential upside of chasing new business opportunities with the impact the disruption may have to existing clients. non-recoverable external costs Depending on the size of the account, many agencies will invest heavily in external costs such as consumer research, animatics, external artwork and the like to provide a perceived competitive advantage. If the agency is unsuccessful, these are hard costs that will never be recovered and even if they are successful, it can take many months to get back to break even. intellectual property rights The core value an agency provides is the ability to generate ideas. In many cases advertisers require the agency to assign the rights to these ideas to the advertiser as part of the pitch process. If you were not intending to use the idea why would you want to own it? And if you do intend to use the idea, why would you not pay for it? industry perception of failure While the successful agency wants to shout their success from the roof tops, the unsuccessful agencies are naturally concerned that a number of unsuccessful pitches can create a perception that the agency is “off the boil” with little or no opportunity of putting these losses into context as they are often covered by confidentiality agreements. when to pay pitch fees There are times when you should compensate the participating agencies for their costs. Our advice is to offer pitch fees when you want to buy the rights to all concepts, not just the winning concept, when you require the agencies to prepare materials and incur external costs beyond what would be considered standard and if you are engaging a large number of agencies in the strategy / creative stage of the process. To find out more on pitch processes and pitch fees, contact P3 in Melbourne 03 9682 6800 or Sydney 02 9279 4997 or by email on people@p3.com.au  
P3 knows the marketplace  

  P3 manages an increasing number of agency reviews due to our up-to-date knowledge of agencies across Australia. P3’s online New Business Register is a free service where agencies express their interest and provide company details for upcoming pitches. We have over 200 of the top agencies in Australia registered with us. To find out more about the agency review process, contact P3 in Melbourne 03 9682 6800 or Sydney 02 9279 4997 or by email on people@p3.com.au  
free webinar download  

If you missed the P3 Webinar held on Tuesday May 22, you can now view the webinar by clicking here. Darren Woolley discussed the impact of the digital platform on traditional advertising practices. For more infomation on upcoming webinars please visit Premiere Global Services.  
woolley speaks consumer  
At this years Australian Advertising & Marketing Summit, Darren Woolley is joining a panel to discuss Accessing the ‘New’ Consumer – Changing Communication Models: what drives the ‘new consumer’? – how has this affected patterns of consumption – detailing the appropriate channels of consumption – what does tomorrow’s consumer want?   Get a booking form via ACEvents at www.acevents.com.au/ad2007  

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