Nick Hand, the Senior Financial Consultant at TrinityP3, has managed and negotiated some of the most high-profile agency pitches in this country over the past decade and is here to discuss the implications for any marketer managing their own pitches.
Since the pandemic, agencies worldwide have been increasingly vocal about ditching the pitch, and trade media have run headlines and opinion pieces claiming it is broken and even dead.
As Australia’s and APAC’s leading pitch consultancy, we noticed that while there were plenty of opinions, there was very little data on this topic, so we undertook our own research called The State of the Pitch in Australia. Nick shares why one of the major pain points is the money. Get the fee wrong and everything else is seriously compromised.
You can download your copy of the State of the Pitch Australia Report for free here.
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It’s a significant part of an agency’s cost base. And certainly, when I worked in a media agency, something you budgeted for.
Transcription:
Darren:
Hi, I’m Darren Woolley, founder, and CEO of TrinityP3 Marketing Management Consultancy and welcome to Managing Marketing. A weekly podcast where we discuss the issues and opportunities facing marketing, media, and advertising with industry thought leaders and practitioners.
If you’re enjoying the Managing Marketing Podcast, please either like, review, or share this episode to help spread the words and wisdom from our guests each week.
Since the pandemic, there’s been an increasingly vocal call from agencies around the world to ditch the pitch, and trade media have run headlines and opinion pieces, claiming the pitch is broken and even dead.
As Australia and Apex leading pitch consultancy, we noticed that while there was plenty of opinions, there was very little data on this topic. So, we undertook our own research called the State of the Pitch in Australia. One of the hot points, or one of the pain points is the money, get the fee wrong, and everything else is seriously compromised.
Well, my guest today is responsible for managing and negotiating some of the most high-profile agency pitches in this country over the past decade and is here to discuss the implications for any marketer managing their own pictures.
Please welcome to the Managing Marketing Podcast, TrinityP3, Senior Financial Consultant, Nick Hand. Welcome, Nick.
Nick:
Hello, Darren. Thanks for having me again.
Darren:
Well, it’s my pleasure because you’re involved in pulling this together, and I’m just wondering from your perspective, what was the thing that jumped out most to you when you were looking at these results?
Nick:
I think the biggest one for me was the lack of a clear scope of work that the respondents replied with. It’s quite often in the pitches that we are managing, it’s one of the biggest areas to try and nail down with the client as we’re going into the RFP stage, what is it that you actually want the agency to do?
Not a laundry list of, “Well, these are the sort of services and the sort of people that we want,” but what do you actually want them to produce? So, seeing that only a quarter of the respondents said that they got a clear scope of work isn’t surprising. And I think is for people managing pitches, marketers managing pitches is one of the biggest things to get right.
Darren:
I think one of the issues here and being a copywriter and loving words is the difference between a scope of services. What are the services that I will need you to provide over the term of the contract compared to an actual scope of work?
And I love using metaphors because I’ve just recently renovated my house. I could say to the builder, “The services I need are plumbing, electrical, tiling, brick laying, concreting, blah, blah, blah.” They’re the services I want provided, but the actual scope of work is in the blueprint, which then they have to produce over the contract.
And I think that’s what we’re seeing here is that some agencies think that just having a scope of services is a scope of work.
Nick:
Look, it’s not, and look agencies will always say that they’re unique for one reason or another. But most agencies obviously, discipline plays a part whether you are media creative or whatever. But most agencies offer the same services for the particular discipline that they’re in.
As I said, what we want to try and do as a marketer is narrow the focus on the financial response from the agency to, this is what we want you to actually produce. Like your house analogy, you show the builder the blueprint and say, “I want five bedrooms there, these dimensions, these are the arch trays I want in the in each room. These are the tiles that I want in the bathroom,” that’s the sort of thing that we’re talking about. And it doesn’t appear as though that that happens in most of the cases.
Darren:
Because the other thing that’s interesting, in some cases, these pictures in the report were for projects. Now, you’d think that if you had a very specific project, that you would have a very defined scope of work for that project compared to trying to set a scope of work for the next two or three years. Sure, that becomes a bit more challenging. But even projects seem to suffer from this very loose definition of what was actually required.
Nick:
I think a lot of that comes down to one of the reasons that the market is going to pitch in the first place is they don’t know exactly what it is that they want to solve the problem, or what they need to solve the problem that they’ve got.
So, we know we’ve got a problem, we know that an agency can help us solve it. Here’s the problem, now tell us what we should do. And that’s fine, I understand that. But there needs to be some guardrails, some fairly closely defined guardrails about what’s going to be acceptable in the response and what’s not.
Just telling the agency that sales are down, and we need some sort of retail response, direct response campaign, that’s great but what mediums do you prefer to play in? Is there any stakeholder engagement further up the food chain that you need to consider that we see it occasionally in retail with franchises.
There is the franchisees are obviously significant stakeholders for any centralized marketing team, and their wishes need to be taken into account. So, these are broad brush examples of course, but most of the franchises, “Well, we want to be on TV. We want to be on TV.”
Well, perhaps the marketing budget doesn’t allow you to get the direct response you need by TV. There’s just not enough money. So, there’s no point telling the agency, well, our franchises want TV, and we want to improve our sales when there’s not the money for it.
You’ve got to set those guardrails and be a little bit more specific about what you think is required, and then let the agency go off and make the recommendations, answer the brief first to the requirements that you’ve got. But then they may say, “Well, actually, have you thought of doing it a slightly different way?”
Darren:
And that’s the point, isn’t it? Because a lot of marketers push back when we ask for a very detailed scope of work, not scope of services, scope of work, push back and they say, “Yeah, but I want the agency to have some input.”
The trouble with that is that often the input that the agency will have is no longer something that they have direct control over because we separated the media from the creative. So, if you’re running a creative pitch, you’re asking the creative agency to tell you what media choices to make, likewise, if you’re running a media pitch, not defining the scope of work is going to impact on what creative is actually going to run as well.
Nick:
And I think also marketers struggle with that detailed scope of work because quite rightly, circumstances change. Now, some marketers are reactive, some are proactive, it depends on the business and the category that you’re in. But there at least needs to be a baseline that the agency can respond financially with a considered proposal.
We all know that things change and in three months that may need to be thrown out, but at least you’ve got the agency focused on what it is that you want them to do at that particular point in time. They’ve priced that up. You can compare that to what your previous agency has potentially been paid. If you get a consultant like us, and you can benchmark that against the rest of the market.
But at least you’ve got that frame of reference, that point in the sand, that then makes any variation to the scope of work subsequent to appointment, much easier to manage because you know that the agency has put together a considered response for what you wanted at the time. And it’s likely that what they then propose for any changes is going to be equally market competitive or fairly priced.
Darren:
And look, the other problem in all of that as well, that often marketers will not necessarily have a plan to execute anyway. You would think that if you have a strategy, you would have a plan, and that plan would be able to adapt to the changes down the track to actually go in.
And I often wonder, if I bought shares in some of these companies and went to the annual general meeting and go, “Would you be able to share the marketing plan for the next 12 months?” Because I’m sure one was presented to the board, and then compare that to what you actually delivered.
Often you would find that a significant amount of it would actually be delivered. I don’t think that the variability that we think happens in the marketplace happens.
And the reason I say that is one of the things that we always do when a market is struggling to define a scope of work for the coming year is just say, “Well, what did you do last year?” Because you’ll often find that the requirements of last year will not be significantly different from what they’re going to end up doing this year.
Nick:
So, then it just biggers the question why only a quarter of the respondents felt they had a reasonable scope of work with which to work.
Darren:
Exactly. Now, the other thing that surprised me is the great variability in fees we had less than 50,000 up to $10 million. There was a global pitch in there, and maybe 10 million in fees per year, is probably a global fee, not just for the Australian operation. But that’s quite a big spread, isn’t it?
Nick:
It’s a huge spread. I thought that days of $50,000 prizes in pitches were behind us, unfortunately. But it doesn’t seem like it is.
Darren:
No, no. Look, most of them were around, I think around 250 to 500, or maybe from 50 to 250, but not that big. I think the industry’s done itself a disservice over the years talking about billings and media billings particularly, because that’s where we get the 20 million, 50 million, 100 million that makes everyone think that the advertising industry is flushed with cash.
Nick:
Yeah, that’s a really good point because agencies are happy to contribute to those lead tables saying that they’ve just won a $30-million media client, or there’s a creative engagement that is worth 5 million.
Even on the creative side, most of that 5 million is likely going to cost of production, not necessarily the strategy and the creative idea. So, you might get a million out of that five, maybe one and a half to two.
So, I think you’re right, focusing on the size of the prize rather than, “Okay, well what’s our actual income? What can we contribute to the top line that’s going to end up being profit,” has made markets … and $30 million to spend with a media agency is a considerable amount of money.
It doesn’t necessarily see that the agency’s only going to get 5, 6, 7% of that at the end of the day. So, it makes it look a bigger prize than what it actually is that may be contributing to the issue.
Darren:
I think commission was 10%, and that’s revenue or income fee not billings. And that’s what I think’s really interesting. It always cracks me up, you know those new business tables that everyone produces, it doesn’t matter which market you’re in. In fact, there’s some global ones.
When someone wins a piece of business, it’s like $50 million worth, when they lose it, they lost 5 million. And I think it’s a very easy thing for the CFO to go, “Well, that’s what we won in billings, but that’s actually what we lost in income.” And so, there’s always this disconnect between what is the value of it, and is the total billings really value anyway?
Nick:
Well, depends, but in this fragmented media world, then probably not because particularly from a creative agency standpoint the media plan may, well certainly will dictate what the agency is producing, but with clients having more in-house capabilities, rosters of agencies doing different type of production and content creation work there’s no guarantee that the size of the prize in a pitch is actually going to go all towards the agency that’s won anyway.
Darren:
Yeah, that’s true. The other thing is that when you think about the fee and let’s pick a nice round number, like a million dollars. As you say, there’s costs out of that, that’s not profit, that’s the base fee that’s paid to the agency. Now, let’s assume that they make 15%, that’s 150,000 out of a million dollars. That could be pre-tax profit, the amounts that we get have thrown around.
There was a research paper a year ago that said it was about 44,000 on average for agency head, our cost to participate in a pitch. We’ve had others say it’s somewhere between 50 and 100,000.
And in fact, in the research report, one agency said that they were out of pocket 150,000. So, on that basis, if you’ve spent $150,000 winning a piece of business, a million-dollar account in a fee, you’ve just blown your profit for the first year, haven’t you?
Nick:
Yeah, we always used to, in my days in agencies, we always used to work on the premise that you would lose money in year one. That includes the cost of pitching for the business. You break even in year two, and you’d actually start making a profit on the account in year three.
Darren:
When procurement would come along and go, “Contract’s up, time to pitch again.”
Nick:
And that was fine when I first started my career, when a lot of these engagements were 5 and 6 and 7 and 10 years, now that a lot of them are only the three years that’s a hard road to hoe for most agencies.
But you’ve got to be in it to win it. You’ve got no choice when, particularly for the multinationals, we’ve said this before on this podcast many times that there is a constant expectation of growth, top line growth, profit growth. Agencies need to participate in these tenders to ensure that they keep that new business machine, that income machine rolling over.
Darren:
It is funny though, isn’t it, that agencies will pitch for relatively small fees. The prize is 50,000, 100,000, 200,000, knowing that the cost to them is so high. Some agencies will say they’ll do it because they’re never told when they go into the pitch what the contract’s actually worth in any shape or form.
And we know some procurement people think that that’s poor practice to reveal the value of the contract because the vendors, the people pitching will just tend for that amount. But it’s a very important business decision, isn’t it? As a CFO and an agency, you would have to have some sort of evaluation on whether this is worthwhile expenditure.
Nick:
That’s one of the first questions that needs to be answered as far as I’m concerned, what are we actually pitching for? It always used to be a point of contention in my agency days that we would have the creative director or the ECD all over a potential opportunity thinking about the work that could be done, potentially the awards that could be won, how that’s going to look on the agency real.
And that’s great. That’s very important. But when you boil down the amount of money that the agency is going to earn as income the question need to be asked, “Is this actually worth our time? Do we want to have another loss leader on the books?” Because it’s a great opportunity, creative opportunity, maybe, maybe not. That’s for the CEO and our masters in New York to decide.
Darren:
Well, and let’s raise that point because we’ve got a global pitch 10 million let’s say in fees globally. The other problem, and I know because your career has been working in some of these big network agencies, isn’t it true that by the time you get to Australia, the fee that’s often allocated for the work in Australia is not commensurate with the work that actually has to be done in this market.
So, even though you’ve won this big global pitch, you can actually end up breaking even or losing money just servicing that client.
Nick:
Most often losing money because too many times the fee is negotiated at a global level, and it’s negotiated effectively on the same terms. Perhaps a different scale depending on the volume of the work, but the same terms, the same rates for all the markets.
Darren:
It’s just a global negotiation and everyone gets the same.
Nick:
Everyone gets the same. Now that might be fine. Media’s the best example when you get some of these large, a hundred million-dollar and more media accounts, that’s billings, just so we’re clear.
Darren:
Yeah, billings.
Nick:
An effective commission rate, even though that’s not usually the model, but an effective rate of 3 and 4% might work fine for the large markets in North America and Western Europe where the spend is significant.
In Australia, our share of the global pie was 20, 30 million, maybe. So, to get 3 and 4% effective commission out of 20, 30 million is not enough to run the business. But you’re part of this global family.
Darren:
But then the local CMOs going, “Well, why isn’t the agency giving me the service that I expect?” It’s because we can’t afford to. Because the money that you’re saving here is actually getting earned overseas.
Nick:
Australia is usually getting the wrong end of the stick on that and subsidizing the other markets.
Darren:
So, while the media, the trade media focus on these big global pictures because there’s big numbers attached to it, in actual fact, it can have quite a negative financial impact locally on the operation here, can’t it?
Nick:
Yeah, it can. And look, the other part of that is also Australia is quite rightly lauded for having really smart people working in its agencies, many of whom have come from overseas, or Australians have spent time in global offices and then come back to Australia.
And so, when the call is put out for people to be working on this global pitch, practitioners in the Australian agency leaned on quite heavily because they’re so good. And that just exacerbates the problem because we’re potentially spending more time relatively than other parts of the world and getting-
Darren:
Landing the business and then getting no reward.
Nick:
And then getting very little reward when the fee’s divvied up.
Darren:
Now the other thing that was interesting was the type of ways that fees were paid. There was the classic retainer, then there were project fees. It was good to see output-based pricing models got a very small acknowledgement in there but also hybrid. So, between I think it was project fees retainer, and then a hybrid of all of them that was about 90% of all the fee deals. Did that surprise you?
Nick:
It did a little bit. I thought that, so the output-based, value-based might have shown a little bit more of a score because it’s certainly something that is hot in the agency news today. I mean, we’ve spoken about it on this podcast a couple of times.
So, I’m a little surprised that it didn’t feature more prominently, but perhaps that just points to two things, lack of understanding of what it actually is and how to implement it. And they are difficult to implement at a pitch stage if the marketer doesn’t have a detailed scope of work.
Darren:
Except that we ran a pitch last year in North America where a significant number of the agencies came to the pitch and said, “We do not do retainers, we do not do hourly rates, and we do project fees and here is a fee for service to deliver different types and different qualities of work.”
So, it is incumbent in many ways on the agency to push back. I don’t know, when we run pitches, we give them the option of recommending alternative fee models, do we see many comeback? Because my experience is they usually say, “Whatever you want us to do.”
Nick:
Yeah, no, when we do manage these pitches, so it’s perhaps going back to the scope of work, it’s a detailed discussion with our marketer about what the scope of work looks like. What do you want the agency to do? We get as much information as we possibly can and then talk to them.
Okay, “Well, what sort of remuneration model would you like to implement?” Take them through the options, pros and cons of each. Invariably we end up on some sort of FTE or head out based model, which is fine.
I’ve spoken at length before about why a lot of clients prefer that model, but as you say, we give the agencies the opportunity to not only answer the requirements of the RFP but come back with an alternative model.
And as you say, they rarely do, and I’m not quite sure why that’s the case. It may well be they’re just taking the line of lease resistance thinking that it’s never going to get up. It may well be that the agencies themselves aren’t sure how it needs to be implemented or how it could be implemented in these sorts of situations.
Given the amount of noise out there about how this is the direction that the industry needs to be headed it is surprising that those numbers out of this report and survey are so low in that area.
Darren:
And yet, we have done it. That pitch last year in North America, the procurement team were immediately feeling like, “Well, this is going to be a challenge,” but we were able to show that we can compare like for like across the agencies, those that were happy to go with retainer based, hourly rates and resource models, and be able to evaluate those that were coming with a price and negotiate.
You and I were doing it, negotiate with them to actually get a result that was acceptable to everyone involved.
Nick:
I think two things perhaps stick out there is that it was a significant account.
Darren:
yeah, we’re talking more than $10 million in fees, yeah.
Nick:
So, it was a significant account. So, it would be, I think perhaps, a little bit too much to expect an agency for a $50,000 project although maybe that’s the perfect scenario to do it, perhaps. So, I’m being a little bit flippant, but the size of the prize was important there.
But also, I think the fact that the desired solution was to have a roster of agencies that the client could call on to solve different problems, and the fact that the price that the agencies were asked to agree to was going to be similar across the entire roster.
So, there was no potential or no worry for the client that they were going to be paying more or less by picking one agency over another.
Darren:
That’s right. Well, it allowed them to judge value because they could compare — we helped them compare, like for like.
Nick:
That’s right.
Darren:
Look, I’ll get onto payment terms later, but just going back a step, a lot of the industry talks about the need to pay pitch fees, and yet the research shows that 90% of the pitches, there was no pitch fee paid. Did that surprise you?
Nick:
No, it didn’t. I know that there’s a lot of talk about that, but my experience, I think my career is 20 years in agencies. I think I paid pitch fees twice, and these are agencies that are continually pitching. So, it’s not surprising. I think it sounds in theory like it’s a good idea, but the amounts that are usually proposed are token at best.
Darren:
And that’s what we saw here. Most of them were under 20,000, under 10,000, a lot of them were around 5,000. Which is not even out of pocket expenses for a pitch, is it? It’s quite tokenistic.
Nick:
Two reasons you pay pitch fee, three reasons you pay pitch fee, one to get the intellectual property, I’m sure we’ll talk about that in a second, two, because the marketer feels that there’s a moral obligation to pay these agencies for their expertise in answering the brief, particularly if it’s their strategic response and a creative response involved.
And three, they want to actually treat it like a live project and not just get the intellectual property, but actually take whatever they’ve had from each of the respondents and potentially use that in market.
So, if you fall into either of those three categories, then you’re going to make sure you make it worth the agency. Well, because as you quoted earlier, most agencies cite it cost them 150,000 to participate in a pitch. So, if you are actually going to make it worth the agencies’ while, then that’s the sort of money that you need to be thinking of paying depending on the what’s being asked.
Darren:
Yeah, exactly. And just recently I had a phone call from an agency who had participated in a pitch, they’d won the pitch, they’d won it, but then the client said, “We need to postpone the contract because …
So, I had a phone call recently from an agency, they’d won the pitch. The client needed to postpone the engagement so the contract would be signed later, but wondered if they could proceed with the creative idea now and just pay them a fee. And the fee was like 10 grand to actually take the concept and work with it with their incumbent agency.
And they were asking me the value of it, and I said, “Well, just in lost opportunity, what would you normally charge a client?” And they gave me a figure, and I said, “That sounds perfectly reasonable to me.”
So, that’s really the cost that you should because the agency’s come up with the idea, they’ve come up with the idea. I said, “Had you signed anything that said that they owned all of the IP out of the pitch?” and that’s where they came unstuck.
Because this is the other problem is that often in pitches, procurement, or marketing will put something … I’ve even seen it hidden in an NDA or a confidentiality agreement that says that the agency will assign all intellectual property arising from the pitch process to the client.
And what we’ve seen here is, what was it, 27% of the agencies involved, or the pitches had that requirement, had the requirement that the agency would assign their IP arising out of that pitch.
Nick:
Yeah, that’s a lot.
Darren:
It is. It’s a quarter. Better than a quarter.
Nick:
And for tokenistic at best pitch fees, I mean, if people point to the fact that pitching is broken, I think that’s one of the areas that needs focused on first because look, it’s unethical potentially. But neither are you going to get the best work out of the agencies.
Darren:
That’s right. Look, I think the big problem is that agencies for too long talk about creativity and IP and creating intellectual property as being the core of the value proposition, but then charge by the hour. We’ve never had a culture of charging for the value of ideas. And so, why should anyone value the idea if you never have to pay for it?
Nick:
And even worse, when I started in the industry you were quite happy to give it away for nothing because you were making money elsewhere, usually in media, or in production. And so, the strategic thinking, and to a large part, the bulk of the year, the creative concepting was given away.
And so, it’s very difficult to put that genie back on the bottle, even though all these years later, we keep hearing that that is what agencies and certainly an agency of the future is going to be. They’re not going to be implementers. They’re going to be strategic partners, creative partners, and that goes from a media perspective as well. And in channel planning and brand strategy, agencies need to get better at doing that.
Darren:
Yeah, absolutely. Now, because we’re running out of time but let’s finish up with payment terms. That old hoary little number we’ve seen over time it go from 30 days to 60 to 90 plus, and a lot of the big holding companies are saying that they’re very happy to take on clients with 90-day or longer payment terms.
How do they do it? Is it just the sheer size of the holding company that they can absorb it? Is it because they have cheaper source of money than say, a small independent? Is that what’s going on?
Nick:
All of the above. We’ve spoken about this in a previous podcast. Advertisers have significant and very smart treasury functions. And so, that is a profit center for them, hence the fact that they want to delay payment terms as long as they can. And the holding companies equally, large corporate entities that have significant treasury functions.
And so, they’re able to manage their affairs in order to be able to offer those sorts of payment terms as an incentive to winning the business. So, what that does for the small independent agencies puts them behind the able from the start if that is a real sticking point for the advertiser.
Interestingly though, I’ve noticed that most of the pitches that I’ve worked on in the last 18 to 24 months have actually all had reasonable payment terms, usually around 30 days.
And it is something that we want to try and get an idea of upfront to tell the agencies that are participating in the RFP because that is a significant issue as to whether they can agree to terms or if indeed if there’s some negotiation be had on rates or project costs or whatever the case may be, the payment terms will also impact the agency’s ability to potentially discount or agree to lower fees.
So, it’s really important that that is declared upfront and potentially open to negotiation as well.
Darren:
Well, there was a couple of the pitches in the research where they said it was actually 14 days. Interestingly, that seemed to align with the ones that were also being run for government bodies. Because governments often have policies that small business will get paid on 14 days, which is good.
There was also some commentary from some of the agencies that they were told it would be 60 days and managed to negotiate it down to 30 days. So, it shows that there is some flexibility, but there was still a significant number of pushing it 60 and 90 days.
Nick:
Look, and I think that’s down to the individual agencies to manage. That’s why we try and have that information disclosed upfront so agencies can make a determination among everything else, a detailed scope of work, what the budget is, all those other things that we talked about.
Having that information is crucial for the agency to make an informed decision of whether they want to participate and if they do participate, what their proposal is going to look like based on all of those factors.
Darren:
Though 30 days is not necessarily 30 days because then you have to read the fine print and it’s 30 days from the end of month.
Nick:
From the end of the month.
Darren:
So, with media billing still going around the 15th, that means that it’s actually 45 days. But particularly now we are living in a time where money is not as cheap as it was two or three years ago. Interest rates have climbed significantly. And so, I imagine for all businesses that carrying your client’s funding costs is a significant impact.
Nick:
Absolutely. Especially for the media agencies because it’s such a low margin business, gross margin business that as you say, with the cost of money now, if a client is only a few days late in paying then that could be a significant bill to the agency having to — because they need to pay the publishers on time or they get slugged with late payment fees.
Potentially, their credit standing gets impacted adversely. So, it’s a significant part of an agency’s cost base. And certainly when I worked in media agency, something you budgeted for.
Darren:
Now, Nick, looking at the at the research and the way it’s come together if you started thinking about what more we need to be asking, we don’t want to make this survey too long, but do you think there’s something in there that we probably should cover that we haven’t?
And if you find it, let me know because we’re going to start this survey again on the 1st of July and do it every year.
Nick:
I know that we’ve got the timeframe of the responses. It would be interesting to know if the client had been bedded into the agency for three, six months, is the remuneration that’s been put in place still fit for purpose?
Now you may not be able to get that in a obviously a new relationship that’s only just started or even perhaps looking back retrospectively for the agencies that responded in this iteration of the survey, go back to the responses that you gave us last time, is that remuneration model still working, or does it need to be thrown out and start again?
That would be interesting because even when we are dealing with our clients, quite often there is a continual engagement where we’re constantly assisting them to tweak the remuneration model. As time goes by, quite often the agency gets appointed, and we are done and we’re out of the picture.
And don’t necessarily see what happens down the track as to whether what we’ve negotiated for the client is still working or not. And if not, why not? It doesn’t necessarily mean it was wrong, it was just circumstances change. So, it would be nice to know if those models that are put in place are still fit for purpose months after the fact.
Darren:
And that’s usually the case, where we’ve had in the odd situation where 6 months, 12 months later, a client comes back and says, “We need to re-look at the fee model.” It’s usually because there’s been a significant shift in the scope of work, and that’s why it’s so important to get a defined scope of work up front.
Because if there’s only a scope of services and no one’s capturing what work was done in that first 12 months, it’s very hard to actually then work out where it’s gone wrong.
Nick:
Yeah. Particularly if you’ve got one of those all-inclusive retainers.
Darren:
The all you can eat, I call it the pigs at the trough, it’s like the smorgasbord.
Nick:
The buffet. That’s where it can go most wrong, where you’ve got largely an ill-defined team of people. It’s a good start, but if you’re not capturing what’s been done, then it becomes a guess at best as to whether the fee that was paid is actually commensurate with the scope of work that was delivered.
Darren:
Nick, thanks for coming along and discussing everything to do with money and the state of the pitch in Australia. It’s been a great conversation.
Nick:
That was a pleasure. Thanks for having me.
Darren:
And there’s a link in the show notes for those that want to download the full report for themselves. Thanks very much.
Nick:
Thank you.