Fiercely-fought pitches have been at the centre of several account movements in the last few months, but what the industry lacks is ‘pitch science’ or standard operating procedures for pitching by media and creative agencies.
Intense drama marked the last two quarters in the realm of media account movements in India, with keenly fought-out pitches making for big and small shifts of media and creative businesses. Though some really big moves like Reliance Communications (Rs 200 crore, moved half of its media business from OMD to MEC), Dabur (Rs 100-200 crore, consolidated its media planning by moving some categories to Starcom MediaVest Group from Maxus) and Parle (Rs 50 crore, moved its media business to TME-MPG from Maxus) did not see intense pitching, other big and small movements did. The sector is likely to see more drama when the outcome of accounts currently under global review begins to have an impact in India.
Hindustan Unilever Limited’s global media business is under review this year, while Vodafone and Nokia complete their two-year contracts with existing agencies and take a re-look at their agency relationships. While statistics would indicate this year to be a big year for pitches, actual feedback from the industry is that the year is ‘slow’ in terms of account shifts.
A large number of account movements and reviews have become a norm in the industry. The key factors leading to this trend are increase in the business coming into the domain, new companies entering the advertising space and PSUs and small entrepreneurs graduating to big agencies as they grow.
However, the technical reason why a client does not take a long term view of an agency relationship is increasing competition amongst agencies and rates at which they offer services. As advertising spends increase, advertisers would want to bring in the best deal and make the most of it. Also, an agency’s ability to deliver a product to its client is under pressure, with agencies finding it difficult to retain existing clients and find new talent.
Shift from cost focus to strategic value
India is a highly cost-sensitive, decision-making market. There does not seem to be a standard operating procedure in the way pitches are conducted or managed. However, there are steps and consistent check-points in the pitch process to ensure that it is objective, fair and outcome-driven.
A few years ago, the pitch process was usually a closed door affair with only some parts of the business being involved in it. Now, it is much more robust with key internal partners such as marketing, procurement and finance departments being an active part of the process. “Elements that are gaining significance as part of the pitch are cost negotiation, fee negotiation, target-setting over a historical contract, and understanding the incremental business value of a client’s key performance indicators (KPIs). We now see a more transparent pitch process and guidelines that are being followed. This creates a level playing field for all players,” says Rishi Khanna, Manager, Accenture Interactive-Media Management. Accenture Interactive provides services of third party pitch experts. According to them, the market has started moving from a cost-focused approach to one that is focused on strategic value. “Clients look at the agency to leverage media to help build brand and advertising effectiveness over and above the creative punch. The key change is clients asking how the agency will add to their business growth, not just service and support,” adds Khanna.
Marketers have realized that pitches are not the solution to marketing challenges and a mindless roster of agencies on the pitch day has been reduced. Gradual respect for agency talent is being built up. The ‘my club pal’ influence seems to be on the decline. Agencies, on the other hand, are on their toes to justify the monthly retainer that they get.
These days, the cost of an agency does not necessarily need to be the lowest, but competitive. “We have seen situations where an agency’s cost was higher than the lowest quote, but the business still went to them because they were far better equipped to handle the business. That is what ensures a long term relationship with the client. This premium can be paid based on the performance of the agency. All good agencies are OK with the concept of performance-linked pay,” says Meenakshi Menon, Founder & Chairperson, Spatial Access Private Limited.
T Gangadhar, Managing Director, MEC India, feels that if a client demands the best from an agency, they should be willing to pay for it. “Clients must allow their partners to make profits as they also have to keep their people motivated and attract talent in the industry,” he explains.
A pitch process is no longer based on a linear framework of a marketing brief and output evaluation scenario. It has evolved beyond driving only cost efficiencies to achieving effectiveness, ownership and accountability, says Shivani Suri Dhanda, Deputy General Manager, Brand & Marketing, Reliance Communications Limited. Reliance follows a multi-dimensional pitch process with multiple levels of evaluation, which include quantitative and qualitative parameters. Independent /third party reports on agency performance, client and media owner referrals also form an important part of our consideration framework.
RISHI KHANNA
ACCENTURE INTERACTIVE
Elements that are becoming significant are cost negotiation, fee negotiation, target-setting and understanding the incremental business value of a client’s key performance indicators
MADHUKAR SABNAVIS
OGILVY & MATHER
When five agencies are present, we do feel that ideas can be stolen. A client can take an idea and go with another partner and execute it. And it hurts when ideas are being given for free
Increasing importance of team chemistry & compatibility
Historically, pitches have been about creative, strategic inputs and credentials. But at the end of the day the agencies are run by people and the client needs to see whether they will ‘tick’ with the people who will be working on their business. “The importance of team chemistry is increasing in a big way and I have seen a large number of pitches won not only on the basis of work, but on whether we can actually tick,” reveals Madhukar Sabnavis, Country Head, Discovery & Planning, Ogilvy & Mather.
According to K Raghavendra, General Manager, Marketing Service, Jyothy Laboratories, who recently re-aligned the media agency for Henkel brand from OMD to LMG and DDB MudraMax, the team that is eventually going to work on the business should only come and pitch for the business and not the senior management or pitch presentation experts. According to him, crucial elements for a successful partnership beyond the initial high that are to be evaluated in the pitch process are:
1. Senior management team’s commitment to business
2. Operational team’s passion about day-to-day operations
3. Agency’s ability to pursue its recommendations
4. Agency’s ability to innovate, keeping its ear to the ground
5. Strict no to presentation from senior management team/pitch presentation experts; only people running the business are allowed to present
Commercial departments & special projects
There is this debate in the industry whether marketing is accountable, and that is where the commercial department comes in. The marketing department has to ensure the best value for their investment and justify their revenue returns whereas the commercial department has to ensure that they get the best cost from a supplier. These days, commercial departments are roped in for the pitch process in Western countries. Out of the three-four agencies that pitch for the business, the marketing department shortlists two and then the commercial department comes in to finalize the agency on commercial terms and negotiate costs. “These are things that are coming in and operating. We at agencies have to learn to cope with it and work around it,” says Sabnavis.
Of late, we have also noticed that large companies call in agencies to pitch for special projects - re-launch of a brand or a special assignment. Whether it is good or bad for overall brand-building is a different issue altogether.
Issues in the pitching process
A creative or media pitch takes a lot of time, energy and involvement. Obviously, most marketers are not interested in wasting their time unless they are genuine about the pitch. But there are certain issues which bother them in terms of this process.
Agencies often have big promises, made during the initial meetings, but in most cases not delivered in the contract. “During the pitch, everything sounds very good but we have to really evaluate whether the agency is being realistic or not and whether they will be able to deliver on their promises. We have to count on our experience and take references of people who have already worked with those agencies to arrive at a decision,” affirms Praveen Kulkarni, General Manager - Marketing at Parle Products.
In cases where the client is only looking at cost as measurement matrix, the issue of squeezing the agency comes in. Most marketers do not give the 2.5% commission for a media agency. Everyone tries to negotiate, and the final price depends on how important the client is for the agency. So, on that basis, the agency decides to strike a particular percentage deal with that client. But marketers should also keep in mind that if they cut down on agency cost, the quality of people on the business will suffer, and this will eventually impact the business. The agency will then not be able to put enough resources or money into the business.
“We see a growing, more sophisticated client base interested in buying as efficiently as they can. However, they also focus on delivering against strategic imperatives and quality goals that will help them to deliver overall top-line value and business growth. That is why it’s very important for any pitch process to look at all the aspects of business, not just the cost at which they are buying,” says Khanna.
Sabnavis says that he would ideally like to see the parameters of the pitching process limited to ‘Credentials, Chemistry and Commercials’. According to him, the creative and strategy presentations that are made by the agency based on the brief given by the client are hypothetical and are a drain on the time of the process. In most cases, the client is not able to provide all the information to the agency as part of the brief and the presentations made by the agency are thus based on superficial knowledge. “There are very few instances in my 28 years where campaigns presented at the pitch actually saw the light of day. There are odd cases when it does happen. Campaigns are about partnerships with the client and presentations based on hypothetical stuff can be done away with,” he says. Seasoned marketers who would have dealt with agencies earlier would have a fair idea of an agency’s capabilities from the parameters of ‘Credentials, Chemistry and Commercials’.
Another important point that Sabnavis makes is that agencies should be compensated for the ideas that they present to the client, especially in case of creative pitching. “When five agencies are present, we do feel that ideas can be stolen. A client can take an idea and go with another partner and execute it. And it hurts when ideas are being given for free,” he adds. “This is something that the agency has spoken about a number of times. It is not easy to implement in India or abroad.”
Alternatively, there is a concept where clients ask agencies to pay a fee to pitch for their business. Reckitt Benkiser tried it during its media pitch process, but it did not seem to meet with the industry’s approval. According to Accenture Interactive, one of the key points that can address the issue of pitch fee is a mutual non-disclosure agreement. This ensures that ideas presented by the media agencies within the pitch process will not be used by the client team if the agency does not get selected. This would enable the agencies to focus on maintaining high standards in the pitch process, given that their strength and ideas are safeguarded properly during the pitching process.
Pitch conductors and their role in India
The role of the pitch conductor is designed to help clients get the best value from the participating agencies, by helping participants understand the client’s requirements and facilitate a level playing field with complete transparency. This role can include: developing clear and measurable KPIs that can be established for tracking and measurement; assisting the client in areas like contract design, developing performance-based fee structure, benchmarking fee and cost value proposals by the agencies; as well as providing overall strategic advice on market inflation, executing independent audits of the savings or value delivered, and checking of the methodology used to calculate savings.
In India, given that media audit is an emerging practice; the role of the pitch conductor is also relatively new to clients and media agencies. However, the benefit of appointing a ‘pitch consultant’ is catching the attention of all investment gatekeepers, such as the chief marketing officer, chief procurement officer and the chief financial officer. The reason for this is the growing importance of and attention to ensure that investment in a pitch process delivers measurable value. This is important in a market like India where there is a growing sophistication among clients who not only look at cost savings, but also the quality achieved in their media buys. There are very few media auditing agencies in the country. Meenakshi Menon of Spatial Access, set up around eight years ago, says, “We ourselves are just skimming over the top and not even getting into it. We do a maximum of about 12-15 pitches in a year whereas there are over 50 pitches going on.”
Debraj Tripathy, Managing Director, Mediacom, points out that the issue with appointing media auditors in India is that, since it is still not evolved, companies hesitate to go and reveal everything to them. “There is a fairly significant level of discomfort for agencies to reveal everything to the auditor. There are a few clients who have opened up to the idea of appointing pitch auditors and consultants, but the industry is still warming up to it,” he says.
Merely changing creative and media partners does not solve all marketing problems. Marketers should accept a direction, and seek agency inputs to build brands in line with the vision of the organization. The day pitches become the outcome of a client’s insecurity and lack of direction, marketing as a subject will be doomed in such organizations. The need for a pitch arises due to drifting priorities between agencies and clients. To bring in about a balance or alignment is a difficult task. The quest for the right balance is what keeps the business of pitches alive and kicking.
Feedback: dipali@exchange4media.com
