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Should agencies start asking for pitch fees?
By Palin Ningthoujam on Mar 4, 2008 in NBD, clientservicing, featured
Much have been discussed about PR agencies’ yearning desire to protect their intellectual properties they share with a potential client during a pitch process. Typically the problem starts when a company starts inviting say 15 PR agencies for a pitch, ask for rounds of presentations to finally select one agency. This sounds ideal from a hiring company’s point of view. they get to select the best agency and gets tons of free ideas and tips for their communications requirements. But for the rest of the 14 agencies that didn’t get selected, imagine the time and resources wasted.PR agencies have not been able to make much headway into addressing this issue. Earlier a post on Open RFPs and a reader commented that charging a pitch fee could be a solution. The comments is as follows:
RFPs which look at the PR consultancy’s understanding of the business environment a client is operating in is a good idea. As far as RFPs with ideation are concerned, Consultancies should ask for a pitch fee which if the account is won by the consultancy can be adjusted against the retainer, and if not, it would be fee earned for work done. Putting this into practice will also enable PR consultancies to gauge the seriousness behind an RFP and clients will also understand that for PR consultants time is money!
It would be great to see clients apply the same methodology towards their advisors such as KPMG/PwC and the like.. surely they would not put forth a strategy without agreeing on fees and signing on the dotted line!
I couldn’t agree more. I think it is high time there is a serious discussion on whether PR agencies should start charging clients pitch fees. One factor that seem to have work against this is the intense competition in the PR market and agencies feel that if they are the only one to ask for a pitch fee, they might lose out on important RFPs. This could be addressed if PR associations like PRCAI and PRSI take this pro-actively and if some of the bigger agencies start charging. That could be a start.
On a realistic note, I know it’s easier said than done. Unlike the ad industry, there are no ‘INS accreditation’ tag that agencies would fear of losing. So nobody would listen one another. But there is no harm dreaming.
I would love to hear what some of the industry leaders say about this.
On Mar 4, 2008, Shael Sharma said:
Ahem ahem, aggressive move to ask for pitch fees! Lets face it with the kind of sales pressures most people who run regions (read - with a couple of crores as a number painted on their head most often resembling a bullseye) live with; they’d sooner shoot themselves first before doing anything even remotely in the ballpark. Cartels dont work in this business, nor do they work in advertising where people trade any model including agency commission, fee based, a combination thereof etc etc. It will be a ballsy move for a PR Firm to either demand pitch fees or say that they will only do a credentials pitch. Even if you are the gorilla of the hill. Being good, knowing it, and demanding the right compensation for it seems utopian. Hell if it were to happen, I’d love it though!
On Mar 4, 2008, Shashank Jaitely said:
Well, it is very a daring thought! But I think it as a distant dream. With the cut throat competition in the market to get the share of the client retainers, it is very difficult to get a collective agreement between the agencies to morally and ethically agree to it. Also, with the the volatility in the economics of the country (s) (more so in the current scenario where we are living in the US recession) the clients are also getting choosy regarding the agencies offering low cost - high quality services.
In the above scenario, the agencies having good knowledge base excel. Because it is easy for agencies to offer cost cut solutions but difficult to sound intelligent amongst all. Therefore, that the firms should not hesitate giving the glimpse of their proprietary knowledge tools, as it will make them sound intelligent at the first glance.
On Mar 4, 2008, Palin Ningthoujam said:
Hi guys, thanks for the inputs. I agree that the thought might be little ahead of its time. But big thoughts do come well ahead of their time and are discussed many times before before they are introduced
So let’s take this like one of them.
No I am not taking credit for the idea. In fact, this has been discussed many times over in the advertising fraternity -seemingly practiced in Malaysia and the Advertising Agencies Association of India have brought up the topic time and again. See these links:
http://snipurl.com/20ymx
http://snipurl.com/20yn0
In fact our own PRCAI in its PRefferal page mention ‘PRCAI could also assist you with outlining the brief for the final pitch presentation. Ideally you should meet no more then three to five consultancies. Should you decide to invite more than five public relations firms for the first pitch list, the PR firms are entitled to charge a nominal fee for the meeting.’
http://snipurl.com/20yn4
Also, as I mentioned, it is not upto an individual agency to start this practice. It will take the associations, which can think beyond the sales, to bring up such discussions among the PR agencies.
What do the associations say? That will be interesting to hear as well.
On Mar 5, 2008, K. Srinivasan said:
The matter was debated few months back in ‘prpoint group’ vigorously. I doubt whether the PR organisations can do anything in this matter. PRCAI has the membership of only top few agencies. Our concern should be about pitching by middle level companies and participation by middle level agencies. I know that there is a serious exploitation by the Companies, taking advantage of the competition amongst the PR Agencies. Unfortunatley, the PR Agencies also silently accept such humilations.
I can do one thing. If the PR Agencies have got the ‘embarassment’ to come out open protesting against such unethical prctises, they can write to me personally at prpoint (at) gmail.com, with more details and contact number of the concerned company who exploits. I will seek their opinion as the moderator of prpoint group and editor of PR-e-Sense (without disclosing the identity of the pr agency). If such things are happening, i can publish the name of the company who indulge in such exploitation with their view points. That will work as a check for the companies who involve in unethical practises. I invite your suggestion.
On Mar 5, 2008, Palin Ningthoujam said:
Thanks for the inputs, Mr. Srinivasan. Yes I do remember the post in this blog some time back…(link also in the post above) about how some companies are abusing the system to get a free house of ideas from agencies. I felt that the discussion was left midway without much headway.
That aside, even if we leave aside these sort of companies and talk about companies genuinely calling PR agencies for pitching to hire them, there could be advantages in charging a pitch fee which we are discussing now.
On Mar 6, 2008, Afroz said:
No, Think of people who could not offer those fees
On Mar 6, 2008, Afroz said:
No
On Mar 6, 2008, Padmesh Prabhune said:
Hi there ,
My name is Padmesh Prabhune and I run a small PR outfut called Dhruv Communications in Mumbai and we have been handling clients from IT and Health
Yes agencies should start asking for pitch fees I think most of us would agree to the fact, that clients take all the ideas and itenary for free and implement it successfully at times, without hiring any so called invited ‘Agencies’ .
I think PRSI should take such issues seriously..
Padmesh Prabhuny
Dhruv Communications
Mumbai
On Mar 6, 2008, Palin Ningthoujam said:
Padmesh, thanks for the inputs. Yes I agree PR associations have much issues to look after. We need them more than any gyaan sessions….
On Mar 20, 2008, Priya arjun said:
I’m closely associated with the PR industry for the past 10 years, during which period I had the opportunity to work both on the agency side as well as on the client side.
I do not agree with the concept paying pitch fees to the PR agencies.After all, in every industry there is competition.And PR agencies, are also part of this.Only agencies which can successully convince the clients that they have something to better interms of quality and cost, can survive the intense competition.In other words, these PR outfits must try to differentiate themselves from one another interms of their individual service offerings and focus more on improving their PR service standards and performance , rather than fighting for pitch fees.
Let us say, if you are a product aManager or a sales Manager of an IT cpany, are you going to charge your clients for making sales pitches or presentations.
It is quite unjust of PR agencies to crib on the time and resources spent for making presentations.