DESIGN INDUSTRY VOICES

Fairley & Associates Gabriele Skelton On Pointe

(NOT SO) PITCH PERFECT

This year’s Design Industry Voices report suggests that design and digital agencies are emerging from the economic difficulties of recent years. Pay increases are outstripping inflation and a quarter of respondents received bonuses in the last year.

However, agencies continue to feel the squeeze from existing and prospective clients – and it’s starting to feel like this has become ‘the new normal’. 86% of respondents agree that clients expect more work for less money. The demand for free creative pitches for prospective clients hasn’t abated, with nearly half of respondents reporting they are making more free creative pitches since before the recession in 2007. More worrying is the perception amongst 36% of respondents that they are making more free creative pitches for their existing clients. All this has a huge impact on profit margins.

That’s not the whole story. 2013 saw the rise of several other disturbing trends imposed on agencies by their clients and prospects. The trade press reported one major UK ‘house of brands’ asked some of its communications agencies to pay upfront fees just to remain on its roster. Other major multinationals are demanding payment terms upwards of 120 days.* At the end of 2013, one multinational asked hundreds of agencies to contribute a percentage rebate for work they had already carried out that year for some of its brands – work which had likely been heavily discounted from the outset.** Let’s not forget the rise of the much-maligned ‘fake pitch’ phenomenon, where agencies are made to jump through many PQQ/RFI/RFQ hoops (and spend huge amounts of non-billable time), only to find that the brand owner was simply on a ‘fishing expedition.’

This has, to large extent, been limited to advertising, media and marketing agencies, but as the lines continue to blur in terms of what agencies offer to their clients, it may very well be that design and digital agencies are next in the firing line.

It’s understandable that agencies may be reluctant to talk about unfair pitch processes and bad client practice in a public forum themselves, for fear of biting the hand that feeds them. So it’s encouraging to see that one industry body, the Marketing Agencies Association (MAA), has set up a Pitch Watchdog. This is a safe forum in which agencies can anonymously raise their concerns, so that the MAA can fight on their behalf. For example, the UK ‘house of brands’ removed its upfront fees request as a direct result of the MAA’s intervention.

Let’s hope other major industry bodies follow suit. The UK’s creative landscape is incredibly diverse and dynamic, and clients should be able to enjoy the best the industry can deliver. But we need to carefully protect our industry and make clients pay a fair price for the work they commission. This will ensure that the industry is as relevant and innovative tomorrow as it is today.

For the full report please download here

Stef Brown
Co-author of Design Industry Voices and MD, On Pointe Marketing

 

Sources:

* Campaign magazine, “Client pressure is putting independent spirit at stake”, 5 Dec 2013
** The Times, GSK angers agencies with demand for ‘sign-on bonus, 29 Nov 2013