New Survey: European Clients More Likely to Pay for Pitches

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In what has been a hotly debated issue for years within the broadcast design community, we now have new information comparing pitch compensation in the US and Europe. Although the 2009 study (conducted by Worldwide Partners) takes a look at pitch fee structure for traditional advertising agencies, it nonetheless offers a rare comparative glimpse at the two leading markets in the world.

The results? The survey found that European ad agencies were more likely to get compensated for ideas presented during new business pitches than shops based in the US. From my experience, it does seem like US design firms are a bit more willing to engage in no-fee pitches. Reasons for this vary. One possibility could be the large number of shops competing at any one given time in the mega client LA & NYC hubs. As such, if more agencies are throwing free boards at a prospective assignment, clients may be less apt (and less able) to compensate pitch participants.

Some more crunchy data from the study; of the agencies that responded to the survey, nearly half, 49% reported rarely or never receiving compensation from clients.

Only 5% in North America reported getting pitch fees, while 56% of agencies based in Europe said marketers offer remuneration for new business pitches. The pitch compensation structures varied, from a flat fee of about $5000 to a fixed percentage of the contract amount. And again, although these figures are based on traditional ad agency reviews, it nonetheless supports similar observations in broadcast design/branding industry.

I must add (in defense of US marketers), however, that I have had a great number of clients in the US that have compensated for boards through the years. Further, the consensus seems to be that main titles and channel identity assignments have a higher paid pitch percentage over other types of projects.

On a positive note, as I see it, the market continues to offer chances for smaller shops to win hotly contested midline ($75k-$150k) assignments. It also provides unique opportunities for broadcast design & branding shops to pick up previously ungettable direct to client branding work that just doesn’t fit the old ad agency pricing model.

Do you have thoughts on this issue? Send your perspective to denny@dennytu.com

*I have received a number of responses to the original publishing of this story. For more perspective on this article, you can read a few reader responses here.

2009: A Single Perspective to Weather the Storm

A few years ago, I was invited by CTAM to speak on a panel at Summit. I received the formal invite, which included the name of the session “Who Wins? Balancing Agency and Client Perspectives”. Interesting! This would be something I could get my arms around.

I checked out the other speakers invited to the panel. Stephanie Gibbons, SVP Showtime. Nina Gramaglia, Group Account Director DDB Worldwide. Spence Kramer, VP ESPN. And yours truly, rounding out the group.

I was working in our Los Angeles office at the time, so as the only participant on the west coast, I was greeted with a 6AM conference call each morning (espresso in hand) with a warm and sympathetic “Denny, are you awake yet?” sort of welcome.

Reader Response to “Paying for Creative Pitches”

It’s 12:25 AM.

After a fully packed day of meetings and presentations, I’m finally settling in for the evening. If you’re a regular reader/subscriber, you already know that yesterday’s post took a look at pitch fee compensation in the US & Europe. Just 24 hours, and over 2 dozen emails later, I get the sense that many of you have something constructive to say on this issue- a genuine desire to contribute to the conversation. Most of the emails were from the agency-side of the business, however I did get a handful of client-side opinions that were thoughtful and enlightening, especially against the backdrop of new economic pressures felt across the channel-sphere. In the spirit of “real talk”, I thought I might share one such letter that came from Greg Duncan, who many of you may remember from NY-based Verb. Please note that his perspective is provided unedited (as it should be) and published with his consent (I’ll always ask before putting your name in lights).

Response to “New Survey: European Clients More Likely to Pay for Pitches”
By Greg Duncan

Denny,

I’m really enjoying your blog. Our industry suffers from a profound lack of communication (and industry standards) about these topics; BDA suffers from being both client- and vendor-focused at the same time and blogs like Motionographer seem to simply showcase the latest new trick from the latest new design stars.

The pitch fee compensation article is fascinating. I can’t believe that half of the respondents said they never receive compensation for pitches. At Verb, we were paid for probably 80% of pitches, and we stopped doing free pitches for the last couple of years. Often, clients would say that they had no money for the pitch, and we’d just hold firm to $2500 – $5000 (occasionally $1K for something tiny). I would estimate that half the time the clients would come back to us with money.

5 Reminders When Selecting a New Branding Agency

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Now that the 60+ hour work week you’ve been tallying has finally seen fruit,  you’re now the proud parent of a recently launched brand campaign. The dust has settled, tapes delivered, it’s time to take a step back and take stock. Too bad you’re not afforded the luxury of endless time and 3 assistants. Soon, your email will be filled with feedback, customer analytics, and meeting reqs to debrief from the research department. If only they served the good donuts in those meetings.

Sorry, I got distracted.

The truth is something’s not right and you just can’t put your finger on it. You’ve decided, for one reason or another, that you will explore other options for the next creative assignment. It could be business chemistry, lackluster creative process, or just an annoying EP. Maybe the agency is showing some early tell-tale credit crunch signs of going belly up. You’re going to look at options. Agency review has become a far more common practice, perhaps you’ll stumble across a new broadcast design agency gem, one with the enthusiasm, spark, and capability offering you’ve been hankering for.

If you decide on embarking on your next agency review solo, here’s a short, nifty list of things to consider before you take the plunge. And by plunge I mean, be unlucky enough to get a hold of an eager business development executive who will call, email, and nag you weekly until you share a drink at the PROMAX New York afterparty.

• Ask yourself: Is this review really necessary? How much effort, time, and shared business knowledge has gone into the encumbent agency?
• Be clear with what you’re looking for in a new design firm. Identifying category skill-sets like specialist firms that focus on network branding or on-air promotion will enable you to avoid long and unnecessary pitch lists with design firms that lack the requisite skill-sets. Sure they have a great VFX reel, but you’re not going to pay them to learn how to produce a proper title sequence. This isn’t 2002.
• Be clear on who you are involving internally with the review. There may be existing relationships within your organization that may cause unnecessary complication and emotional headaches.
• Getting the right strategic/creative brief upfront will lay a foundation for a fruitful process. Fully explored briefs will help mitigate creative and financial risk. Part 2 of this article will explore a few universal success components of good pitches. Look for it in the coming weeks.
• The value of pre-pitch meetings in order to establish personal, creative, and professional chemistry should not be underestimated.

And as I explained in my Guide to Distinguishing Agencies there is a new frenzy of broadast and design agencies competing for your brand assignments at any given time. They are hungrier, and more talented than ever. Recession provides a platform for change. The opportunities it gives should be neither feared nor wasted. So go out and explore your creative options!

If you would like to get my article when it posts on “10 Hot Broadcast Design Companies to Look Out for in 2009”, click here to get on my private e-list. Don’t worry, you’ll get email updates only when this blog is updated and since I don’t answer to any advertisers, your email is always held in the strictest of confidence and you will never get spammed.

…I’m off to find myself a warm buttermilk donut.

Winning (and retaining) clients in 2009

The sky is falling. Well you’d certainly believe it if you’re reading any sort of news media these days. It seems just a few short years ago that broadcast design was all the buzz. Advancements in desktop technology saw in a wave of prosperity, both in the size of our budgets and scope of our creative. Broadcast design boutiques flourished and the marcomm eco-system remained in a happy, natural balance. We were flush with business, sitting in the soft, cozy nook between global advertising agencies and VFX/production companies.  Life was good.

A few years, a few wrinkles, and an unfriendly credit crunch later, we sit in a brand new world. But has anything fundamentally changed for our industry?

Fewer are the days of expected paid pitches and credential awarding. That 21-way unpaid RTE pitch (CNN 2003 anyone?) doesn’t seem that long ago.  Some, at the time, had even suggested that free pitches were the design industry’s raison d’etre. Was it a sign of things to come, or just another symptom of a problem quietly lying in wait?

Pitches are an expected (and in some cases, required) part of our business. They enable the buyers of brand goods to sample a bounty of flavors, each artisan hoping to win over that elusive customer after each delicious bite. If you’ve been to Costco, you’ve seen how this can turn out to be a good (or really bad) thing. Take too many samples, and you’ll feel ill to the stomach. Not to mention not being welcomed back for seconds.  Conversely, find the right flavor, and you’ll be singing your morsels gospels.

Winning business hasn’t changed much. In fact, over the last few years- creative agencies have seen a rush of challenging, profitable assignments. We now win business in new marketing categories, taking over brand stewardship roles from larger traditional agencies, suggesting that a direct-to-client model is not only viable, but preferable.

So why then are owners/CEOs of broadcast design shops showing concern about the stability of incoming work. The production pipeline is full for the next 60, but what about after?

That’s where the cracks for some creative agencies begin to show.

And so the phonebanks of 2009 have sprung anew. Design reps across the country have been feverishly “checking-in” with clients. I’ve spoken to no less than a dozen clients in the past week who say their VMs are up to 20+ messages a day with messages like

“Please let me know if there’s any projects you can send our way”.

Tomorrow, the message is similar, but no less empty

“I wanted to call and check-in and make sure you have everything you need”.

Has any rep ever had a client reply

“Thanks for calling, I was sitting around waiting for you to call because I have an approved budget on my desk and wanted to award it to you without review and discussion”

Didn’t think so.

Herein lies the unfortunate failure of some to remember that our creative offerings are not really so unique. There are no less than 20 shops capable of doing top-tier branding creative at any given time (not to mention increased competition and assignment attrition to international firms). We are in the strategic services business. Maybe there’s where part of the problem lies. And so, perhaps, the solution.

Creating value for our clients means understanding that the pitching landscape is the way it is because companies remain poorly communicated in their above the line service offerings. And so, some companies appear homogenous and undifferentiated, resulting in some impersonal multi-agency pitches.

Creativity and production quality are expected givens. And, although some clients do search reels for a particular design style or aesthetic, most routinely cite the experience working with the a particular team as a majority factor in repeat direct-award assignments. Other considerations cited include budget compatibility, category leadership, and name brand.

2009 hasn’t brought a drought of business for our industry. It offers a new opportunity for creative agencies to reconnect with clients, to not only deliver outstanding creative, but a renewed commitment to a few simple rules of good above the line service. It’s how you operate before, during, and most especially after, a production is actualized.

It’s listening instead of talking.

It’s not making promises that can’t be kept.

It’s dealing with complaints, not redirecting them.

It’s being fair and competitive with regards to budget.

It’s going above and beyond- even if there’s no immediate profit from it.

It’s training reps to speak about project strategy, production, and service differentiators, not just account names.

It’s recognizing that clients are more than projects.

It’s taking those extra steps to show you appreciate their business, regardless of size, scope, or budget.

Catalyze the experience by being mindful of these time tested business development rules. 2009 will be what you make of it.

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Denny Tu is an independent Executive Producer based in LA & London. His daily blog (https://dennytu.wordpress.com) examines the art and business of screen design & brand building. For a PDF of this article or to just say hello, drop a line at denny@dennytu.com