COLUMN: AMF on pitching, free and fair
A group of Advertising Media Forum (AMF) members has compiled pitching guidelines for the industry in order to open up the debate on the process.
With media pitches taking place more frequently, we need to ask if, as an industry, we should qualify the rules of engagement. The realisation of these guidelines would be a challenge, but then we would have clear protocols to follow.
So, in writing this column, we want to elicit discussion around a set of base guidelines linked to the pitching process for media in South Africa. It is imperative that the key issues are addressed and that in establishing these, we have buy-in from key stakeholders – media agencies, clients and procurement (both within the client companies and independent evaluation agencies linked to the process).
Here are the six key issues:
Phasing of pitches and short-listing requirement:
Here, we suggest a four-phase approach:
- Credentials phase: The client requests credentials from as many agencies they deem necessary to get an accurate assessment of the capacity of agencies to deal with the portion of business in question. This is not a physical presentation and is done via the internet.
- Chemistry sessions: This should be followed by an interim interview with client and the media agency prospects to gauge chemistry and ability to work together before moving to the final listing. This could save a substantial amount of time: if there is no chemistry between them, then there is no need for a strategic revert.
- Final listing: The client selects no more than four agencies to proceed to the next phase of the pitch, which could include a detailed request for proposal (RFP), buying templates, references, commitments and/or a strategic revert as required. Clients whose billing volume exceeds R100 million should be able to include an additional (fifth) agency, should they require it. As strategy is intellectual property, agencies should provide a suggested approach rather than the full strategy.
- Short listing: The client short lists no more than two agencies and enters into discussions around service level agreements, among others.
- The pitch process must be completed within six weeks, with the announcement to all agencies included in the final listing made at the end of that time on a designated date.
- The client may delay the announcement by an additional two weeks should the timing be required.
- The process would be declared invalid should a decision be delayed beyond this final announcement date and would have to be redone.
- Pitch rejection fees would then have to be paid to all agencies involved in the process from the final listing phase onwards.
- Pitches should not be run over the end-of-year holiday period (between December and mid-January).
Pitch fees and remuneration
- The AMF encourages clients and agencies to adopt a resource-based costing model to establish a more consistent method of setting fees.
- We need to discourage the standard industry media commission as a percentage of billing. It often does not reflect the work involved and in most case is transferred into a fixed retainer anyway.
- Final fee discussion is between client and short-listed agencies. Fees can be submitted or requested as part of the RFP phase.
- Fees should be based on an industry standard and not necessarily on staff actuals.
- Clients will not be able to hold agencies to ransom by insisting that they place their entire base fee at risk against delivery of key performance indicators (KPIs). This must be addressed by the AMF if it occurs. This sets a negative precedent as clients often determine the weightings and detail of KPIs.
- Pitch rejection fees are paid to all the agencies that participated in the process, from final listing to short listing (excluding the successful agency and the incumbent).
- All agencies involved in the pitch process reserve the right to ownership over any ideas, processes and innovation that they have introduced to the client through the pitch process. That is, unless rejection fees are paid and any of those ideas discussed are ‘purchased’ from the agency concerned at a mutually negotiated price.
- The value of the rejection fee should be 0.0005% of the determined billing value of the pitch (at rate card) or R20 000 ex VAT, whichever is greater (R500/million in billing – with a minimum of R20 000). Rejection fees are payable within 30 days of the end of the pitch process.
- A desired term of three-to-five years is requested as standard contract terms.
- This is to avoid the strain placed on multiple agencies when clients put their business out to pitch on a regular basis, and at shorter intervals.
- Serial offenders in this will be highlighted by the AMF and addressed on behalf of the industry.
- Scoring criteria need to be made clear upfront to the final listed agencies, along with weightings.
- Results of individual scorings by agency need to be sent back individually to all final listed agencies when the announcement is made. The independent panelist or pitch consultant needs to ensure the scoring is accurate and is added for every round.
- The final scores are audited or score sheets completed under audit supervision. The decision-makers have to be involved in the process from the start.
- Clear written feedback needs to be given to the unsuccessful agencies within 30 days of the pitch announcement.
Free and fair pitch
- All pitches that have R30 million in billings must involve an independent evaluator.
- Should the client wish to run the process internally, the final judging panel would need to include an independent panelist. The agencies in the final listing need to have agreed on the person chosen for this.
- This independent panelist or evaluator needs to declare the pitch process sound when the winning agency is announced (in other words, that the scoring was fair and decision-makers were involved in the pitch process from the start).
- An independent pitch report must be sent to all finalist agencies along with client feedback.