by Odette van der Haar It is no secret that tenders and pitches are an integral part of the advertising and communications profession. For clients, the tender and pitch process is vital in selecting an agency partner and for agencies, new business acquisition is paramount for survival.
Given the importance and frequency of tenders and pitches in the advertising and communications sector, the Association for Communication 
and Advertising (ACA) put in place a set of rules for tenders and pitches that aims to assist both clients and agencies mitigate risk, save costs, promote transformation and ultimately ensure a fair and equitable pitch process. These rules are contained in a Code of Conduct that governs tenders and pitches in the sector and provides clients with an easy, robust means to selecting an agency partner whilst simultaneously protects all the parties against unfair, exploitary and unreasonably competitive pitch processes as well as infringement of copyright and/or intellectual property.
The Code of Conduct was put in place by the ACA and its membership agencies, in collaboration with the Department of Trade and Industry (DTI), the Government Communication and Information Services (GCIS) and National Treasury. It details a fair process to be implemented during tenders and pitches and does not contravene any legislation or supply chain management process.
Contained in the Code are five simple rules that when adhered to are beneficial to clients and agencies – they are:
- The number of agencies shortlisted should not exceed five – whether or not an incumbent agency is involved and whether or not an open or closed tender process is being followed. By requesting strategic and creative work for all the participating agencies, without shortlisting the agencies inhibits transformation, is unreasonably competitive, wasteful, expensive and prejudices smaller agencies who may not have available the same resource to invest in the costs of providing such work especially when competing against larger or international agencies. Furthermore, by having more than five agencies compete against each other for final evaluation, without a shortlisting process becomes a “lotto” as agencies will have little chance of winning the business given the sheer number of participants in the tender process and this when the cumulative investment from agencies can amount to millions of rands.
Benefit to clients: Having five agencies shortlisted provides an opportunity to have a variety of agencies for final evaluation/comparison, including large, medium, small and possibly “wildcard” agencies.
Benefit to agencies: Each agency, if one of five will be afforded at least 20% chance of winning the business justifying their investment in the pitch process which can amount to hundreds of thousands of rands especially when agencies are required to provide strategic and/or creative work for evaluation during a tender process.
- Sufficient time must be afforded to agencies for preparation of their submissions – at least fifteen working days (three weeks) is required.
Benefit to clients: Affording agencies fifteen working days provides sufficient time for agencies to do the necessary research about the client and the client’s business ahead of their final presentations as this research information will assist clients in evaluating whether or not the agencies have a basic understanding of the respective client’s business.
Benefit to agencies: Participating agencies can take the time to gain a basic understanding of the client’s business and in so doing, showcase themselves for final evaluation during the pitch process.
- Only credentials and case studies should be submitted and/or presented by agencies during pitches. It is very costly for agencies to provide clients with strategic and/or creative work during pitches and requesting such work places smaller agencies at a disadvantage when competing against larger agencies as smaller agencies may not have available the same resources. Furthermore, Pitching with strategic and creative work is not allowed when a client’s budget is less than R10million because the costs of new business acquisition cannot be recouped by agencies.
Benefit to clients: Clients save costs as no pitch fees are to be paid when credentials and case studies are required. Asking agencies to come up with strategies and concepts for creative during pitch processes is expensive as agencies incur hard/third party costs and clients incur pitch fees which are offset against the hard costs/third party costs incurred by agencies as a result of meeting the client’s requirements for strategic and/or creative work. Furthermore, the strategic and creative work provided by agencies for evaluation during pitches will be based on desktop research of the client’s business and not in-depth knowledge and understanding which is essential when crafting a sound strategy and supporting creative. By asking agencies for their credentials and case studies of recently, successfully executed and paid for work that is similar in nature to the scope of work required by the client, provides clients with an opportunity to mitigate risk and evaluate agencies based on what the agencies have already successfully done with resources they already have – concrete evidence of an agency’s ability.
Benefit to agencies: Providing case studies is significantly less expensive for agencies yet still affords agencies with the opportunity to showcase what they are able to deliver to/for the client. Moreover, agencies can demonstrate how they generated a return on investment for the spend/budget utilised through their case studies.
- A pitch fee of at least R50,000 (fifty thousand rand) excluding VAT is to be paid to each unsuccessful agency when agencies are briefed to provide strategic and/or creative work.
Benefit to clients: Paying the unsuccessful agencies the required pitch fees aids in levelling the playing field for small and large agencies to compete equally ensuring a fair pitch process. It also demonstrates to agencies that the client understands how agencies work and portrays respect to agencies for the value of their work and contribution to the client’s business.
Benefit to agencies: Agencies are able to recoup some of the hard costs incurred as a result of creating the strategic and/or creative work required by the client for the pitch process. Smaller agencies are afforded an opportunity to compete equally and equitably against larger agencies.
- Agencies intellectual property created during pitches is protected and retained by the agencies unless paid for.
Note that the pitch fee does not under any circumstances entitle clients to the agencies’ intellectual property – this fee is offset against the hard costs incurred by agencies during the pitch process. Clients who wish to use the agencies ideas must pay the agencies separately for their intellectual property as agencies’ intellectual property is protected under Copyright law.
The ACA, is often asked why clients and agencies should abide by the Code especially since times are tough economically – clients don’t have the budget for pitch fees and agencies are hungry for new business. The reasons are, quite simply, because times are tough, the Code should be adhered to. Clients cannot afford to make mistakes when selecting an agency partner and agencies cannot afford to pitch themselves out of business. The Code assists in mitigating those risks and it promotes cost saving for both clients and agencies.
How?
By asking agencies to provide case studies of recent, successfully implemented and paid for work that is similar in nature to the client’s Scope of Work provides an accurate means of assessing an agency’s ability to do the work required because tried and tested work, methodology, ideas are presented not to mention how the agency has tracked and measured the success of their work to generate a return on the client’s spend. Using case studies is also cost effective for agencies as such case studies should be available to support their credentials anyway. By briefing agencies to come up with ideas and/or concepts for a tender evaluation is wasteful and expensive for agencies given the resource cost incurred on the part of agencies when producing the required ideas and/or concepts and the fact that those ideas and/or concepts are rarely ever used because those concepts and/or ideas are based on desktop research and not an in-depth understanding of the client’s business. For clients, pitch fees are incurred which eats into the client’s marketing budget.
Adherence to the Code really provides all the parties involved in a tender and pitch process with a favourable, mutually beneficial – win-win and robust process that ultimately enhances any supply chain management process and relationship between clients and agencies.
And, it goes without saying that the relationship between a client and agency is critical in order for the team to work constructively, productively, successfully and of course profitably together. When the tender and pitch process is wrong, chances of sourcing the right agency partner are slim. Remember: rubbish in, rubbish out.
– Odette van der Haar (nee Roper) is the CEO of the Association for Communication and Advertising (ACA) which is the recognised industry body of the advertising and communications profession in South Africa.
OK, so if this is a guide, then you have successfully managed to confuse me on the position of the ACA! On one hand you are saying to quote; ” Only credentials and case studies should be submitted and/or presented by agencies during pitches”, whilst on the other hand you go on to add that “A pitch fee of at least R50,000 (fifty thousand rand) excluding VAT is to be paid to each unsuccessful agency when agencies are briefed to provide strategic and/or creative work.”
So what is it to be? Surely the ACA as a Governing Body should take a stand one way or the other. If you are going to propose a pitch fee, then the first point about case studies become null and void. Clients are already adhering to the number of agencies allowed and the ‘pitch fee’, perhaps it is time that the ‘case study’ approach is mandated. After all, most agencies make it on to the shortlist because the client has done their research.
This simply feels like the ACA trying to stand as a neutral bystander instead of adopt a ‘firm’ view on the above. The truth of the matter is, that agencies will honestly do anything to win new business, and each to their own. In fact, a large part of any ‘pitch’ process are the proactive ideas that agencies tend to bring to the party over and above what is required of them, in an attempt to demonstrate their creative genius outside of the ‘brief’, R10 Million budget or not.
I am sorry to say, but agencies have created this ‘monster’ for themselves. If everyone would ‘play fair’ and simply stick to the case study and credentials approach, not only would it provide a more ‘level’ playing field off which a potential client could evaluate the agency, but equally avoids any of the ‘pitching’ pitfalls that this article has attempted to address.