ACA suspends DDB SA, Ireland/Davenport, Wunderman

by MarkLives (@marklives) The Association for Communication and Advertising (ACA) has suspended members DDB South Africa, Ireland/Davenport and Wunderman South Africa, after the three agencies were found guilty of transgressing the ACA’s Code of Conduct governing tenders and pitches.

Telkom pitch

The agencies were all involved in the controversial Telkom account pitch, which concluded in July 2017 with the announcement that the account was moving to Wunderman (above-the-line creative and digital marketing), Demographica (direct marketing) and Retail Insight (retail and brand activations). DDB SA was the ATL incumbent. Both Wunderman and Ireland/Davenport are WPP agencies; DDB SA is part of the Omnicom network.

• As sanction for participating in the pitch, which the ACA believes to be irregular, the three agencies all need to submit a written undertaking “from each agency regarding their future conduct is to be sent to the ACA”
• Agency representatives from these agencies currently on the ACA board or operations committees are to step down for a period of 12 months
• Each transgressing agency is to be fined the maximum penalty allowable in terms of the ACA’s MOI
• Each agency’s ACA membership is suspended for a period of 12 months, and during this the agency may not derive any of the benefits offered to member agencies
• The agencies’ membership may be reinstated after the suspension period, on the proviso that they don’t commit any further transgressions of the Code of Conduct during their suspension.

“The ACA is about maintaining the health and well-being of the industry and sets the highest standards for integrity and professionalism amongst its member agencies. In the interest of upholding our commitment to self-regulation, it was decided that sanctions be imposed on DDB South Africa, Ireland-Davenport and Wunderman,” says Odette van der Haar, ACA CEO, in a statement issued to the media. “The biggest threat to our industry is that more and more clients behave unfairly towards agencies during pitches. It is paramount to the sustainability of the profession that agencies stand united against these unfair practices in order to maintain the value and currency of the profession.”

Issues

The ACA highlighted the following issues with the Telkom pitch:

• Too many agencies were asked for strategic and creative work (as many as 15 agencies were said to be participating). “This especially prejudiced smaller agencies, as they do not have the resources to invest in a pitch of this scale. Without payment of pitch fees, the unsuccessful agencies could not recoup some of the cost incurred as a result of answering Telkom’s brief,” according to the ACA.
• Agencies had to supply Telkom with free intellectual property.
• The collective cost of this pitch ran into millions of rands in time and material costs for the participating agencies.
• A pitch process of this nature is counter-productive to the industry’s transformation efforts. “Small, black-owned agencies were invited to participate in the Telkom pitch process with little-to-no prospect of success, given the terms and conditions of the RFP,” says the ACA. “The ACA would therefore like Telkom to explain why none of the smaller South African agencies were able to secure any of the business on offer — especially since Telkom is such an iconic South African brand.”

Telkom’s response

When approached for comment, Telkom’s executive for group communication and business support issued the following brief statement: “Telkom takes note of the decision taken by the ACA. We however believe it is a matter between the ACA and its members. Therefore we cannot comment any further.”

Full statement by the ACA:

After an appropriate and robust investigation and disciplinary process held between the Association for Communication and Advertising (ACA) and its members DDB South Africa, Ireland-Davenport and Wunderman, the ACA exercised its rights in accordance with its MOI and the process laid down in the ACA’s Internal Enquiry Framework. At thesubsequent Board meeting held on 5 July 2017, the ACA found the three agencies guilty of transgressing the ACA’s Code of Conduct governing tenders and pitches.

Sanctions to be imposed

The ACA Exco and Board discussed the circumstances pertaining to the Telkom pitch at length, considered statements made by representatives from each agency and agreed that in the interest of self-regulation and in accordance with its MOI, the following sanctions were to be imposed:
a. A written undertaking from each agency regarding their future conduct is to be sent to the ACA
b. Agency representatives from these agencies currently on the ACA Board or operations committees are to step down for a period of 12 months
c. Each transgressing agency is to be fined the maximum penalty allowable in terms of the ACA’s MOI
d. Each agency’s membership of the ACA is suspended for a period of 12 months and during this suspension the agency may not derive any of the benefits offered to member agencies.

The agencies’ membership may be reinstated after the suspension period, on the proviso that they do not commit any further transgressions of the Code of Conduct during their suspension.

“The ACA is about maintaining the health and well-being of the industry and sets the highest standards for integrity and professionalism amongst its member agencies. In the interest of upholding our commitment to self-regulation, it was decided that sanctions be imposed on DDB South Africa, Ireland-Davenport and Wunderman,” says Odette van der Haar, CEO ACA.

Telkom and the professional integrity of the advertising and communications industry

The ACA is deeply concerned that the Telkom ad agency pitch process did not comply with the ACA’s Code of Conduct that governs tenders and pitches. This Code was put in place some years ago to encourage fair, equitable and healthy competition, transformation, a level playing field, good ethics and conduct during new business acquisition and protection of agencies’ intellectual property.

The Code also mitigates risk and wasteful expenditure on the part of agencies and clients. There is therefore no reason not to adhere to the Code, which supports a mutually fair and robust pitch process.

According to Odette van der Haar, CEO of the ACA: “The biggest threat to our industry is that more and more clients behave unfairly towards agencies during pitches. It is paramount to the sustainability of the profession that agencies stand united against these unfair practices in order to maintain the value and currency of the profession.”

The ACA’s concerns with the Telkom pitch are as follows:

1. Too many agencies were asked for strategic and creative work, whichwas very costly for the participating agencies and gave each bidder a less than 10% chance of winning the business. This especially prejudiced smaller agencies, as they do not have the resources to invest in a pitch of this scale. Without payment of pitch fees, the unsuccessful agencies could not recoup some of the cost incurred as a result of answering Telkom’s brief.

2. Most worrying is that the contribution and currency of the participating agencies was devalued when agencies were asked to provide Telkom with free intellectual property. An option was for Telkom to accept case studies of recently successfully work, that was in line with thescope of work and services required of the brief. These case studies would have accurately demonstrated the agencies’ ability to meet Telkom’s requirements and deliver a return on investment. Furthermore, submission of case studies would not have incurred pitch fees. Telkom did not accept the ACA’s proposal.

3. The collective cost of this pitch ran into millions of Randsin time and material costs for the participating agencies.

4. A pitch process of this nature is counterproductive to the industry’s transformation efforts. Small, black-owned agencies were invited to participate in the Telkom pitch process with little to no prospect of success, given the terms and conditions of the RFP.

5. The ACA would therefore like Telkom to explain why none of the smaller South African agencies were able to secure any of the business on offer – especially since Telkom is such an iconic South African brand.

/ends

MarkLives will publish comment from affected parties as their feedback is made available. This is a breaking story.

Updated at 11.10am on 17 July 2017.

— Sign up now for the MarkLives email newsletter every Monday and Thursday, now including headlines from the Ramify.biz company newsroom service!