Strategic Design | marketing & branding thoughts by Nick Rice

Dynamic marketing, branding & design strategies that span the gap between business & creative.


Agency pitch fees. Good or bad?

Do you think clients should pay "pitch fees" for agencies to come in and pitch their ideas?

It's a semi-new issue in the ever-changing environment that advertising/design/PR agencies face today. Historically agencies have not charged for the time staffers put into generating ideas/concepts to win new business. Typically the agency fees were so high after winning the business, they would make up any effort spent pre-contract. But in today's increasingly competitive marketplace, there is not as much profit in advertising and design as there once was. Today's agency is more concerned with doing the right thing for the client than excessively padding their own coffers by using media technologies that only they control.

One side of the argument (client side) says that if an agency is not winning new business then their ideas are weak and they need more experience or practice. Why would a client pay for an idea that they are not happy with or on target.

The other side (agency side) says it takes an enormous effort to brainstorm new ideas and put them into a format that elevates the clients value/brand. Their time is valuable and they wouldn't be in the pitch process if the client hadn't asked (or let) them in.

To make matters worse, clients have stolen brilliant ideas from outside agencies and handed them off to the in-house team for execution - without compensation. Or put a new agency thorough the ringer under the guise of potential business only to keep the incumbent agency honest. That is taking advantage.

The thought process is that if agency pitch fees were a standard procedure, clients would be less likely to drain ideas or abuse advertising/design agencies without compensation. I know from personal experience that agencies will spend an exorbitant amount of time generating concepts to win a new account. My opinion, if those concepts/ideas are not on strategy or completely off base, then it's the fault of the agency. If the concepts/ideas were on target and another agency was selected for some other reason, then depending on the circumstance, the agency should be reimbursed for their time. If the agency was too small (whatever that means), not experienced enough, or couldn't handle the work volume for the client, they should have never been part of the selection process in the first place. That's the clients fault. They should take care of the agency for wasting their time.

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