Buyers put a price on pitch chemistry

As buying departments become more involved in judging pitches, is cost-cutting undermining client/agency relationships?

But one media expert with a major packaged goods company claims that picking an agency is not just down to price and contacts. He assesses agencies in detail across four areas: the promised service level in terms of the number and quality of staff; strategy; discount on media spending; and the fee.

John Blakemore, UK advertising director at GlaxoSmithKline, agrees: “There are certain boxes that have to be ticked in terms of strategic planning, staffing levels and quality of staff, media buying expertise and implementation, and research capabilities.”

He adds: “There’s very little difference between the top five to ten agencies. Chemistry does help. It is not necessarily the deciding factor but it’s important.”

For many companies, supplier costs are such a key issue that their procurement departments are playing an ever-increasing role in pitches.

Carat client services director Neil Jones says: “Pricing will always be a factor in a pitch, there’s no doubt about that, especially with the growing role of procurement, which is no longer just limited to the contract and fee at the end.”

He says that procurement departments are now involved throughout the pitch and the core focus is on “saving money for the business”.

In some instances, procurement specialists are media experts, who instead of forming part of the marketing team report to a company’s general buying department, as in the case of Masterfoods.

However, others may have come from a general buying background where they bought anything from chairs to product ingredients, or have developed a specialism in buying marketing services, as is the case with Tina Fegent, Orange’s head of category purchasing, global marketing.

Fegent says the marketing team “needs to trust buyers” and to understand that they aren’t always there to cut the budget; by examining costs they can increase the amount available to spend on media. “I think all clients should use purchasing as long as they have people with the right experience,” she says.

Clients that don’t have the necessary media experience may also use outside media auditors to help with the pitch.

Chris Locke, managing director at MediaVest, warns: “There’s a danger that if auditors and procurement people are involved then a 100-chart presentation will get boiled down to a three-chart presentation, consisting of ‘how much can you buy it for?’; ‘how much are you going to charge?’; and ‘who is going to work on the business?’.”

With some companies, the emphasis on cost-efficiency has become so great that the procurement experts call the pitch, not the marketing team, as recently happened in the case of Saga.

But one industry insider believes procurement departments should not have the right to call a review. “It makes no sense whatsoever,” he says. “The result means that when the contract runs out, say after every three years, they up and go to another agency. There is no long-term relationship. They see media agencies as a supplier and nothing more.”

He was involved a pitch for Peugeot Citroën’s media account, which has changed agencies four times in the past five years, and claims that the car manufacturer’s procurement department has been responsible for the moves.

Volkswagen is another car manufacturer whose central procurement department – based in Germany – has played a role, when it insisted that the UK account move out of Aegis-owned BBJ and into MediaCom half-way through a pitch, following a fall out between the client and its then agency in Germany Carat, also owned by Aegis.

Orange’s Fegent believes that any decision to call a pitch should be made jointly between purchasing and marketing and that procurement should be present throughout the pitch to demonstrate to the agency that the client is looking at costs in their entirety, not just the fee.

Tim Irwin, joint managing director of BJK&E Media, believes a procurement-led pitch can be a “positive experience”. “You can have a grown-up conversation about costs, especially if you involve your own financial people. Furthermore, the pitch is not led by personality if it is not carried out through the marketing department.”

But some industry insiders claim the emphasis on costs in a pitch leads some agencies to work for next to nothing in the hope of recouping costs through kick-backs, securing extra discounts and not passing them onto the client or earning undeclared interest on clients’ money before paying it to media owners. But agencies are increasingly unlikely to get away with such activities now that media auditors are playing a greater role in clients’ businesses.

In an attempt to gain an advantage over rivals, some agencies invest thousands of pounds in planning and research tools. But one packaged goods client points out that tools must be compatible with those used by the client in the first place: “The tools help but are not core.”

Other agencies such as MediaCom have used stunts to illustrate a particular point as part of the pitch. Another packaged goods client says: “In themselves, stunts aren’t important but they certainly make a long day go a little bit faster. They can demonstrate a bit of passion, commitment and a will to win, as well as lateral thinking.”

Perhaps most important of all, these stunts can show whether the agency that is pitching shares the client’s sense of humour, providing a spark for that elusive and unquantifiable factor, “chemistry”.

Additional reporting by Lucy Barrett


    Leave a comment