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Why Clients Should Pay PR Pitch Fees

Scenario 1: A multinational company invites a short-list of PR agencies to pitch for its Corporate PR business. They are made to go through the process of an EOI (Expression of Interest) and even sign a Non Disclosure Agreement (NDA). The agencies then proceed with their preparations, some going as far as commissioning expensive research in order to empirically elicit insights that will drive their proposals (understandably, because word is about town that the company pays well).

Comes D-day, and all the agencies file out for the pitch exercise, each showcasing the best of its talents and ideas.

But that’s where the story ends! The client goes completely deaf and dumb after that exercise. Six full months later, there’s absolutely no word from them regarding the pitch. No results – officially or otherwise. Meanwhile, the incumbent agency continues to work for them as if nothing happened.

Scenario 2: One of the Top Ten commercial banks calls for a pitch for a PR firm to manage its Corporate Communications and Reputation Management. As usual, the short-listing process is rigorous and the ‘lucky’ agencies put in their very best. But a top executive of one of the agencies that participated was to reveal later that the members of the panel appeared only to be going through the motions. From their attitude it appeared that the outcome of the pitch had been pre-determined, and no matter how brilliant their presentations, his agency (and probably some of the others too) never stood a chance.

Scenario 3: A big conglomerate in the FMCG (Fast Moving Consumer Goods) sector calls for a PR agency pitch for its Corporate and Brand Communication programmes. Six agencies are involved. After a very thorough and energy-sapping exercise, the two top runners are invited for a second round of discussions and even negotiations. Client even visits the agencies as part of the process. Subsequently, one of them begins to get signals, from client’s side, that it is being seriously considered. People are already calling, informally, to congratulate them in advance. And then, black-out!

A few weeks later news breaks in the media that the client has appointed a new PR agency. And it turns out to be one that did not even participate in the original pitch process. That’s it, no explanations. Almighty Client has played his hand and everyone has no choice but to live with it. In fairness to this client, it may well be that none of the agencies at the pitch (including the front-runners) quite made the mark. But that is not the point. The point is that there was absolutely no communication. Those who were not successful at least deserve to be told so, even if they might never know why.

Scenario 4: A new Corporate Affairs Director is appointed in one of the leading telecoms firms. And one of the earliest priorities he sets for himself is to get rid of the incumbent PR agency (regardless of their level of competence and performance) and bring in his own ‘people’. In order to give this venture a veneer of legitimacy, he contrives a PR ‘pitch’ to which are invited his preferred agency, plus a small group of obscure, relatively unknown agencies (he can’t risk some of the stronger ones showing up and stealing the show). The entire charade is wrapped up within a week, and the rest, as they say, is history.

All of the scenarios showcased above are real-life experiences, not fiction. And I am quite sure that quite a number of experienced PR agency handlers can relate to one, or more, of them.

So what protection (or avenue for redress) is there for the PR agency that suffers this kind of ‘injustice’? Precious little, I must admit. After all, it is absolutely within the rights and prerogative of the client to decide how he wants to give out his business, and to whom. In any case ‘terms and conditions do apply’ don’t they?

Some clients behave irresponsibly in the way they call for, and conduct, pitches for their business because they know that they can get away with it. But it is not a state of affairs that should be encouraged. Pitch exercises do take a heavy toll on the participating agencies, in terms of human and material resources deployed.

The pitch is essentially a contest, with every participant matching their very best against the competition. It is probably the closest you can come to a full-blown professional ‘war’ campaign among agencies. The very least anyone participating in the process can expect is the noblest of intentions from the client (as convener, moderator and judge of the process) and a level playing field for all the contestants.

There are two main ways in which PR agencies can hope to protect themselves against clients who frivolously (or mischievously) call for pitches. One is to insist on a minimum level of engagement and disclosure (from them) during the process. The second, and more important, is to ensure that the clients pay pitch fees. This is an amount of money that is paid out to each of the agencies that is unsuccessful at the conclusion of the pitch process. Ideally, this figure should be known up-front.

The pitch fee is not expected to completely defray the cost of the agencies’ preparations (nor is it designed to). It is simply a compensation for all the effort (and expenses) incurred, and for their ‘losing out’ in the contest. It shows that the client appreciates their efforts.

It is only fair to acknowledge that some organizations are already engaged in the practice of paying pitch fees. My agency has witnessed it on a couple of occasions in the past. But it is a practice that is still rare, and that has to be encouraged (enforced, if necessary) on a wider scale.

PR agencies operating in Nigeria should begin now to insist that clients (especially the big ones) who call for pitches commit up-front to paying pitch fees. I know this is easier said than done, especially given the very competitive environment and currently highly level of quackery in the business.

The big PR agencies, working with, and through, the professional associations (NIPR and PRCAN) will have to take the lead in this campaign. It is in their enlightened, long-term, self-interest so to do.

Insisting that clients calling for pitches commit to paying pitch fees will invariably make them more responsible in the way they call for and conduct the process, as well as raise their level of professional respect for local (Nigerian) PR agencies.

John Ehiguese
CEO Mediacraft Group

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