Ditch the pitch: Clients respond to agencies’ calls to reform the pitch process
Mat Baxter blasted the entire “dog and pony show” pitch process in his Mumbrella360 keynote, but was especially concerned with one, unnamed client demanding that media agencies comply with 120-day payment terms. Following his challenge to the industry, media agency bosses weighed in, mostly agreeing that ditching the pitch is unrealistic, but so are payment terms of that length. Now, clients – including Kellogg’s – respond.
When Mat Baxter blasted bad clients from the stage of Mumbrella360, the global CEO of Initiative never explicitly mentioned Kellogg’s by name. He did reference a “CPG client”, though, which was demanding agencies agree to 120-day payment terms in order to participate in the pitch for its media account.
But everybody – the agencies involved in the consumer packaged goods pitch and the industry more broadly – knew the brand he was referring to.
And, if they didn’t, Mumbrella’s Tim Burrowes made the implicit explicit when he wrote in his Best of the Week column: “Without referring to it specifically, Baxter alluded to the current (disgraceful) Kellogg’s media pitch in Australia. It’s an open secret in the agency world that IPG and Omnicom have both told the company to shove it, based on the terms it is demanding from its so-called partners.”
Baxter delivering the Mumbrella360 keynote in which he blasted the pitch process, or what he called a “dog and pony show”
Kellogg’s contact in this article is ‘Director of marketing AND corporate affairs'(?). What an untenable position. Since when do they more than marginally overlap? Major red flag. (BTW that’s not a comment on Howe, but rather an indictment on org structure at Kellogg ANZ)
Given there are 6 major markets globally operating on negative interest rates….I can guarantee when interest rates go to negative in Australia, clients operating on 120 day payment terms will quickly change their stance
We need more good clients and more good agencies to stand up here. How a marketer approaches a pitch speaks volumes about how that marketer will approach an agency relationship. Yet even when we at TrinityP3 have declined to manage a pitch process because the basic principles of good business practice are being ignored or sidestepped, there have still been plenty of agencies (and good ones too) willing to participate. That’s why – if we really want to do the hard yards and improve the industry – the pitch needs to become the last resort rather than the first, for everyone involved.
I think Ronson nailed it.
It’s lack of experience on marketer’s part for what is necessary / not necessary for pitch requirements. How often does a marketing team go out to pitch? It’s not frequent enough for a confident approach in most. And if they have frequent experience getting agencies to pitch… ultimately that’s a red flag for the agencies pitching isn’t it?
There needs to be some form of agreed standardisation for pitching, tiered based on requirements, with relative costs associated. If everyone is playing to the same rules, it also makes comparison and selection easier.
Ronson said share the knowledge above, I think that’s the real answer here, it just needs to be applied at scale.
Much of this conversation/debate is focused on media agencies, but now ad agencies are fielding pitches with 120-day terms. In media-land, the client revenue can be worth hundreds of millions so, as Baxter says, after a year, you recoup the $300k spent on pitching. But in ad-land, where client budgets have been slashed year on year and many clients have moved to a project basis rather than retainer, agencies are now pitching for $250k revenue. Which means the agency hopes to make $30-80k profit, yet a pitch still costs $20-80k (internal and external). Even if you make the money back in the first year, there is no second year to make it into profit. Add to that the 120-day term and it is becoming unfeasible for ad agencies to even bother with a pitch.
Takeout: If you’re a client brand and you’re thinking of pitching, you better be offering more than a project and way less than 120-days. Otherwise, no-one is going to give you ads to fill those empty slots you’ve so cleverly got at bargain basement prices.
The old saying, ‘where you stand depends upon where you sit’.
Very revealing to compare and contrast the now-competing stances of two ex-Naked staffers: Mat Baxter as agency CEO, and Ivan Pollard as client CMO stateside at General Mills, who – as Kellogg’s in this market – are currently out to pitch with a demand for 120-days payment terms, and are also copping it hard from an exasperated industry.
As an experienced agency practitioner, I’ve long suggested – only half jokingly – that submissions for these mega-pitches should be just one slide, stating “Whatever they’re charging, less 0.1%”. Would save everyone a lot of time and bother.
Optus commenting on pitch fairness? I once did an Optus pitch, in a room with a table and 5 chairs, which we were allowed to enter early to set up. In walked 5 Optus people and took all 5 chairs, leaving our team to stand up for an hour, the entire pitch session, like schoolchildren in the headmaster’s office. Nothing was offered, other than condescension and arrogance. After, we decided not to await their decision and withdrew our business. Who would ever want to work with such people and such a toxic culture? When will clients learn they’re not Broadway legends casting a smash hit – they’re bores in suits spending someone else’s money.
“…. lean in to win business.”
What the hell does that actually mean?
Having participated in many pitches over the years the consistent lesson is that clients get the supply partners they deserve.
How any client can think that starting a business relationship by imposing highly inequitable terms and expectations on their new partner is going to create fantastic outcomes beggars belief.
While these terms may be imposed on local marketing departments by global H/O, it’s up to the CMO to inject some common sense and take into account their partner’s commercial needs.
The single biggest problem is most marketers don’t understand how advertising works, so they push and push and push what they can understand – price. Anyone worth their salt in media understands that creativity and craft expertise is what drives business results, but in 2019 we still have CMO’s prioritising marginal short-term savings on the single biggest way to put your brand in front of consumers. It’s crazy talk. This attitude is what creates the pitch process we now have – price focussed, with a prevalent lack of respect for the work agencies do, driven by lack of understanding and trust. I’m sure marketers will say agencies need to do a better job of educating, but having personally sat in multiple brand meeting rooms explaining the difference between brand and product to clients, and consistently seeing no behaviour change, I think its clear this is something that needs to be addressed from the client’s side. Educate your marketers, get better results, pretty simple.
It’s just a jump to the left
And then a step to the right
With your hands on your hips
You bring your knees in tight
But it’s the pelvic thrust
That starts to drive you insane
….Let’s do the Time Warp again
Hi Michael
Just as Agencies go through highs and lows, so do Clients.
I don’t recall being part of the pitch – and please shout out if I was.
Optus has shifted and created major change in the pitch process because we saw it is required.
My one request is that agencies given a chance for clients to change, just as much as clients need to give agencies the same.
Lets all embrace change together.
p.s.
Far from a bore in suit too
Melissa is helping lead this change and should be applauded. Thank you Melissa, I hope others follow ‘suit’, pardon the pun.
“Howe is quick to emphasise that Baxter’s comments aren’t a fair assessment of the Kellogg’s pitch process, citing an 80+ year relationship with creative agency Wunderman Thompson and a 35-year relationship with incumbent media agency Mindshare as examples of how the brand holds on to “valuable and effective relationships”.”
You mean the media agency who is declining to pitch on the business is your example of a valuable and effective relationship?
Lean in – I think, in this example, its a euphemism for ‘bend over’