SHOULD CLIENTS COUGH UP FOR PITCHES?

17 April 2007
Gillian Jones, Managing Editor of Marketingweb
Gillian Jones, Managing Editor of Marketingweb

On 19 March 2007, the South African Design Council held a debate at Sappi Braamfontein on the contentious issue of free pitching in the design industry. Gary Harwood, Chairperson of think, elaborated on the reasons behind think s no free pitching stance and the positive effect it has had on his business. Enterprise IG MD David Blyth, Cross Colours MD Adelle Wapnick and Espial's CEO Rudi Kruger will shared their differing opinions on the pitching issue, and then the floor was opened to discusson. Gillian Jones from Marketingweb covered the event.



Clients should pay for pitches or even better pitching should be outlawed.

Free pitches harm the graphic design industry and are not good for a client's business.

This was one of the main points to come out of a debate organised by think, the South African design council, on Monday evening.

Four industry experts - David Blyth, MD, Enterprise IG; Rudi Kruger, CEO, Espial; Gary Harwood, group executive creative director, HKLM; and Adele Wapnik, MD, Cross Colours - each offered their opinions on free pitching.

Two years ago, think members reconfirmed the think Code of Ethical Conduct that states, "A designer shall not undertake any work at the invitation of a client without payment of an appropriate fee."

This stance is shared by various design bodies around the world, including Icograda, the world body for Graphic Design & Visual Communication, of which think is a member.

The pitching process is inherited from the advertising industry, explained Wapnik.

Free pitching started when agencies' main income came from media commission and creativity was an added value. When media spend moved out of the agencies, free pitching remained.

Why free pitches are bad

The "free" in free pitching is a misnomer, says Blyth. He suggests that ultimately someone has to pay, either through soft costs absorption, unpaid after hours work or pass-through costs where the costs are picked up by other clients.

Harwood agrees: "It takes resources away from existing clients who end up paying for it."

Free pitching positions graphic design as a cottage industry and devalues the craft, Blyth adds.

In addition, speculative design work is not real design work.

"You do work that wins the pitch rather than work that is right for the client," says Blyth. "Clients have this attitude that they believe they are buying creativity and want to try before they buy, instead of working with a designer to create a better product."

Harwood agrees.

"The creative pitch approach is fundamentally flawed. Prospective clients need to realise that it is an artificial situation. A team burns the midnight oil coming up with a few fabulous ideas, which may or may not hit the mark.

"Due to conditions that are inherent in the pitch scenario, these solutions are seldom rooted in any depth of insight into the client's business and unique challenges. It amounts to creative gambling.

"In the United Kingdom statistics show that only 20% of work requested through pitch processes ever comes to fruition."

He says the fundamental reason why free pitching is wrong is that it "takes dialogue to solve problems. Good design is about finding solutions to creative problems. This only comes from a thorough knowledge of the problem - a luxury you don't get in a pitch."

He believes a far better approach is for the client and agency "to engage... to gain real insight into each other's businesses".

He suggests you show prospective clients your credentials, portfolios and testimonials from existing clients, and most importantly introduce them to the team which will actually do the work, as its relationships that really count.

"Best practice is: Get the agency to show you its work, and explore with them everything from how they identified the problem or opportunity, through strategy and insight, to execution to results, to lessons learned. This rigorous and diagnostic approach is much superior to speculative work," he says.

Why does free pitching happen?

If free pitching is so bad, why is it so rife?

Blyth suggests that some of the factors contributing to this include low barriers to entry; a lack of client education; a lack of designer professionalism; market maturity; a lack of governance; a frontier mentality among South African graphic designers; supply outstripping demand; and high levels of ignorance.

He also suggests that the media is somewhat to blame for giving exposure to the winners of free pitches.

What about paid pitches?

Harwood believes that even when you're paid for a pitch, you're never fully compensated. You can only charge for your hours, but not for your intellectual capital. And you're not providing the best solution to your client's problems.

Wapnik agrees. "Not just free pitching but pitching in general is bad practice."

The scary UK situation

Blyth quoted statistics from a UK "Pitch versus productivity research survey" undertaken by the British Design Innovation (BDI) and BDI member Firedog Design in October 2005.

It found that on average, a design agency spends GBP 38,000 a year on free pitching. The average annual spend by agencies participating in paid pitching is GBP 25,000.

The number of man hours spent on free pitching each year is 608 hours. The number of hours spend on paid pitching per annum is 400 hours.

Some 65% of design companies surveyed selectively engaged in free pitching. Some 16% take up every invitation to pitch for free, while 14% claim to never take part in free pitches.

About one-third of respondents said they receive more than 10 requests a year to pitch for free.

The study also found that the average number of agencies invited to participate in a free pitch is six, while this number drops to three in a paid pitch.

The results found that the public sector asked for free pitches more often than the private sector with 40% of respondents saying they had received more free pitch requests from public sector organisations.

This should not be the case in South Africa, where the Association For Communication and Advertising and GCIS (Government Communications), has issued Best Practise Guidelines For the Procurement of Marketing, Advertising & PR Services which explicitly discourage government bodies from requesting free pitching, says Harwood.

Unfortunately similar research has not been done in South Africa.

"In SA we have never done the research. If we had the data we could explain to clients what they are doing to industry when they take what they can," says Wapnik.

What needs to happen?

Blyth makes a number of suggestions to put an end to free pitching. This includes positioning think as an independent body and giving it some teeth to govern. It would also help to introduce standard pitch terms and conditions and educate designers before they enter the industry.

He also suggests that media commentators need to lose their ambivalence towards free pitching and more senior practitioners are needed in leadership roles

It is also vital to educate clients to recognise the value of authenticity and uniqueness. "Clients have a responsibility to the industry to ensure this behaviour is not perpetuated," says Blyth. "They get charged for it, one way or the other."

Never pitch again

Espial's Kruger, who is not a member of think, offered an alternative viewpoint.

"I don't get paid for pitching. The way I get round it is not to pitch at all," he says.

He offers tips on never pitching again which includes finding a source of endless projects; making a list of accounts you want and going for them - choose an area of expertise; saying no to unsolicited requests for pitching; not playing outside your league; creating word of mouth; changing your status with clients to that of trusted advisor; and attaining GOD status - Game Over Dominance.

"I get paid every time with a consulting fee," he says.

The successes

Harwood says that in two years they have had phenomenal success which has saved the industry and economy huge amounts of money.

He mentions the SAA national tender for marketing services as a success story. They called for a creative pitch, but think stepped in and persuaded the airline to drop the pitch idea.

They had similar success with FIFA and Rand Water, and "20 to 30 other cases", he says.

"From an HKLM point of view we have seen the request for free creative pitches dramatically decline over the past two years," he adds.

"We see potential clients increasingly requesting credential pitches and on the odd occasion where a client requests a creative pitch, remuneration is now being offered for time spent. When the successful agency is awarded the project a new fee is negotiated in order to purchase the intellectual capital."

He says: "When we explain our stance and suggest an alternative response, seven out of 10 agree, two out of 10 insist on a pitch with remuneration, and one out of 10 want a free pitch, and we walk away.

Harwood also quoted Ashantha Armagram and Nathan Reddy of Grid, who told him: "Our view is that we are definitely against free pitching. At the start it was difficult to abide by and tempting as we did not have a huge volume of work and we felt that we were losing opportunities.

"Now that the business has grown, our stance has earned us more respect and credibility. We have been protected by this policy and it has set relationships straight with clients from the very beginning."


Questions left unanswered

The open debate following the four formal presentations presented some tricky questions.

One if the issues raised was who owns the work presented if a client pays for the pitch.

Wapnik suggested this should be negotiated upfront before pitching.

There was also come concern that outlawing free pitches would prevent new players from entering the industry and competing with the well established players.

Can small agencies compete against the big boys? Or do they need to participate in free pitches to get a foot in the door.

Harwood believes that as a small agency you'll gain more respect if you stick to your principles.

Wapnik adds: "The difference between having an okay business and having a great business is the need to take some of these hard decisions. In the long-term it pays off."

And what should you be paid for a pitch? Technically a client could pay you R100 and it would no longer be a free pitch. The consensus seemed to be that you should be paid for the time spent doing the work, and this should not include the client buying the rights to the intellectual property.

Kruger argued that you should charge a percentage of the account, while it was also suggested - although not everyone agreed - that the fee should be linked to the client's size.

Another issue raised was whether an eight man agency pitching for the same work as a 40 man agency should get paid the same fee?

Harwood's advice: "You should look at the unique situation and offer a solution. That's the ideal."



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