Ad agency Hadeler Sullivan Ewing is hoping to lessen the risk of new-business pitches by charging a "loser's fee."
But the midsize Dallas shop's controversial plan looks like anything but a winner.
"We're the only industry that gives away strategic thinking and creative ideas for free," said CEO David Hadeler, who claimed the fee will make clients more judicious about both the number and type of agencies invited to pitch.
Mr. Hadeler, who wants other agencies to adopt loser's fees, added, "If a client hears they have to pay $3,000 to $5,000 to everyone involved, they are going to limit the agency selection."
The agency, with billings of about $45 million, is going to suggest a flat fee of about $5,000 to cover out-of-pocket costs, labor and overhead.
But industry experts don't think the compensation idea will fly with prospective clients. Pitching business that may not be won is part of the cost of doing business, they said. Few, if any, rival shops are likely to follow suit, they believed.
"It sounds ludicrous to me," said consultant Leslie Winthrop of Advertising Agency Register. "We have a hard enough time getting paid for spec work. There's not a chance he will come up with a client."
Clients sometimes pay a fee, typically in the $5,000 to $10,000 range, for pitches that include spec work where the actual pitch cost for an agency can exceed $200,000. Some agencies decline the money to keep the rights to their own ideas.
Copyright June 1996 Crain Communications Inc.