European Clients More Likely to Pay Agencies for Pitch Ideas
NEW YORK (AdAge.com) -- Want a pitch fee? You might have better luck across the pond.
European ad agencies are more likely to get compensated for the ideas they present during new business pitches than shops based in the U.S., a new survey has found.
The poll was conducted late last month by Worldwide Partners, an owner-operated global network of ad agencies that collectively manage some $4 billion in marketing budgets. Domestic partners include shops such as Kirshenbaum Bond & Partners and Butler Shine Stern & Partners.
Of the 45 WPI partner agencies that responded to the survey, nearly half -- 49% -- reported rarely or never receiving compensation from clients. Only 5% in North America reported getting pitch fees, while 56% of agencies based in Europe said marketers offer renumeration for new-business pitches. The compensation schemes varied, from a flat fee of 4,000 euros (about $5,350) to a fixed percentage of the contract amount.
While the upside of a pitch is obvious, a common gripe from agency execs about the new-business process is the possibility of giving away ideas for little, or no compensation. The issue is one that's becoming more pronounced in a down economy, as clients are under pressure and negotiating agency pricing terms harder than ever.
"On the one hand, winning accounts is a path to grow revenue, burnish the image of the agency and build morale," said Al Moffatt, president-CEO of WPI, in a statement. "On the other hand, it is an expensive process where agencies often give away ownership of ideas in the hopes of winning a review ... at least European clients are more likely to understand that agencies shouldn't work for free."