While the total value of federal and state ad contracts is growing dramatically, few leading advertising agencies want to pitch government business.
What's wrong, and why are the best and brightest in our business not pursuing a category that will become one of the largest in spending in the nation ("Gov't to test anti-drug ads; big boosts loom," AA, Nov. 17)?
Recently, I consulted with an agency that lost a bid for a major U.S. government ad contract. It lost to a bidder that provided "the best value to the government."
Do we really believe that "best value" is delivered under the current system the government uses for awarding contracts to advertising agencies? Most agencies would answer "No."
With many more government contracts coming up for bids, advertising agencies should push for a re-examination of the system -- a process that has not changed substantially in decades.
The perception in the agency business is that the incumbent shop on a government contract has a strong advantage in any review, a sharp contrast to private-sector reviews.
When the existing U.S. Navy recruitment advertising contract was about to expire in 1997, and bidding was opened to select an agency for the new contract (an account worth more than $15 million a year), no other agency bid against incumbent Navy shop BBDO Worldwide, New York.
When the even larger U.S. Army recruiting contract ($80 million in spending) was rebid not long ago, only one agency, Wells BDDP, New York, challenged the incumbent Army agency, Y&R Advertising, New York.
In the recent competition for the Army National Guard and Air National Guard recruitment advertising contract (valued at about $10 million), only two serious competitors (Seiter & Miller, New York, and HMS Partners, Columbus, Ohio) challenged Laughlin, Marinaccio, Owens, Arlington, Va., the incumbent. When the military threw open for bids its joint recruitment advertising program in 1996, only two shops -- W.B. Doner & Co. and Ogilvy & Mather -- challenged incumbent Bates. In each case, the incumbent won the new contract.
Many agencies consider the hurdles imposed by government contracting rules and regulations to be too large.
A "Request for Proposals," the federal document that specifies what the government wants to buy and how to bid for the contract, can take 100 to 150 pages just to explain the rules of the engagement. An agency usually calls in an outside expert to understand the RFP's requirements. Reviews are time-consuming. Six to eight months from start to finish is typical. And, since most RFPs demand a full creative exploration plus media planning, sales promotion, direct marketing, etc., months of time and effort are required to respond.
All this is expensive. Responding to an RFP can cost an agency between $50,000 and $400,000 dollars in out-of-pocket expenses. Even by the standards of big agencies, this is a substantial amount of money.
ATTRACT MORE BIDDERS
So it is easy to understand why many ad agencies are reluctant to pursue federal and state accounts. If, however, the state and federal units are really going to get the best value for their advertising budgets, they must attract more agency bidders.
Agencies can learn how to respond to the government contracting process. (It is not as onerous as they might think.) They can also make a profit on government business, although not as large, on a percentage basis, as they can get with private-sector accounts. And many government accounts can turn out to be creative showcases. Y&R's outstanding work on the U.S. Army account has been widely praised, for example, and helped the agency land the U.S. Census Bureau account for the year 2000 Census.
Moreover, federal and state governments pay their bills and honor their contracts. That's not always so in the private sector.
Can the government agency selection process change to generate more interest from the nation's best shops? It must, or millions of taxpayer dollars spent on ads will not benefit from the full range of talent in the ad business.
There are things that can be done. Consider dispensing with required account reviews where the government client is happy with its existing agency.
Government rules require ad contracts be put out for rebidding on a periodic basis. Federal ad contracts for the armed services are typically for one year, renewable annually for up to five years without a review. At the end of five years, a review is required regardless of whether the government client is happy with its existing agency. Is that review needed if there are no serious marketing problems? On the other hand, if there are problems, shouldn't the review process be quicker, as in the private sector?
Consider having the American Association of Advertising Agencies consult with the government on how to improve the selection process. The Four A's could even provide agency executives (from shops not involved in government work) as advisers to the federal panels that must weigh agency presentations and select winning bidders.
Look for ways to simplify the RFP process: Some federal agencies have changed their procurement process in other areas; the ad agency selection process should come under scrutiny as well. The Four A's is currently conducting a test of a simplified RFP in California. Changes are also being considered to the Federal Acquisition Regulations, which govern federal advertising contracts.
Our best and brightest agencies must be encouraged to pursue government assignments, not be discouraged from doing so. With large tobacco- and drug-education advertising contracts on the horizon, let's not make the same mistakes made in the past. The government, the agencies -- and the citizens who pay the bills -- deserve better.
Mr. Ravitz, a marketing consultant in Norwalk, Conn., advises agencies on new-business and government presentations. As an exec VP at Grey Advertising, New York, he managed 10 different federal government advertising contracts. He is also a retired rear admiral in the U.S. Naval Reserve.