Analysis: Be upfront. How you pitch is a reflection of your brand

The trend of clients choosing not to disclose budgets during initial conversations with agencies is not new and agency leaders MARKETING-INTERACTIVE spoke to recently said while most clients are largely upfront with their budgets, there are some who are either unsure about what they ought to be paying for (in terms of scope of work) or prefer agencies to recommend an appropriate budget based on their ambitions.

According to a report by 4As Malaysia and R3 in 2016 titled "Finding an agency", unclear evaluation criteria (27%), unclear briefs (19%), and lack of transparency on pitch details (17%) are some of the key areas that agencies are frustrated with during the pitch process.

The report said agencies should be given a specific direction on how to prepare their compensation proposals. If the marketer has a preferred compensation methodology, the agencies should know that. If the marketer is open to the agencies’ recommendations on compensation, they should know that as well.

According to the report, marketers are not locked into a compensation methodology. They will want the finalist agencies to make proposals based on their own preferred methodologies. Hence, this signals to agencies that the marketer is flexible and open-minded on the subject of agency compensation - a trait which most agencies will find appealing, it added. At the same time, agencies should be provided with a template for the submission of their proposals to enable the marketer to make side-by-side comparisons of the proposals.

"If there are unusual or make-or-break contract terms that will be imposed on the agencies if they are hired, it is best to disclose those terms during the briefing meetings or even in the initial agency contact phase of the search," the report said.

It is very important for the marketer to think through budget and compensation parameters before there is any agency outreach. It’s better to air this fundamental information early on rather than have it come up late and result in agencies dropping out at the eleventh hour.

That said, R3's principal and co-founder and Association of Advertising and Marketing Singapore's (AAMS) president Shufen Goh is also mindful that most associations do not have the luxury of resources dedicated to “policing” rules to ensure compliance. Hence, the more practical solution is for associations to provide guidance and education on what is good pitch practice. Goh said this is something AAMS will be championing for the industry. AAMS was formed after a merger between 4As Singapore and the Institute of Advertising Singapore in 2019.

Why do clients not disclose budgets?

Many a times, agencies have been told that the main reason for not disclosing budgets upfront is because the data is "too sensitive and corporate procurement guidelines do not allow them to disclose", Goh said. However, there are clients who are also not aligned internally on budgets because the scope of what they want agencies to pitch for is not confirmed. Hence, they are using the process to refine their planning and decision-making process.

"In most cases, this is driven by poor alignment internally within the client organisation," she said adding the caveat that:

Reasonable exceptions are new initiatives, new brands or when clients have the flexibility to move budgets from one communications bucket to another.

Meanwhile, budgets can also be seen as a double-edged sword. Cheryl Lim, former VP, head of brand, marketing communications and sponsorship at Manulife Singapore who left recently, said on one hand, it defines clear parameters in which a pitch team should work within to deliver realistic results. But on the flipside, it is also a financial fence that inevitably imposes a limit on the team’s potential to ideate. As such, some brands may choose not to disclose their budgets to encourage greater levels of creativity.

That said, Lim personally believes it is important to define the scope of a pitch as that would allude to the budget that has been allocated to the campaign. For example, a lead generation campaign could run from SG$1,000 to SG$10,000, or even a million dollars. Being clear on how much the agency has to work with would make their ideation process more efficient and productive, and also render their concepts more immediately applicable when appointed, she explained.

"I am also of the view that an agency’s ability to be creative within the set budget parameters is a better testament of their prowess as opposed to taking a no-holds-barred approach. As the client, the onus would then be on me to ensure that the budget is fair, and I am always upfront about the apportioned funds as I believe it helps to build an equitable client-agency relationship from the onset," she added.

Lim also highlighted the importance of being transparent when it comes to budgets, explaining that doing so helps to start a potential relationship on the right foot. It gives the agency a clearer sense on the scale and extent of the pitch, and saves time on the financial approval process as budgets typically need to be signed off before work can commence.

(Read also: Analysis: Let's talk budget: Are agencies prepared to be hard-nosed on the matter?)

On the point about agencies not disclosing budgets so as to not limit an agency's creativity, Andrew Yeoh, regional head of marketing and innovation (shopping centre), IKEA Southeast Asia, said clients who claim to do so "are usually the ones without budgets". Unless the client is secretive, Yeoh said companies generally will share budgets upfront otherwise agencies are unable to gauge the skills and resources needed for the pitch.

"A lot of the times when the client says that, in a pitch especially, I feel it is driven by procurement. We have to educate procurement that a marketing or advertising pitch is not like an engineering or materials type of pitch," he said, adding:

Procurement has the impression that the moment you tell agencies the budget, they will propose a budget that is a dollar below your amount.

"It's about having that understanding and you need to educate your procurement department when it comes to distrust," he explained. IKEA Southeast Asia and its shopping centre arm Ikano Centres are currently in the midst of a pitch which was called last month.

When it comes to pitches concerning agencies of record (AOR), the struggle for agencies is mainly around how they can effectively allocate their resources. "It is not just about the budget but also being able to understand the value that you bring as a client," Yeoh said.

When engaging the network agencies, for example, Yeoh said the company needs to be upfront with them to ensure it is worth their while to pitch. For him, it boils down to being ethical and moral rather than "leading agencies on a merry-go-round". He cited instances of statutory boards in Singapore where there are numerous agencies vying for a pitch. "If you as an agency participate, you know what you are getting into. It works both ways," he said, adding:

As a client, you need to know how you want to treat agencies. As an agency, when you see a client acting that way, do you stand up for yourself or just bend over?

"You either burn the client's bridge or the employee bridge. It is a dilemma but you need to be searching out the markets for clients that are actually worth the effort," he explained.

Last year, the Civil Aviation Authority of Singapore saw 38 agencies competing for its social duties, while the People’s Association's digital marketing and PR pitch had 18 agencies vying for the account. Meanwhile, Singapore's National Environment Agency also had 21 other agencies eyeing its social media pitch. Malaysia is no stranger to such a practice either. More than five years ago, Malaysia Airlines had 15 agencies vying for the account, resulting in 4As issuing a letter reminding the airline to compensate agencies which did not win the pitch.

Besides being upfront with budgets, Yeoh also pointed out that relationships between clients and agencies have shifted from AOR and retainers to projects. Although projects might be harder for agencies to allocate resources, it also offers them a change to gauge the client and their trust. That said, Yeoh explained that some clients will offer agencies projects in the promise of further work, which sometimes is not true. In such cases, agencies need to be able to tell the difference.

Also weighing in was Grab's regional head of country marketing Sulin Lau who said: "There are some things that are genuinely confidential that can’t be shared in a pitch - budget for the assignment you are pitching out is not one of them. That is like asking someone to cook your dinner without allowing them to see what’s in your fridge."

How you pitch is a reflection of your brand

Pitches are a two-way process and R3's Goh said how a company pitches is a reflection of the brand. She often reminds clients that agencies are also judging how professional or not they are in the process, so it affects their corporate reputation.

Respect cuts both ways. As a service industry, agencies are often very quick to say yes, and shy of saying 'no'. Rejecting unreasonable requests or behaviour goes a long way to sending the right message.

Likewise, Goh said clients who respect agencies often get superior work and value in a pitch. She also advises marketers to "put [their] money where [their] mouth is". "Do not leave commercials as a by-the-way and expect lowballing. Agencies need to justify their fees, and clients need to be clear about how much of the decision will be cost-driven and get alignment internally, at the start of the process," she explained. According to her, it is a client's business reality if they have to cut cost, it just should not be a surprise to agencies at the end of the process.

Besides showing respect, clients should also determine the baselines that are acceptable to them in advance to help identify areas that drive value versus cost, CEO of 4As Malaysia Khairudin Rahim said. He added that marketers can also start with the big picture before deep diving into what they want to build with the agency. This helps to balance between which metrics really matter. Lastly, Khairudin also suggests that marketers appoint a central team to assess fees consistently across all submissions to enable evaluators understand the value.

While brands should do their part to ensure transparency in budgets, agencies should also be unafraid to ask. Ikano Centres' Yeoh said while it is great for agencies to ask about budgets upfront, they also need to be careful of how they frame the question. Having accumulated experience from his leadership roles in the strategy teams at Naga DDB Tribal, Isobar and Interbrand, Yeoh said agencies should approach the budget discussion from the perspective of wanting to know what the best solution is for clients and how they can best resource the team. Hence, having a budget upfront provides a better gauge. 

"Sometimes, a lot of agencies say 'You need to give me the budget otherwise I cannot give you a headcount'. The way you frame things is important, do not frame it in a negative light. For me, it is more about how agencies can deliver the best work for clients," he explained.

Being vocal also leaves an impression on clients. Lim said she personally appreciates when agencies ask questions to gain greater clarity on the brief during the proposal development process because this demonstrates their thinking. "In picking my brain on the business, they are also likely to get a better steer on the nature and considerations of the brand, which would in turn sharpen their ideas," she added.

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Photo courtesy: 123RF

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