Agency Business Agency Models New Business

Pitching can cost agencies dearly, so should they charge clients for their time?

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By Sam Bradley | Senior Reporter

September 26, 2022 | 8 min read

Fishing for new business can cost agencies time, money and intellectual property. One London experiential shop hopes to change that.

Pitcher's mitt

Should agencies charge clients for pitches? / Unsplash

Pitching for new business is the lifeblood of any agency. But it can be an expensive game – each tender or pitch might consume hundreds of hours of working time, representing significant cost if the contract isn't won.

That’s why London experiential shop The Park has launched a new initiative to charge clients a fee for the pitches it goes in for and invest the proceeds in its diversity and inclusion (DE&I) work.

Will Worsdell, co-founder and global strategy director, tells The Drum: ”What we’re asking for is a small fee – a contribution towards our time. It will be heavily discounted and nowhere near our rate card. It’s a contribution that will be ringfenced purely for investment in DE&I initiatives.”

Time charge

Worsdell argues that even a small fee provided to the agency will go some way to making up for the costs incurred in tendering for new accounts – especially given the uptick in demand the agency's seen over the last year.

”This is about the increase in the quantity of work we’re seeing client requests for at the RFP stage and the impact that has on our agency’s DE&I efforts,” he says.

”There is a knock-on effect from that level of work being required. Ultimately it's people’s time that allows ideas to be created and budgets made and things produced. We don’t make products, we make time. If a client's asking for some of that for free, we need to make more of it. That means people having to work longer hours, which discriminates against people with other life commitments.”

Not only does pitching for free impact The Park’s team of 12, it means there’s less cash to invest in its own DE&I work, which include paid internships, mentoring schemes, mental health support and internal training. ”We live in a society that’s very lopsided and there needs to be a lot of investment to even up opportunities for people,” he says.

State of the pitch

Though agencies being paid for the time involved in a pitch isn’t unheard of, adopting a fee-first policy is unusual. Paul McEntee, founder of Here Be Dragons, tells The Drum his agency doesn’t charge ”as a rule,” but is occasionally offered a fee. ”Some big pitches have come with a fee for pitch time, which I think is fair and I’d welcome more of this.”

The Pitch Positive pledge, a gold standard approach promoted by the Institute for Practitioners in Advertising, stops short of recommending agencies charge prospective clients. Typically, the fees levied are only nominal – only going part of the way to covering the cost of pitching itself – and are usually offered by clients to agencies, not the other way around.

Creative agencies sometimes agree to trade the IP created for a pitch for a fee. Some clients (especially bigger ones) demand this of all contending suppliers, but other agencies, such as Mother, refuse to pitch under those conditions. In McEntee’s experience, project-based work sees pitch fees applied more frequently, ”as the client is aware that a big retainer is not up for grabs... so often we see development fee from big brands who want to speak to us or a range of agencies if they aren’t sure what the answer is to their brief.”

While The Park’s initiative stands out within the industry, it’s not the first agency to consider charging clients for pitches. Next Fifteen creative agency Elvis charges clients a fee for pitches under specific circumstances, says Tanya Whitehouse, the company’s chief executive.

”If we’ve already committed to another pitch, or it’s the holiday season so I just don’t have the people for it, I’ll say to clients: ’There’s lots of different ways that we can approach this. Number one is we can’t do it at all. Number two is that you can extend it out. The third option is you can pay us a fee so that I can resource this properly.’ As you can imagine, that’s the least popular option.”

Whitehouse says that in a best-case scenario, clients should be prepared to pay agencies a fee any time they want to take a process beyond chemistry meetings. ”If run properly, chemistry meetings and credentials do all of the heavy lifting or should be able to do all the heavy lifting,” she argues.

For agencies like Elvis that don’t have dedicated new business teams, she notes, ”I am essentially signing away profits on a one-in-three or one-in-five chance. It’s crazy. If you’re selling something like creative or strategy, we’re effectively saying that we're not worth that much.” Though the policy makes up for some of the costs incurred, Whitehouse says it happens infrequently, ”like once every 18 months.”

Competition exposure

She agrees with Worsdell that charging could solve some of the issues around pitching, but believes charging as a rule would leave an agency too exposed to competitors.

”Even if X percentage of the industry said, ’Right, we’re not going to pitch anymore past chemistry unless we get paid for it,’ somebody would, because somebody would get fucking desperate.”

Worsdell says the initiative could hit the firm’s ability to bid for new work, but ”it’s something we’ve just got to do.”

”There is a consideration it could affect our new business opportunities, but we think this is a reasonable, fair and appropriate position. We’re confident that people will understand it's a good thing.”

The team has reserved the right to waive the fee for the right client. He says: ”It’s not a black and white thing with a set fee... it’s on a case-by-case basis. If a client comes to us and the level of work they’re asking for we think is reasonable for free, and we don’t think it’ll affect our inclusive culture, that’s fine.”

If clients want more, he says they’ll either pitch with a fee, or simply pitch the amount the team is comfortable with.

Though the IPA’s Pledge doesn’t suggest clients pay pitch fees, Worsdell hopes more agencies will begin to charge for their time. ”We would love other independent agencies to hear about this and steal it with pride,” he says. ”Maybe we can all work together.”

Whitehouse, though, is pessimistic about other agencies picking up the practice and ceasing to pitch for free. ”There’s so much wrong with it and for some reason, the industry as a whole is too frightened and nervous to do anything about it. I just don’t see [how] it’s going to go away,” she says.

Agency Business Agency Models New Business

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