Pitch consultants respond to 'pay-to-play' criticism: Don't 'lump all intermediaries in one bucket'

This week Campaign covered an op-ed by VoxComm, the alliance of communications agencies associations. In it, the organisation called out intermediaries operating the model of pay-to-play pitches and highlighted several aspects of the model, which it said undermined fair competition. The industry body wrote: "Agencies are being asked to pay intermediaries for the privilege of pitching for accounts. This scheme is on the rise and threatens the value and competition our industry delivers."

Pay-to-play can lead to agencies who are not willing to pay a fee not being put forward for a shortlist, consequently limiting advertisers' access to talent, VoxComm said.

But as Ishan Chatterjee, vice-president of global growth at R3 shared, knowing participation in pitches is not based on merit can also negatively affect the psychology and motivation of teams working on the pitch. He added this could affect the team's ability to "deliver their best work."

In some other cases, according to VoxComm, pay-to-play can shift the cost burden of pitches entirely onto the agencies. As Lucinda Peniston-Baines, founder and managing partner at The Observatory, puts it, it is a “false economy”, where clients might save in the short-term, but will face higher rates from the agencies who will try to recoup the cost of pitching further down the line.

Questioning the overall ethics of the practice, VoxComm said: “Anecdotally, it appears those agencies that pay a fee to consultants for training and consultancy on new business are more likely to be the same agencies that end up on shortlists managed by the same intermediary.”

It also called for fairness and transparency, and for advertisers and clients to review their existing relationships with pay-to-play intermediaries and consultants.

At the same time, several intermediaries responding to Campaign's piece on the op-ed said transparency is key to their business, with Victoria Fox, chief executive officer of AAR, noting that the op-ed should not “lump all intermediaries in one bucket”.

Read on to find out how the intermediaries responded to VoxComm’s call-out. 

Lucinda Peniston-Baines
Co-founder and managing partner
The Observatory

A founding principle of The Observatory International was to have a client-only-funded model. Being paid by agencies too—via win fees, subscriptions, club fees or a slice of annual fees—seems an obvious conflict of interest. It can drive a behaviour where an intermediary has to keep all its “customers” happy, rather than the brand that has commissioned it to find it an agency partner. That model may allow intermediaries to charge marketers less for their own services, but agencies will have to find a way to recoup the pay-to-play cost from any new client in the medium term, so it’s a false economy. Marketers and procurement professionals, please ask the question of your potential pitch consultancy: How are you funded, are you transparent and will that provide the choice of agencies and an outcome with my best interests at heart?

Victoria Fox
Chief executive
AAR

The question raised is an important one about access to briefs and integrity, which AAR fully supports. AAR does not operate a pay-to-play model. All clients have open access to the market on pitches we run, and we are transparent with clients and agencies about how we run the business and our commercial model including the consultancy services we offer to both brands and agencies. Our consultancy to agencies on how to win and retain business is in no way linked to pitch lists and you do not need to pay for any AAR consultancy in order to participate in a review. Less than 4% of the agencies on our database work with AAR’s consultancy offering, and over 91% of AAR pitches last year involved agencies who do not pay for consultancy services. Our only concern with this article is it lumps all intermediaries in one bucket when, in fact, the models, the quality of consultancy, the integrity and neutrality varies greatly. We fully support upholding these values across the whole intermediary sector.

Ishan Chatterjee
Vice-president of global growth
R3

We need to address the duty of care that consultants owe marketers and agencies in the pitch process. Without that obligation, we put client-agency relationships at a disadvantage from the very start. When marketers seek advisory on agency search or review, they are looking for a curation of agencies based on criteria that reflects the needs of their business. It’s not about which agency the consultant thinks is right for the job; it’s ensuring there’s rigour and discipline in a process that includes and will allow the best agency to win. It also needs to be acknowledged that agencies continue to run their businesses to maximise profits, so any fees they need to pay intermediaries will ultimately be passed on to clients. Agency rates in this scenario will simply be higher for clients.

Another point not to dismiss is that agencies are participating in larger competitive sets, more so over longer periods of time. Considering demands on resources, agencies look to consultants for guidance in generating qualified pipelines and opportunities where they genuinely stand a chance to win. Knowing that participation is not necessarily based on merit affects the psychology of teams and their motivation to deliver their best work.

David Meikle
Author and founder
How to Buy a Gorilla

This is a much-needed initiative—and not a moment too soon. I know of highly respected agencies that have recently turned down major pitch opportunities due to the inherent conflicts of interest in pay-to-play models. The entire marketing services supply chain must operate without conflicts to serve brands effectively, and that includes intermediaries. At How to Buy a Gorilla, we have always upheld the highest standards of transparency and impartiality. We are accountable to these standards because they are literally published in our book How to Buy a Gorilla. And we work exclusively through referrals, so our reputation is everything.

Andrew Mortimer
Managing partner
The Aperto Partnership

The Aperto Partnership has always championed transparency. We strongly believe media advisors should be focused only on getting the best outcomes for their clients. You cannot do that with objectivity if you have a conflict that comes from earning pay-to-play pitch fees from agencies, either directly through upfront fees or a percentage of the successful agency fees, or indirectly from providing training or consultancy on how to win new business. This is an important issue both for agencies and advertisers, many of whom are unaware of the practice and risk not getting the right result from a pitch process.

David Indo
Chief executive
ID Comms

These practices distort fair competition, restrict access to top agencies (and talent), and erode the integrity of the pitch process. We have always championed transparent, unbiased pitches that prioritise our clients needs and their best interests. At a time where trust between advertiser and agency is a rare commodity, ensuring fairness and transparency in the pitch process is critical. Advertisers should work with those consultants who refuse to compromise on the integrity of the processes they manage. If in doubt, brands should ask their consultant partners what type of relationships they have with the agencies being invited to tender.

Rebecca McKinlay
Managing director
Oystercatchers

Oystercatchers operates a model of transparency, fair process and impartiality. Our work is paid for by the commissioning client. In exchange, they receive impartial, comprehensive and specialist advice, delivered without bias or financial influence. We are concerned that many clients seem unaware of the pay-to-play and win fee model in operation in parts of the industry. Intermediaries who run fixed rosters, paid for by agencies, or impose win fees on agencies are creating an uneven playing field. 

1. It limits the choice and recommendations they provide to clients based on the agencies that can afford to pay.
2. It allows them to offer consultancy at cut-price rates, undermining the value of comprehensive, agnostic consultancy services.
3. It may impact an agency’s ability to invest in or service the account for the period the fee structure is in place.
4. Clients may be unaware of the full price of their services. 

Angus Crowther
Founder
Tuffon Hall Consultancy

At Tuffon Hall Consulting our value exchange has always been, and always will be with clients. Clients who are prepared to pay for our expert, unbiased view on the best agencies to pitch for their business, together with other commercial consultancy, operating model and relationship value added services that we offer. To simultaneously seek to extract value from agencies is confusing, engenders a conflict, and removes priceless agency margin at a time when they have already invested significantly in a pitch process. In the spirit of complete transparency, in parallel, we do run an annual wine-associated networking event for which we charge agencies a small amount, amounting in total to 2.5% of our income. But to be clear, two out of our last three pitches were won by agencies that were not part of this.

Tina Fegent
Marketing procurement consultant 

As a procurement consultant—and for my marketing procurement colleagues working within brands —our role is to ensure that every agency selection process is conducted fairly and transparently. Our goal is to find the best agency for the brief and budget while fostering a pitch process that promotes fair and healthy competition from a neutral standpoint. A longlist of agencies should not be predetermined based on criteria other than merit, capability, and fit for the brief and budget. Selection processes that require agencies to pay to be considered undermine fairness and risk limiting access to the most innovative and effective partners.