An advertisement for Suntory Holding's Kakubin whisky is displayed at a station in Tokyo January 14, 2014.ISSEI KATO/Reuters
An industry association representing advertising agencies in Quebec is strengthening its language to advertisers, telling them that asking for speculative work from agencies pitching for their business is not acceptable.
On Wednesday, the Association of Quebec Advertising Agencies, which represents roughly 70 firms, revealed a new guide that is meant to help both marketers and advertising agencies to better communicate during the agency selection process.
One of its major changes, compared to the last time its guidelines were updated in 2001, is a stronger stance against agencies being asked to produce mock-up campaigns, essentially producing work without pay, during a pitch.
It is just one part of a global trend of agencies being asked to do more with less, as marketers' budgets shrink, and as companies place greater scrutiny on their advertising expenses.
This has made the pitch process more complicated as agencies try to balance the need to win new business against difficult requests from prospective clients – everything from extending their payment periods to trimming their fees to sometimes unprofitable levels. Speculative work is another concern; and it is part of more and more marketers' agency searches.
"We strongly believe this is not the best way to select an agency," said Ann Bouthillier, the AAPQ's chairman and president and CEO of Palm + Havas in Montreal.
The reason: because of confidentiality, agencies cannot familiarize themselves with competitive details and marketing strategy of a company until they actually have a business relationship, meaning pitch work often does not resemble what they would actually produce for the client. And the people working on spec for pitches are not always the same creative team who would produce a real client's campaigns.
It is also a major hit to ad agencies' budgets, and much more than clients realize. Producing work on spec costs between $20,000 and $100,000, Ms. Bouthillier said. In the fall, the AAPQ surveyed marketing clients and found that their perception of the cost was about half of that.
The Toronto-based industry group, the Institute of Communications Agencies, also advocates against speculative work in its "Best Practices Agency Search" document. The ICA has formed a "new business committee" recently, and is "evaluating whether to make further enhancements to our guidelines in this area," CEO Gillian Graham said in an e-mail.
More marketers are using procurement departments during the search for an agency, negotiating more aggressively to lower their advertising costs. The same marketers should not be asking agencies to do work for free, just to test the waters, Ms. Bouthillier said.
"One of the first things procurement will ask is, 'Can you lower your overhead?'" she said. "This is a huge component of that overhead that we're not compensated for. ... All this investment is not put against what would be the best investment to contribute to the clients' success."