CLOSE-UP: LIVE ISSUE/MEDIA-BY-AUCTION - Has GE Capital transformed the face of the pitch? GE has ruffled feathers by introducing auctioning to the pitch

Heard about the GE Capital Life pitch? Just about everyone who is

up to speed with what's going on there is dismayed and disgruntled.

Actually, disgruntled doesn't begin to convey the depth of feeling here.

Some observers are very angry indeed.



But, as yet, this is a relatively small earthquake because, thanks to

Draconian confidentiality agreements imposed by the client, there aren't

that many people in the business who are in command of all the

facts.



But, from what can be gleaned from inside sources, the facts of the

matter are these: last year, the company began a pitch process on its

pounds 8 million media account in which a number of agencies were to

submit - and then develop - possible strategic communications plans. But

then, before the first formal pitch presentations, the company's

procurement office became involved and it devised a questionnaire that

quizzed the agencies' ability to meet certain price requirements.



Those still in the running were invited to base their pitch around their

response to this document. When it came down to it, some stood up and

said the document was stupid and demeaning - at which point,

surprisingly, they dropped off the pitchlist.



But the survivors (two, it is believed) had no call to be smug, because

the second pitch was to take the form of an auction (the winner being

the lowest bidder against a number of price criteria) conducted via an

intranet.



At this point the procurement people became even more involved. They

liked this auction idea. In fact, they liked it so much that they

decreed that the whole pitch be opened up again to all-comers. Get a

password for the intranet and you too can be a player.



Log on each morning to discover that the leading bid against criterion X

is now pounds Y. Can you match it? Dare you try?



Back to the commodity future, obviously. Could 'pile it high, buy it

cheap' media be back in vogue? It would be nice to dismiss this GE

Capital pitch as a shocking example of how not to do things. But it is

by no means an isolated example - and the thing that makes it an almost

credible vision of a dystopian future is the role being played by new

technology.



And haven't we just seen Xerox do exactly the same thing in its recent

pounds 8 million pan-European direct marketing pitch? The final

shoot-out was conducted in an online auction, with finalists submitting

offers relating to budget, production and fee costs. And, come to think

of it, aren't there lots of companies around these days that exist to

auction media inventory online?



We could actually be entering a media-by-auction age - taken to its

logical conclusion, advertisers will eventually be able to cut out the

middle man and just ask the media owners to submit their best prices

directly.



A nightmare scenario? Actually, there are some who don't think so. Greg

Turzynski, a partner in Optimedia, says the GE Capital approach might be

years ahead of its time. But in the end, he concedes 'the internet is a

fantastic tool but it doesn't replace relationships and negotiating

skills. For instance, online sales sites have had great success in

providing buyers with broader access to all the opportunities but far

less in getting buyers to close the sale online.'



And, of course, Turzynski is not alone in pointing out that conducting

an auction for marketing services obviously means the service is reduced

to a lowest common denominator commodity.



Some despair at this apparent evidence that the industry's efforts to

educate clients have fallen on deaf ears. One source not a million miles

away from the GE bid process comments: 'This is a hugely depressing way

of looking at the business. We've spent years talking about

communications planning and bringing a strategic vision of what media

can do for the brand. You sort of hoped that by now someone out there

might just understand that there's no point in buying something cheap if

it's something you don't want.'



Matt James, the managing director of Manning Gottlieb Media, seconds

that opinion: 'If this is true, it's a sad indictment of where some

people are trying to push the business. We've all seen pitches where the

procurement people have been involved but usually there's the bit in the

middle, which is about marketing.'



He adds: 'I wouldn't go as far as to say that the internet is being used

in an entirely negative way. There are beneficial efficiencies in

trading to be achieved from, for instance, pooled inventory and you can

then use the time won in that way to develop creative relationships and

strategic solutions. But commoditising other parts of the process is a

danger, there's no doubt about that.'



And media owners are by no means happy either. For the big TV sales

points, this simply reflects the market's obsession with discount - an

obsession originally fostered, they maintain, by the rise of media

auditors. Auditors, of course, have been fielding cheap shots like this

for years. John Storey, the group managing director of Media Audits,

says it is nonsense to imagine that pitches are won purely on the price

numbers. But even he admits he shares some disquiet about the way the GE

pitch is being handled.



Some, however, believe that this whole episode is actually symptomatic

of a deeper malaise. 'There should be widespread concern these days that

a large percentage of clients are actually abdicating responsibility for

media,' one source asserts. 'They typically spend less than 2 per cent

of their time on it. They believe that the big operators are much of a

muchness now, in terms of their creative approach to a brief. They call

in the purchasing department to oversee the pitch and use auditors to

measure performance. So the people involved aren't passionate about the

specific communications requirements of the brand. That's the real issue

that people should be worried about.'



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).