IPA plots agency ratecard to fight power of procurers

LONDON - Leaders of Britain's agencies are divided on whether or not to produce a ratecard to counter the burgeoning power of procurement specialists.

The idea was the subject of heated debate at this week's meeting of the IPA council, whose members are increasingly alarmed at collusion by clients to screw down agency margins.

But some senior industry figures say standard charge-out rates would be impossible to compile accurately and that creating a benchmark would merely give procurers even more negotiating clout.

There are also doubts that the IPA could legally publish such a ratecard, whose pros and cons were presented in a briefing paper to the council by the IPA director-general, Hamish Pringle, as it could be ruled as anti-competitive.

It is understood that the ratecard issue provoked much discussion at the meeting but the question of whether or not one should be compiled remains unresolved.

The proposal is the result of disquiet by IPA executives at the practice of ISBA's Communications Purchasing Action Group to share charge-out data accumulated during its members' negotiations with individual agencies.

"We take a very dim view of so much confidential information being pooled and distributed," an IPA source said.

The current controversy takes place as the IPA presses ahead with a five-year initiative to improve the remuneration of member agencies.

IPA executives have also proposed commissioning a report which would redefine what constitutes a fair margin.

A recommended margin of 20% was set in the mid-90s in a report to the IPA by Arthur Andersen. Since then the average margin has fallen, which has encouraged procurers to negotiate tougher deals.

Many agency bosses fear that, if forced to negotiate off a ratecard, procurement directors will insist on paying the lowest quoted price. There is also concern that a ratecard would not be flexible enough to allow for consideration of the type of agency in question.

The problems are compounded by the different remuneration structures of creative and media agencies. And a ratecard would make it difficult to link higher rates to agencies' success at the IPA Effectiveness Awards or its commitment to staff training.

"We think there should be less emphasis on how many people work on a client's business and more on the value an agency can add to a brand," an IPA insider commented.

For the time being, the IPA plans to press ahead with better training for agency senior managers so that they are better equipped to, in the words of one source, "learn to play the procurers at their own game".

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