Thomas Cook in pitch fee row

by Ian Darby, 08 July 2010, 8:00am

Thomas Cook is demanding a "signing-on fee", thought to be approaching £1m, from the agency it appoints at the conclusion of its ongoing £30m media pitch.

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The travel company’s initial RFI to media agencies outlines demands for a "substantial signing-on fee in return for a three-year contract award" in addition to "a reduction in agency fees currently paid" and "a minimum 10% saving through consolidated media buying".

Agency sources suggest that Thomas Cook representatives have since indicated that it expects the signing-on fee to be in the region of £1m.

Hamish Pringle, the IPA director-general, said: "This is absolutely outrageous. It adds insult to the injuries that unprofessional procurement people have inflicted on our industry. Agencies should pull out of this pitch."

More than one agency claims to have boycotted the pitch and an agency source described Thomas Cook’s demands as "farcical", claiming that it could take several years to break even on the business.

However, another agency source said: "This is just a sign that clients are getting more demanding. Thomas Cook isn’t the first and won’t be the last to do this."

Thomas Cook’s actions have not deterred four agencies from pitching for the account. The incumbent, Arena Media, has repitched against Aegis Media, Brilliant Media, and Starcom MediaVest Group with a decision expected imminently.

A Thomas Cook spokesman said: "Our current pitch process for a media buying agency has resulted from a review of several contracts across our business. As this process is still ongoing, we’re unable to discuss confidential details which remain part of the negotiations with agencies who want to work with us."

Thomas Cook kicked off its media pitch in April when its procurement team contacted agencies with the RFI. The account includes online and offline media for all Thomas Cook brands, including its travel services arm and the Going Places travel agent brand.

The bulk of the business is held by Arena Media with MediaVest Manchester working on the Going Places and Direct Flights brands.

Beta, which created the recent TV ad campaign featuring Jamie and Louise Redknapp, is unaffected by the media review process.

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All Comments

Robin Bonn - 08 July 2010

Hamish is right, this sounds outrageous.

Presumably there's more to this than is reported, because I can't see the logic. Surely the best Thomas Cook will achieve is a desperate agency and an understaffed account team.

Rightly or wrongly, sadly this will add more weight to the lazy stereotyping of procurement people by agencies. Come on procurement pros \(and Thomas Cook marketers) - please shed some light...

Julia - 08 July 2010

As a procurement person \(sorry) I suspect the driver for this pitch is a massive savings target and fee reduction, "guaranteed" by the head of procurement and/or their procurement consultancy. Always remember, purchasing people are bonused on savings delivery.

Sue Turner - 08 July 2010

On behalf of those who can't say it, I will: fecking cheek. Walk away. They don't deserve you.

Ad- Dick - 08 July 2010

If there was a smiley for "holy s**t! Is this real?

Now is the time to use it.

pandora palmer-edwards - 08 July 2010

Just another example of the lack of respect the advertising industry receives on the subject of pitches. If only agencies \(along with the IPA) would take a stand together on their response to this type of behavior the better off we'll all be.

Jonathan Harris - 08 July 2010

I look forward to seeing some absolutely awful media buying and the worst service levels imaginable coming out of whichever agency is lucky enough to win this.

Chris Arnold - 08 July 2010

This is bordering on corrupt. It's unethical, dishonest and a disgusting practice. I would ask the IPA and other bodies, like the DMA, to investigate if this is even legal. If not, lets get someone banged up. When clients start thinking like the Mafia, demanding money like this, then they have crossed the line. This needs to outlawed. Whoever is responsible for this is bringing shame upon the Thomas Cook name and isn't working in the best interest of the company. Second letter to Cameron & Clegg in the pipeline.

I'd like to see the heads of big media groups show some spine and publicly agree all to refuse to play this dirty game. Come on Martin, be the first.

Read my piece in THINK BR - 'A new low in pitch abuse, now agencies are having to pay clients to get on a pitch lists.'

http://www.brandrepublic.com/opinion/1014198/a-new-low-pitch-abuse-agencies-having-pay-clients-pitch-list/

Darian Watts - 08 July 2010

A MEDIA BUYER, DEAN FISHER HAS JUST GONE TO PRISON FOR SCAMMING HUNDREDS OF THOUSANDS OF POUND OUT OF HIS MEDIA AGENCY.THIS IS A SHOCKING CASE AND ONE WHERE THE PERSON DOES DESERVE TO GO TO PRISON. BUT IT SEEMS OK FOR THOMAS COOK TO SCAM MONEY OUT OF MEDIA AGENCIES - OR IS IT? MAYBE THOMAS CROOK WOULD LIKE TO HIRE DEAN WHEN HE GETS OUT.

Sarah - 08 July 2010

THOMAS CROOK, nice one!!

Darian Watts - 08 July 2010

It was a typing mistake, but maybe God moves in mysterious ways.

To see the directors of TC go to:

http://www.thomascookgroup.com/directors

Now there's another coincidence - TC is short for Top Cat who was always on the make! Not a trusty cat.

Chris Worsley - 08 July 2010

true, but he is also the undisputable leader of the gang.

equally appropriate analogy perchance?

Dasbeasten - 08 July 2010

As long as it means they can keep on hiring the charming Redknapps performing unrepresentative vignettes of the Thomas Cook experience then I'm all for it.

On a more serious note let's name and shame the scumbag who came up with this extortion!

TOM DENFORD - 08 July 2010

Of course this is wrong, but as Julia \(above) points out it is a symptom of procurement being wrongly incentivised to seek only savings. Its not procurements fault but a higher power who includes marketing services alongside other material goods procurement and creates a system in which agencies are valued on the money they save not the value they create. Until procurement are able to evaluate an agency on the value it creates, and agencies can articulate their own value \(not sure anyone yet can) then this further commoditisation will likely continue.

But whilst agencies are willing to further damage our joint reputations but agreeing to pitch under these inane terms then what CFO isn't going to keep viewing media as a commodity that can be squeezed....and they've also just seen everyone lushing it up at Cannes displaying plenty of apparent profit margin...

Grilla Login - 08 July 2010

Can they not crowd-source their media?

Koen Smeets - 08 July 2010

It is absolutely shocking that media agencies are still pitching for this business! It only encourages this kind of maffia behaviour. When is the industry going to realise it is creating its own downfall by signing up to these kind of value-destroying arrangements?

Darian Watts - 08 July 2010

Michael Beckett was - Chairman - he was formerly Managing Director of Consolidated Gold Fields plc.

External appointments:Non-Executive Chairman of Endeavour Financial Corporation \(Canada). Non-Executive Director of Petroamerica Oil Corporation \(Canada),

David Allvey was Group Finance Director of Barclays Bank plc, B.A.T Industries plc and was Group Chief Operating Officer for Zurich Financial Services AG.

And you wonder why they love money so. It's in their blood.

Darian Watts - 08 July 2010

THEIR CLAIM

Imagine working with customers who, through our products and service, will enjoy some of the best and happiest moments of their lives.

REVISED...

Imagine working with Thomas Cook who, through our exploitation of suppliers, will enjoy some of the wealthiest and happiest moments of our lives, while exploiting others.

Darian Watts - 08 July 2010

Did that come across?

Sarah - 08 July 2010

I think we should hold a caption writing contest under the pic above. I'll start:

Hi Cindy.

Hi Thom.

Do you want to sleep with me Thom?

Sure thing Cindy, but you'll have to pay me first.

Darian Watts - 08 July 2010

Nice one Sarah. Try this.

Hi Thom, let's go exploit some third world workers.

Why go to the third world Cindy, when we can exploit media companies at home.

robgs - 08 July 2010

"Welcome to my worrrrld..."

\(Ka-Ching)

"Won't you come on in.."

\(Ka-Ching Ka-Ching)

J Griffiths - 08 July 2010

I'm posting a blog about this here tomorrow morning: http://paab.typepad.com/furtherandfaster/

I'm not really clear why there's such outrage. Unless you thought someone was desperate enough to pay it. In which case its them you should be complaining about. Nobody is forcing anybody to take Thomas Cook's business. Just leave them with an empty pitchlist and force them into an embarassing climb down. But someone is going to shell out aren't they?

The best way to tackle this is to show it up for the dreadful procurement policy that it is. Do you want me to cook for you? Well you're gonna have to pay me first.. give me a meal I've paid for any day and not where the cook has paid for the privilege of putting it on my table. The first meal is a better one. There's a higher probability that there's something dodgy or off with the second one. Thomas Cook just gave up any control over quality. Whoever pays the shilling will be intent on taking them to the cleaners.

Mohammed Ali - 09 July 2010

LOL...

That's probably as constructive as I can get on this absolutely ridiculous "brainwave" by Thomas Cook!

Gordon Macmillan - 09 July 2010

I'm sure some will notice we have had to delete a couple of comments that sailed a little too close to the legal wind. So apologies to those concerned. It is a highly contentious issue the traffic to this story, the comments and the number of tweets has shown.

But the real issue is not what you think of Thomas Cook's character, but if this is the thin end of the wedge? Is this the shape of things to come.

Chris Arnold - 09 July 2010

JG, you should read my BR blog. The issue is that this could become a trend \(already happening in India), those who hold the budgets using it to force agencies to pay to pitch. Greed over need. Even though we do already because we have to pay the cost of staff, resources and materials. It can cost £15k for even a small pitch. As former board member of the DMA and former chair of both the Creative Council and the Agency Council we looked at ways agencies can share the cost with clients. The famous P&G pitch involved around 30 agencies, each having to spend £10k+. Pitching costs the industry millions a year. Some clients agreed they should share the cost, the nice intelligent ones. Some just hadn't thought about it costing money \(worrying). Some were arrogant and aggressive and one procurement person thought we ripped them off so deserved to suffer. If we are to work as partners, not like sewing machinists in a sweat shop, as an industry we need to act now. It is at times like this that trade bodies need to show leadership and take quick action. We also need to see the heads of big media groups like Omicom, WWP and the rest unite and act. I think asking for a fee to pitch is unethical, dishonest and shows a declining relationship between clients and agencies, and alack of understand about the value we bring. Without our skills most wouldn't sell a thing. It's all about being seen as a valuable business partner not just a service provider.

Rob Mortimer - 09 July 2010

If this is accurate then it is understandable but disgusting. It follows the view that all media agencies do is save money on buying.

If agencies don't want this to become the norm we have to do two things:

1. Work together and don't agree to demands like this

\(and perhaps more importantly)

2. Do a better job of explaining to procurement people and the like the benefits and values agencies bring over and above sheer cost savings \(better ROI on spend, better targeting, etc etc)

"Congratulations, you have been awarded the job Mr Smith. That will be £2000 please." is not a way to get a healthy or productive client/agency relationship, and if they insist on this it will be the Thomas Cook brand that suffers more than the agency.

Jules Bending - 11 July 2010

Is this some king of cleaver reverse psychology thing?

Jules Bending - 11 July 2010

Sorry that should have read 'kind' not 'king'. Must get glasses.

Mark Palmer - 12 July 2010

I don't know what the proof is for this story. Assuming so as hamish has commented. The industry cannot collaborate to fix terms of business at a minimum level. It would be a cartel. It can start behaving as an industry. Surely, the answer is for everyone to pull out and for those who sit in the IPA Media Futures Group, mainly the Chief Execs of the Media agencies, to grab together how the industry behaves. We can talk about resetting the media agency world vs price cutting, buying promises and pitching only on price. The reality is to do something about it.

PAUL PHELPS - 12 July 2010

Esteemed colleagues - all we have to do is have enough self-respect to say "no thanks, we're not playing". Those agreeing to pitch on this basis have literally just sold their professional soul. No wonder media buyers are deemed only one rung up from used car salesmen - and I doubt Arthur Daley would ever have paid a "signing on fee" just for the right to trade.

Nicholas Tomlin - 12 July 2010

By agreeing to proceed with the pitch the media agencies involved have not just compromised their position but undermined the integrity of the industry as a whole. The good work that the IPA is doing to promote our industry as a profession will all be for nothing if Thomas Cook succeed in their aims. I do wonder where the media owners stand on this. Should they not "black list" avertisers who enforce these unreasonable business practices on agencies?

Nicholas Tomlin - 12 July 2010

By agreeing to engage in the pitch process for Thomas Cook the agencies involved have not only compromised their own position but that of the industry as a whole. Their actions undermine all the good work of Hamish Pringle and the IPA to promote our industry as a professional body. I do wonder where the media owners stand in all of this. Should they not "black list" advertisers who put unfair pressure on agencies and media owners? Nick Tomlin

SIMON TIMLETT - 12 July 2010

I guess the other way of looking at this is that it brings some transparency to the murkier corners of media buying. Perhaps the 'signing on fee' and the guaranteed term of the contract then allow the winning agency free exploitation of 'other media income' available to media buyers. If that's the case, maybe the pitching agencies have calculated it is still worth competing.

Darren Woolley - 14 July 2010

Shame, shame, shame Thomas Cook. Do unto others as you would have them do unto you. I encourage everyone in the industry who finds this behaviour abhorrent to call there local Thomas Cook branch and ask them to pay you £1000 for the opportunity to provide a quote for your next trip. And keep doing it. If they ask why then tell them you are just doing to them what their company is doing to the industry. Hamish, ask your members to contact Thomas Cook and say they are tendering their millions of pounds in travel. And then ask £10,000 to tender for it. Treat them as they are treating the industry. Bullies only learn a lesson if there is consequences. Lets show them the consequences of their greed actions.

Brian George - 16 July 2010

Gosh must have missed this one! But it does remind me of a book that I read many, mmany years ago about a future world which was dominated by 3 ad agencies, who controlled everything including brands and governments - OK so it was a really ludicrous proposition \(but an entertaining story), but then conversely probably no less ludicrous than TC's signing on fee!

The whole NB pitch thing has always been highly contentious and very expensive for participants - the honourable thing would be to pay for advice, aka, pitches, the pragmatic thing to do would be to make all procurement people redundant, the emotional route would be a collective ban on working for TC.

Will any of this really happen, including the signing on fee - your guess is as good as mine!

paulc-c - 16 July 2010

Thin end of the wedge? Never.

Reckitt Benckiser plan to charge ad agencies a fee to pitch for its business in India.

Four shops are already pitching Thomas Cook's business: Arena Media, Aegis Media, Starcom MediaVest and Brilliant Media.

Volume discounts can easily fund the up front pitch fee if you've got a savvy finance model. Let's be transparent here.

Trade bodies are doing little to stop this happening.

Agencies are desperate for income.

To stop this phone the IPA hotline to report 'unprofessional behaviour on pitches'

paulc-c - 16 July 2010

www.thebriberycentre.co.uk

Anant Sanchetee - 21 July 2010

having posted recently about this topic at: http://tinyurl.com/25sgugh we think this is a massive joke. Seriously, who are they kidding?

norbert warne - 17 August 2010

I'd like to see the heads of big media groups show some spine and publicly agree all to refuse to play this dirty game. Come on Martin, be the first. Read my piece in THINK BR - 'A new low in pitch abuse, now agencies are having to pay clients to get on a pitch lists