Close-Up: Live issue - How clients are abusing the pitching process

The IPA is attempting to help ad agencies fight back against exploitation by prospective clients, Larissa Bannister reports.

Have you ever wondered how much money and time you waste every year pitching for business you don't win? Or how many of your best ideas get used in pitches, only to be discarded or, worse still, plagiarised?

According to the IPA, which launched its Confidential Pitch Advisory Service a year ago and has since been monitoring the worst in pitch practice, the industry squanders 239 years of its collective time every year pitching unsuccessfully. It spends a startlingly high £32 million in the process.

Since its launch in September last year, the service has received 12 formal and six informal complaints about what clients get up to during pitches - and has noted many more examples of client behaviour that verge on the outrageous. EasyJet, for instance, called off its creative pitch after six months in February, after shortlisting Ogilvy & Mather and Saatchi & Saatchi. The low-cost airline claimed it wanted to appoint a number of smaller creative shops, only to go on to award the £50 million pan-European account to Ogilvy in May after a final shoot-out against Delaney Lund Knox Warren & Partners.

Of course, clients have always thrown their weight about, but the past year has highlighted some areas where things are getting worse. Marina Palomba, the IPA's legal director, says demands that pitching agencies sign over all the rights to their ideas are becoming commonplace.

"There was one pitch where the client asked agencies to assign all the intellectual property rights to their ideas over for £1," she says. "Two of the pitching agencies approached us about it and we advised them not to sign. In the end, the client backed down - and one of the agencies that refused to sign ended up winning the pitch."

Agencies are also often asked to sign non-disclosure agreements, she adds, which frequently contain innocuous-looking clauses that give clients the right to use any ideas delivered during the pitch process. She suggests that rather than wait for clients to send out such agreements, agencies should send out their own non-disclosure agreement to protect the confidentiality of the ideas they deliver as part of the pitch.

Helen Weisinger, the new-business director at Fallon and the deputy chair of the IPA New Business Group, says the tendency for clients to pitch individual projects rather than entire accounts is another worrying trend.

"Whether you can say no to things like this depends on the agency and the situation," she says. "We had a meeting this year with a great brand and at the end of it the client pulled out a chart showing what he was intending to pay the agency that won. Not only was the amount he suggested ridiculously low, it was unbelievable that he thought he could just dictate the fee like that. Unfortunately there will always be agencies that need wins at any cost and will put up with that sort of treatment."

That is exactly why these problems show little sign of going away. In an over-supplied market, the negotiating power lies firmly with the client. "It's easy for me to say 'stand up for yourself', but it's not as easy in practice," Palomba says. "Part of the problem is that most agencies don't have professional negotiators, so the new-business department ends up running the pitch. But if you do create a fuss, you often win - more often than not, clients are just trying it on."

The IPA's position is that the practice of pitching with creative ideas is not the best way to select an agency. Martin Lucas, the chief operating officer of Saatchi & Saatchi and the chairman of the IPA's finance policy group, says the process is fundamentally flawed and needs a complete overhaul.

"It's a fact that 95 times out of 100, the work produced for a pitch - even by the winning agency - doesn't see the light of day, so all the investment is wasted," he says. "The IPA estimates that the average pitch costs an agency £15,000, though I would argue that for big pitches, the figure is much higher. If you have four agencies on a pitchlist, it could be as much as £250,000. Clients says that's the cost of doing business, but it's a waste of their time as much as it is of ours."

Instead, the IPA's view is that pitch presentations should be based on an agency's reputation and creds, and on chemistry. Back in the real word, such a fundamental change looks unlikely in the short term.

That's not to say that steps aren't being taken to address some of the problems. One compromise might be for agencies to pitch strategic ideas rather than execute creative, which would save a lot of time and money, Lucas says.

The IPA Pitch Pack, sent out to every client embarking on a pitch, sets out best-practice guidelines and includes a two-way non-disclosure agreement that protects both agency and client confidentiality. And agencies can now log pitch ideas with the IPA so that if a client tries to use one after they lose the pitch, they can prove the idea was theirs and even ask for payment.

Others suggest that clients ought to show their commitment by putting their money where their mouth is and contributing towards the cost of the pitch. But even that solution is not without potential problems. "I think it would be dangerous," Palomba says. "If you get paid £5,000-£10,000 to pitch, a client is going to expect to be able to use your ideas, and that's what we need to avoid at all costs."