MEDIA FORUM: Are winner-takes-all pitches really adding value?

Microsoft is the latest client to ask media owners to bid against each other on a winner-takes-all basis. Will we see more of this?

Every year since 1999, DaimlerChrysler, via the offices of its media agency, BJK&E, has invited media owners to pitch for a £100,000 slug of its budget on a winner-takes-all basis. It sends out documentation to 80 or so media owners - both print and broadcast - and receives about 40 responses. These are whittled down to a half-dozen or so, who are then invited to present their ideas more fully.

The whole thing is given event status and there's a trophy awarded to the winning team - all of which adds a bit of spice to the event. It has became an annual fixture but there's nothing set in stone here - it has tended to fall around a special event such as the launch of a new model and it still retains the feel of an ad hoc business. There are some who are suspicious of the whole deal - for instance, isn't this an excuse for BJK&E to steal the five shortlist ideas as well as using the one it's rewarding?

But for many observers it's merely a quaint way of doing business, a bit of fun while extracting just that extra morsel of value from media owners along the way. Soon, though, the whole event might not be quite as quaintly unique as we've come to believe. Last week, Microsoft announced that it had given all national press activity for its Amazing PC launch campaign to the Telegraph Group following a shoot-out with The Times.

And back at the start of November, Safeway signed a partnership tie-up with The Mail on Sunday following a similar process. In both cases, the deals involve advertorial content and the creation of a series of special supplements.

Nick McGrath, Microsoft's group marketing manager, says it had decided that a conventional press campaign was not going to deliver a "deep enough" type of communication to meet the information-rich demands of this product launch. The face-off of the pitch situation ensured that the winner was the one prepared to go that extra mile. "We found the Telegraph people very easy to work with and they are putting forward a very professional bunch of people to manage the business relationship - in effect, we have our own account managers. And also the quality of the journalists who are writing the pieces was quite amazing. They are exactly to brief without holding back - they are taking an independent look at what the technology can deliver."

Aren't there dangerous aspects to this, though? Would it be healthy for the media industry if we started to see more winner-takes-all media shoot-outs? Chris White-Smith, the display ad director of the Telegraph Group, admits that his first reaction is that it's nice to win. But, he concedes, this is not without its potential downsides. "It's about bringing an idea alive and making it sweat and making it interact with the readership.

In this instance, we demonstrated that to win the pitch. I can appreciate that there are situations where there's only enough money for one media owner and I don't mind doing it," he says.

The danger might lie in situations where agencies go down a modern equivalent of the casualty planning route - blackmailing media owners that they'll be stripped of a client's business if they fail to jump high enough. "Ideally, this sort of thing should, perhaps, be about extra activity placed alongside a particular event. I would want to encourage planners to think about getting more money into press on top of the normal advertising. It should be seen as incremental revenue," White-Smith says.

And, of course, the danger is that if there is more of this sort of pitching then it's inevitable that more media owners will invest more resource on pitches that come to nothing. They can ill afford to do that, especially at this stage of an economic cycle.

On the other hand, the media business is clearly evolving. Media owners are becoming more proactive and creative in their approach to the needs of advertisers - and the Telegraph's business development unit has been pioneering in this respect. Meanwhile, media agencies have also been seeking to move beyond the mere booking of space.

But isn't there a danger that it potentially cuts out too much expertise from the whole system? The planning function is diminished if your media vehicle is chosen on the basis of a creative idea. And, by definition, the creative agency input becomes less important.

Tim Irwin, the joint managing director of BJK&E, says that doesn't have to be the case. "A lot of media owners are sitting on a lot of great products and ideas. Why don't we try to leverage them from an intellectual and a financial point of view?" he asks.

"Arguably, going with one particular partner could be restrictive from a coverage point of view, but even if it is, that doesn't mean it's wrong and if you have a focused target audience, arguably it's often best to partner up with a media owner and ask 'what can you really do for us?' What you lose in coverage you might gain in impact."

Greg Grimmer, an executive director of Optimedia, agrees with some of that. He states: "If you're not doing anything interesting then no matter how good your targeting you're not going to get noticed. The big idea can be more important. If you're doing nuts-and-bolts media you might get more coverage by using more titles but you might be able to achieve a bigger impact with fewer titles - that happens even in conventional media usage."

But he fears that, in the long run, there could be more losers than winners if we started to see more of this sort of thing. "If an agency is trying to do this with the best interests of the client at heart then there might well be benefits. But the danger is that people think 'OK, that's the ideas bit done for another year'."

Jon Wilkins, a partner of Naked Communications, seconds that. "I'm not sure we would want to get involved in a winner-takes-all situation, but asking media owners to pitch is an interesting idea as long as people use it for the right strategic reasons, not as an excuse for not thinking for themselves. If you predefine the right media channels that you ask to pitch, it is a good way to get media owners to go the extra mile. Generally speaking, most clients are looking for innovative approaches from the key media owners and I think most media owners have woken up to that fact. And, from the client point of view, if a certain media owner is disproportionately important to you, then there is absolutely no harm in finding ways to do more business with it. The worry might be more from a media owner point of view, if they suspect that media agencies are abusing their position. But I think they all know the ones that don't or can't think for themselves," he concludes.

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