Pitch fee: A reality for only a select few agencies, still elusive for many

A few brands are finally opening up to the idea of compensating agencies for their ideas, however this is still not a widely accepted practice in the Indian ad industry.

The debate between compensated and free pitches in the advertising industry has raged on for years. While some countries have mandated pitch fees, the concept of paid pitches remains relatively uncommon in India. However, recent trends indicate a shift as more agencies are advocating for compensation and certain brands are embracing the idea.

For example, a tweet by the founder and CEO of Talented Agency, Gautam Reghunath says every 4 out of the 5 pitches are paid engagements.

Next best thing to winning accounts without pitching? ~4 out of 5 pitches @TalentedAgency are now paid engagements. That's compensation for creative time & effort, not ownership of pitched ideas. Progress!

— Gautam (@gautxm) August 17, 2023

This got us thinking about whether brands are finally opening up the idea of compensating and what kind of agencies are getting compensated for their pitches.

Supply-Chain issues

The debate about compensated pitches often boils down to the supply and demand dynamics. Agencies that are bigger in size and business are willing to go for unpaid pitches while the independent agencies that are smaller in size but also possess unique strengths request compensation. It also depends on whether an agency chooses to work for project-based work or not.

Sanjeev Jasani, COO, Cheil India feels agencies who are hungry for business will never agree to this pitch compensation model.

“If clients are desperate to work with a particular agency, then they can actually charge a fee for their efforts, and clients will not finch before giving it. So whether you are an independent agency or an industry giant, it really doesn't matter. It eventually boils down to how badly the client wants to work with you,” he says.

On a similar note, Azazul Haque, CCO, Media.Monks, says it is the smaller agencies that can afford to go for paid pitches while the bigger ones have to make do with unpaid pitches due to the competition.

“A place like Talented which has a smaller number of people they can manoeuvre like that. However, the larger organisations don’t go for project-based work. Smaller agencies can make those decisions because if they decide to go for paid pitches it also reduces the number of pitches they go for," says Haque.

Giving an insight into how the pitching scenario works for Monks, Haque says they focus on retainer work and not project-based work. Explaining how things are divided between Ogilvy and Media.Monks for Amazon, he says while Ogilvy is the agency on records, Monks stepped in for project-based work but ensured they got multiple projects done.

Kapil Arora, CEO, 82.5 India feels that the pitch process in the industry varies, with some clients offering token pitch fees that barely cover agency expenses. In other cases, there are adjusted pitch fees that can offset the final fee upon conversion.

“Frankly, I believe occasional pitches are good. They energise and bring together fresh thinking, at both ends, when employed correctly i.e. employed with an honest intent and a genuine respect of all parties involved.”

Evolving perceptions among Indian brands

It is no secret that preparing a pitch is a long process that requires time and effort. While a few brands have started recognising these efforts, Indian brands are still looking to get newer ideas free of cost, say leaders.

Haque says reputed brands like Amazon and Tata Tea have begun compensating agencies for their pitches. However, problems arise when it comes to Indian brands, especially start-ups.

Jasani says while the shift might be gradual, it takes a few brave agencies like Talented to start the trend. He says one has to recognise the value of an agency's time and expertise during the pitch process. He also hopes this trend reflects a growing acknowledgement of the effort and resources invested by agencies to craft innovative solutions for potential clients.

On the other hand, Reghunath feels the non-standardisation of the pitching scenario in the Indian agency industry is actually a blessing in disguise.

He says a few clients now understand that older pitch processes can be deemed unfair in an era where agencies are expected to come back with fully fleshed-out ideas and thinking to the pitch even before there is a sniff of the scope of work discussions, contract chats or haggling with procurement.

“The pitch fee is a nice way to say ‘Hey, we get it,” he says.