When Walking Away Is The Right Decision

I hate walking away from prospective business, but a recent situation made me realize that sometimes that is the best outcome. A few months ago I received an inquiry from someone purported to be a consultant who was given our name through a mutual business friend. She was looking to bring in a new media agency for a small HBC company. The brief she sent focused on two objectives; reduce the agency fee and improve the media efficiency (she meant to say lower the CPM because media efficiency and media cost are not the same thing).

I scheduled a conference call with her and one of my key people, while on vacation, to discuss the project and see if it made sense for us to participate. We opted to go forward and had an in-person meeting with the consultant the following week. As she briefed us it became clear that she was asking for spec work, a fully fleshed out media plan—read my prior post on this subject here http://wp.me/p2edMw-2s

There is a certain amount of spec work I am willing to do in a new business pitch. Anything more than that I ask to be paid for. In this case I asked for a “go-away” fee on the work if they did not hire us. It’s an interesting approach in that often times the work is good enough that it forces the prospect to hire us or pay two agencies. The problem here is that we wanted a lot more than the prospect was willing to pay. They did not put the same value on our work as we did. Our ask was 10X what they were willing to pay.

We settled on an intermediate number, but I insisted that it be only if the client agreed to our ongoing fee structure. It made no sense for us to continue if the client wasn’t intending on paying us the compensation rates we wanted. The consultant danced around the commitment and kept insisting that we needed to do the spec work and the fees would work out. Red flag number 1.

Red flag number 2: the consultant asked us to break out our fees for planning and buying separately because she wanted to manage some of the buying herself. Apparently she had a relationship in the :10 TV unit space and wanted to be more than the consultant. She was going to push for the agency that allowed her to maintain this position—and likely the one who planned the most :10’s.

It was then that we decided that we did not want to pursue the assignment because there would be a lot of spec work, which even if they did not hire us, would benefit the consultant more than the client or us.

The Model Isn’t Broken. It’s Fixed.

Sony, VW, P&G, J&J, Bacardi, SC Johnson, Visa, 21^st Century Fox, L’Oreal, Coca Cola, BMW, BASF. What do all these companies have in common? They all have placed their media business in review, or recently completed a review. Their incumbent media agencies; the usual suspects—OMD, Zenith, UM, Mediacom, Vizeum, Carat, Starcom/MediaVest. The agencies involved in the review; the usual suspects.

Insanity is doing the same thing over and over again and expecting a different result.

I’ve heard and read that some people believe that industry change (content, integration, analytics) is driving this rash of reviews. If so, why are the same agencies that some clients are dissatisfied with all of a sudden appealing to others? Why would OMD be a good repository for Bacardi, which they recently won, when current clients J&J and Visa have put their accounts in review? Is it because what is shown in new business pitches is not what is used on a daily basis? I witnessed much of this when I was at Initiative, albeit a dozen years ago. The people who work on client business think many of the tools and sexy stuff shown in new business pitches is just that, only shown in new business pitches. It’s not practical for everyday use because the planners have too many boxes of GRP’s to fill in. They do not have the time to solve real business problems.

So what is the value proposition of these mega-media agencies? It certainly isn’t buying leverage because smaller agencies can match the big guys on media pricing—and often beat them. The big guys speak of relationships with the media companies, but the media companies are putting more and more inventory up for sale in the open market, using exchanges to eliminate the human aspect of transactions that is rife with inefficiencies.

Others suggest that the reviews are procurement driven, which explains why only the usual list of invitees are participating. These big agencies hate losing business and they’ll promise everything to win. They have a beast to feed to perpetuate their own myth and they believe their own BS.

You don’t have to. If you want the same-old solutions join in the Mad Hatter’s Tea Party. If you want real change you really have to want to change.