The brand / agency relationship has always been a tricky one – and many will say – an unfairly imbalanced one. But we’ve witnessed a sea-change in recent times. There’s a want to readdress this imbalance; for more trust and transparency and not just from agencies, from brands too.
One of the most contested areas up for discussion and change is the way agencies are procured and the traditional RFP / pitching process. Is it current, relevant and fair? Or is it an outdated model, with brands making unreasonable demands on agencies, which ultimately fails brands and agencies alike?
What will happen if brands don’t change and adapt? Will agencies refuse to participate and who will lead the charge in this type of initiative?
Firstly though, it is worth mentioning, not all companies have extraordinary RFP terms. Terms such as 120-day payment (Net 120), ownership of IP (Intellectual Property) Rights, and blind briefs. But they aren’t rare either, which makes it all the more interesting.
Typically this stems from marketing procurement professionals, who will focus on savings and efficiencies over some of the less qualitative aspects of the business. But brand marketers aren’t shying away from these terms either.
So the question then becomes, how can they repeatedly expect agencies to give away their ideas without any form of payment or reciprocity? Even interns get paid when there are big opportunities.
But that’s just the point. If you don’t know the expected size of the opportunity, how do you know if participation and crazy terms are worth it? Whether it’s $400K, $4M or $400M, how can you calculate the ROI without the revenue? Short answer: you can’t.
That’s why the majority of agencies decline this type of offer. There’s too much risk / potential downside. Some agencies – if they perceive a large enough upside – will take a calculated risk. But should they have to?
Because let’s pretend for a minute, agencies are okay with the payment terms. There is an alternative to getting paid faster (by using a third-party loan provider). You give up typically around 1% for quick payments.
But you still must give away the milk for free, as far as the IP rights go. It provides no incentive to buy the cow (and in return, to use your agency vs. others). You’re only a part of a roster, so how is that winning? It’s one thing to keep someone honest and on their toes, it’s another to ask them to jump on one foot, rub their stomach and head, whilst singing a song.
There has to be a better way for the client to find an agency, and for the agencies to be able to respond and showcase their talent, without a huge financial risk being put upon them.
Not all of the blame can be put on the client-side. Marketing Procurement and Marketers need to find a better way to properly vet and evaluate which agencies to put on their roster. Could the ever increasing implementation of technology and online platforms hold the key to a fair, open and timely data driven marketing procurement process? One thing is for sure, the RFP process is too short – it doesn’t allow agencies sufficient time or room to showcase their talent. It turns into the dog and pony show instead of focusing on the true strategic insight and value they bring.
If you layer in the expedited timelines, a lack of communication between the client and buy-side (add in the procurement function) the entire exercise can lead to sub-par results later in the relationship. The process itself fails to fully take into account the qualitative aspects that are so critical to the business’ success. There are some things KPI’s can’t track.
This is why it’s so imperative to have procurement people who understand the qualitative and quantitative aspects of selecting a new agency. They need to understand the nuances of the request, whilst respecting the creative and intangible aspects that can’t always be measured with a calculator.
Once you have the right support for the RFP, it’s time to start thinking about re-defining the process. But what will it look like and how long will it take? It’s hard to say which best practices to adopt but we can start with what not to adopt. Knowing what not to do is often a good way to find out what to do.
We’re not the only ones to think this way. Check out Forbes Council Post: How The Traditional RFP Process Fails Creative Agencies And Brands. Where they layout major limitations to the RFP process and propose a mutual vetting as a solution to this process.