Kuala Lumpur, Malaysia – Khairudin Rahim, the CEO of 4AS Malaysia, has reiterated to advertisers, including multinational companies (MNCs) and GLCs to practice pitch disbursement as fair compensation to member agencies for their pitch work with said companies.
According to a recent statement from Rahim, 4AS Malaysia has been made aware of emerging practices amongst advertisers declining to provide pitch disbursements to its member agencies, with some advertisers having even gone to the extent of compelling 4As member agencies to secure a written exemption from the long-standing 4As pitch disbursement by-laws.
For context, the pitch disbursement requirement is intended to allow 4As members participating in a pitch to recover some of the costs associated with preparing customized strategy, ideas and creative submissions for the pitch.
However, all percentage of the successful member agency’s pitch disbursement allocation would be returned to the advertiser upon the results of the pitch being announced.
The commission has also noted that there are a few advertisers who call for sham pitches with the agency selection already made, prior to the presentation, while others have exploited agencies by using speculative pitches to garner free brand positioning, strategy, and creative ideas.
“Some advertisers have even tried to legitimize the practice by introducing clauses into their pitch requirements that demand the right to utilize or release an agency’s proposals, documents, concepts, ideas, and intellectual property regardless of whether the Agency is chosen in the competitive pitch,” Rahim said.
He also added that a pitch exercise should not be used as an opportunity to mine agencies for ‘free’ ideas.
“Unfortunately, part of the ongoing work that the 4As undertakes is having to highlight unfair and unethical practices by Advertisers including the requirement for exorbitant tender document fees, tender deposits, and demand for retention of pitch ideas,” he said.
For 4AS Malaysia, they are offering two best practices for advertisers: firstly to work with their existing advertiser-agency relationship and try to make the agency relationship work rather than thinking that a move to a new agency is necessarily the best answer. And second, using an agency’s credentials or past case studies as the sole selection criteria before engaging a new agency.
“The 4As believes that with clear understanding of the rationale, advertisers will support the need for pitch disbursements, and support 4As agencies in their drive to provide the best possible solutions to their prospective clients,” he concluded.
