Pay-to-play pitches putting fair competition at risk, global agency body warns

VoxComm, the alliance of communications agencies associations, has taken the unusual step of publishing what it describes as an op-ed calling out pay-to-play pitches for undermining fair competition.

In the op-ed VoxComm, which includes the UK's IPA and the American Association of Advertising Agencies (the 4As), said: "Agencies are being asked to pay intermediaries for the privilege of pitching for accounts. This scheme is on the rise and threatens the value and competition our industry delivers."

VoxComm highlights intermediary models that ask agencies to pay an upfront fee or a percentage of client billings if they are successful. In some cases, VoxComm said, the cost burden is entirely placed on agencies, with advertisers assured that they will not have to pay any fees themselves.

The organisation added that such practices may limit advertisers' access to the best agencies, as some agencies may refuse to participate in paid pitch schemes or join clubs.

"We fear such pay-to-play practices are now putting at risk the foundations of value and fair competition in our industry," VoxComm said.

Paul Bainsfair, director-general of the IPA, said: "We can't expect everyone to be an expert on the advertising agency market, but consider a top-level headhunting firm: a quality headhunter won't just work with candidates who've knocked on their door. Instead, they'll actively search the marketplace for the best talent and attract the right candidates for the job. This should be the principle these intermediaries follow. If they don't, we must question whether they're truly fulfilling their essential role for advertisers." 

The practice emerged in the UK but has become an international issue and led to downward pressure on fees, the op-ed said.

Under the subheading "Why this is unethical", VoxComm said while some of this practice is blatant, some of it is subtle. It said: "Anecdotally, it appears that those agencies that pay a fee to consultants for training and consultancy on new business are more likely to be the same agencies that end up on shortlists managed by the same intermediary."

Marla Kaplowitz, chief executive of the 4As, urged marketers to scrutinise the business models of search consultants they work with. She said: "Marketers should ensure that they have clarity on the business models of the search consultants that they're working with, and understand the ethical consequences." 

VoxComm said: "Fairness and transparency are not just ideals that bolster confidence in our industry; they are the shining lights which show advertisers what they're really buying."

At the end of the op-ed, VoxComm called for advertisers to review their existing relationships with pay-to-play intermediaries and consultants and outlined best practice guidelines. The best practice guidelines suggest consultants make advertisers and agencies aware in writing of any paid-relationships they have with shops being considered.