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AAAN backs pitch fee payment, charges multinational clients on agency remuneration

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The Association of Advertising Agencies of Nigeria (AAAN) has thrown its corporate weight behind the lingering controversy as to whether or not multinational clients should comply with payment of pitch fee and pitch rejection fees to advertising agencies working on their business.

The Association declared it was in full support that agencies be properly remunerated and well compensated through payment of pitch fees to argument their strategic and creative inputs, adding that by so doing agencies would be in better stead to deliver optimally in building the clients’ brands.

Making known the Association’s formal position on the controversial subject, President Ikechi Odigbo disclosed that the association was working out an effective regulatory framework that would see to it that clients complied to the fee payments, adding that what was needed to make it work is collective will of business players on both the clients and agencies’ side.

Yes, we can only lead from a statutory side. It takes a kind of organic or collective ownership of a position that pitch fees and pitch rejection fees must be paid before it becomes effective.

“What we have told our member agencies is that if you are invited for a pitch and you realised that it would undermine your opportunity to directly engage the client to say I want pitch fees before I pitch, you will have to inform us. Once you inform us as an association, we will now communicate the prospective client,” he said.

He added: “Without mentioning that agency’s name we would say to the client; it has come to our notice that you are conducting a pitch, please note that based on our regulatory framework as an association, our member agencies are supposed to be paid xyz amount for pitch fees for strategy and for creative purposes.”

The Association boss answering to MARKETING EDGE correspondent’s questions on the occasion of the 46th AGM/Congress of AAAN which ended recently in Lagos,  commented also on the issue of traditional consultants veering into, and outsourcing advertising businesses, pointing out that the trend  poses  no threat to growth of the  business  but rather  a well anticipated development.

According to him, the percentage on consulting was far much less than it is in advertising, media and productions, and to that extent it was unexpected that consultants would naturally wish to cut out a piece of the pie on advertising business.

“It’s only to be expected because if you have a global perspective of the share of revenue, you would find that the consultants earn much less than advertising and media. They earn less than the pie of the client. The percentage on consulting is less. Advertising, media and production is about five times the size of consulting.

“And if you were in their shoes and you are able to get to the board room, you would say why am I not making more money by adding the advertising offering into my portfolio of services. Having said that, it’s not as clear cut as we think. So, you see a lot of cross fertilisation of offerings and I believe at the end of the day, that is where this session becomes most relevant. It’s not so much about what you offer as much as the level of innovation than the level of strategic input and value you bring to the table,” he said.

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