jueves, junio 03, 2004

Bait and switch

Most clients ask, “who will work on my account”. They are usually not told the truth: the economics of big agencies mean that senior people have to spend most of their lives winning business and cross-selling products from other businesses owned by the agency group.

Agency X visited a small California biotech firm. The firm had told them that the total budget (fees and expenses) available for the year was US $300 – 400,000. Agency X brought its global head of healthcare, its European head of healthcare, its head of medical writing and two senior corporate staff (along with two more junior people) to the pitch. Their combined daily bill-out rate was over $20,000. When the client asked who would be working on the business, Agency X said the team they saw was the team they would get. The client did not question further how this would be done within the budget. After a couple of months, the account degenerated into a nasty feud. The client claimed they got very little of the time of senior people; the agency said that they were “over-servicing” (spending more time than they billed) because the $25,000 a month fee retainer paid for only a portion of the time actually spent by senior staff. Besides, the agency said, it had cost over $50,000 in expenses (not fees) just to win the business in a competitive pitch – they had to recoup this money somehow.

Was the agency untruthful?

Should the client have exercised a little more caveat emptor by asking how these senior staff would fit into the budget?

Has this ever happened to you? If you work for an agency, have you ever been involved in a pitch like this.

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