Rethinking Retention: How fair compensation can improve agency-client dynamics

The landscape of media agency pitches in India has been a topic of intense discussions and also a bone contention, particularly concerning the evolving dynamics of client-agency relationships and the challenges faced within the industry.

Naresh Gupta, Co-Founder and Managing Partner, Bang In The Middle, shared his observations on the unchanged nature of the pitch process despite the advancements in the ad industry, and said, “The clients routinely are putting out posts on social media looking for agencies, the average participation of agencies in a pitch is often in double digits, procurement and thus, the final price holds much more importance than the creative or strategic ability.” This observation highlights a concerning trend, where the emphasis on procurement often overshadows the value of creative and strategic prowess, making the process lengthy, cumbersome, and expensive.

Discussing the decline in retention rates globally, Gupta emphasised the lack of comprehensive data in India regarding pitches, winning rates, and retention rates. He suggested a correlation between declining creative quality and the pursuit of lower fees by brands, indicating a potential area of concern for the industry.

On the contentious issues of pitch fees and Intellectual Property Rights (IPR) ownership, Gupta painted a bleak picture, lamenting, “The pitch fee and IPR is loaded against agencies. That’s it. There is nothing that anyone wants to do about it.” He highlighted the vulnerability of smaller agencies in protecting their ideas and intellectual property, indicating a pressing need for industry-wide solutions.

Shifting focus to client-agency partnerships, Gupta noted the dwindling prevalence of long-term partnerships, attributing this trend to the changing dynamics between agencies and brands. He observed, “Today, agencies are not strategic partners, they are vendors who supply an undifferentiated product, called ‘creative’, and they have no way to demand either a premium or partnership.”

Jolene Fernandes Solanki, COO, Madison Media Ultra, provided additional insights from the agency’s perspective, highlighting the exhaustive nature of the pitch process and the importance of fair remuneration. She stresses the need for pitch fees to mitigate random pitch invitations and compensate teams adequately for their efforts. Solanki emphasised, “Clients have lately realised that pricing makes partnership only transactional and not the best.” She suggested that fair remuneration fosters stronger partnerships, leading to increased retention rates.

Furthermore, Solanki added, “Depending on the investments, the process can span from 30 days to even 3 months. It consumes a lot of time for agencies and stresses teams who work endlessly during this process. In this case, I believe pitch fees should be charged as it can help reduce random pitch invitations/ processes and agencies can also award teams additionally for the work on pitches.”

Both Gupta and Solanki highlighted the need for agencies to adapt to the changing landscape by focusing on client goals, investing in talent and resources, and aligning agency KPIs with client objectives. Despite the challenges, there remains hope for the industry to foster sustainable, long-term partnerships that prioritise creativity, value, and mutual success.