Charity mark-ups, conflicts and copycatting – the worst extremes of client-agency behaviour
From unethical practices to outright copyright infringement, Trinity P3 has unveiled some of the worst examples of client and agency behaviour from across the Asia-Pacific region.
During a presentation at Mumbrella360 Asia conference in Singapore earlier this month, the marketing consultancy firm revealed how one agency claimed commission for bailing his client out of a charitable donation, while one Asia-based client used an agency’s speculative work to launch a new campaign.
Speaking during the recent conference in Singapore, Trinity P3’s founder and managing director Darren Woolley said all the examples were real-life cases the consultancy had dealt with, although he was unable to name the parties due to potential defamation
On the first scenario, Woolley said: “A marketer had a charity that was part of their strategy, but found themselves at a fundraising event unable to make the donation to the charity. They turned to the agency CEO and asked if they would make the $50,000 donation on their behalf, which the agency CEO agreed to.
“Later than month, the $50,000 bill turned up with a 10 per cent commission markup and the 7.5 per cent service fee, which the marketer was very disappointed about.”
Responding to that situation, panellist and former senior marketing director of KFC, Virginia Ng, said: “I would be very disappointed as I would just assume the agency would be in love with me and willing to help me out whatever the circumstances.
“This man agreed to help save me from my embarrassment, so I think it’s acceptable to pay the service fee but not the 10 per cent fee for the work done. In this case he probably just got his finance department to issue a cheque.”
Woolley: ‘Our investigation revealed that the ECD was a silent partner in the production company where 80% of his agency’s work was going’
Another incident encountered by Trinity P3 involved an “an award-winning creative director” who sent 80 per cent of his agency’s work to one particular production house. The total amount of work sent was worth around US$12 million, Woolley said.
“The clients [were not] complaining about the quality of the productions but about the price. Our investigation revealed that the ECD was a silent partner in the production company.”
Commenting on the scenario, fellow panellist and PHD APAC CEO Susana Tsui said: “This is very common some countries. Joking aside, why has the creative director a side project that he hasn’t declared? That’s normally mandatory. Not being transparent with the client is absolutely unfair.”
When asked about whether the agency knew about the ECD’s activities, Woolley elaborated: “The ECD said the agency [knew] about it and was part of an unwritten agreement for them to be able to supplement their income because the agency was unable to pay them the amount they wanted. So for the ECD it was very transparent, but nobody had told the client.”
Meanwhile, on the client side Woolley related one incident whereby a large family business based in Asia asked their media agency to buy a “premium package of out-of-home media”, which was quite sizeable for the quarter and an overall shift in the company’s media strategy.
The advertiser then revealed the OOH package came with a “sales incentive” of an expenses-paid trip to Cannes, Woolley continued. The agency was then told to recommend the package and “organise” the client to win it as ‘Advertiser of the Month’.
Another client, also based in Asia, was revealed to have used a speculative pitch “enthusiastically” put together by and agency and passed it off as work by their incumbent.
“The agency approached a marketer and the marketer decided to give them a brief to work on a particular project,” Woolley said. “The agency was incredibly enthusiastic; did a huge amount of work through different creative territories and lots of different expressions; did the creative presentation to a great reception and then heard nothing for months. Then one day, they saw work that looked very similar to what they had presented.
“When they approached the company, they were told: ‘Thank you for participating in the pitch, but the work was created by our incumbent… We hear about this kind of situation all the time.”
Responding to the example, Ng called the practise “unethical” but said it never took place during her three-year tenure at KFC.
“We can’t pretend this doesn’t happen,” she said. “Under my watch it didn’t. When we get an agency to pitch, it has to be clear what the timeline is and when we would get back to them. When you see the amount of effort that goes into an agency’s work, we should accord them the respect.”
Tsui added: “The [incumbent] agency was also at fault for accepting somebody else’s idea. If you were a proud agency you wouldn’t even entertain the same idea as someone else.”
This business really does attract a high calibre of leaders with integrity doesn’t it.
ReplyIts chicken eat chicken out there, and this just one of many reasons why millennials want nothing to do with our industry.
It’s so true that the entire value chain is so rusted at this stage mainly due to survive and ultimately to satisfy their personal greed for good incentives and power.
Some advertisers create pseudo pitches in order to steal ideas or want to retain ‘friendly’ gift giving agencies. Some advertisers love skimming agencies fees via annual pitches whilst their product price never goes that direction.
This creates issues for agencies. Some agencies will take kick backs or force publishers to give more ‘value’ to help the agencies’ pockets or bottom line. Some agencies even take risks in arbitraging to meet their financial targets or create value banks. Some agencies will provide lavish parties on a regular basis to advertisers to boost their ego. This is just the tip of the iceberg.
Whilst unethical, many stakeholders of the value chain have found ‘creative’ ways to beat the red tapes. When caught, the smaller players are implicated as seen many a times.
The entire decay is so prevalent that even the big and well know advertisers, agencies and publishers are involved. No one will own up, even the internal auditors of such organisation. I even remember when the internal auditors closed one eye on such practices because that year the holding company was having a tough time to meet its financial target. So much for having an internal audit department!
If we wonder why this is still happening, it’s about the bottom line, greed and survivability. Any cure ? Not in the near future for sure.
ReplyDear Truth Be Told, one of the things we have to constantly remind ourselves is that there are many very talented people out there working to provide real value to their clients and to their organisations. Yes, the problem is leadership or a lack of ethical leadership to support the efforts of these people. But just as the #metoo has galvanised people to speak up on sexual harassment and start the conversation to call out unacceptable behaviour, we believe that an open conversation on what client/agency behaviour is acceptable and what is not and why is a non-confrontational way to raise awareness and stimulate discussion on ethical behaviour – doing the right thing. You may think this is naive but the fact is there are more marketers, media professional, advertising professionals and more who want to do the right thing. If we can find a way to raise the issue when we see unethical behaviour in our organisations or with our clients and suppliers but simply asking is that acceptable to you or not? Hopefully taking a moment to consider the acceptability of our actions from all perspectives will bring about change.
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