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Malaysia’s TNB charges RM5,000 pitch fee to weed out ‘non-serious’ agencies

A recent pitch for Malaysian utilities company Tenaga Nasional Berhad has been called out by the Association of Accredited Advertising Agencies Malaysia for charging a non-refundable fee of RM5,000 (approximately S$1,600) from each agency that intends to pitch for its business.

The account for TNB is currently handled by IPG Mediabrands’ agency Reprise in Malaysia. IPG Mediabrands had initially won the consolidated business for TNB after a pitch in November 2017 – the contract at the time was expected to last just six months. 

Speaking about the most recent pitch, 4A’s of Malaysia CEO Khairudin Rahim said: “The 4As found  it odd that a tender fee be levied even for the preliminary request for information (RFI) stage and wrote officially on October 18 to TNB stating this is an unfair requirement and appealed that the fee be waived, at least for the RFI stage.”

TNB has however replied that it intends charging the fee and that doing so will encourage participation only from serious agencies. And that fees are a standard practice across all of its tenders.

In a statement, Rahim said: “If TNB is concerned about seriousness of bids, there are other qualifying criteria that could be applied as a prerequisite. In addition, a simple review of the agencies portfolio or work, case studies, client lists, and client testimonials would also be a clear indication of their seriousness.”

He also pointed to the effort and expense that goes into creating a proposal and said: “Every agency’s pitch is customised and complex involving hundreds of man hours and external cost in order to develop a worthy proposal that it is prepared to defend.”

He further clarified that agencies do not pitch just to “test the waters” and said: “TNB should not generalise nor assume that some agencies might decide to enter the tender, and waste their evaluation panel’s time, even if they know they are not qualified, competent, nor have the resources and talent to deliver.

“Agencies also value time. Agencies do not participate in pitches just to ‘test the waters’. Far, far from it.”

Reprise has declined to comment on the pitch when approached by Mumbrella.

The full statement from Khairudin Rahim can be read below:

A pitch for the Tenaga Nasional Berhad (TNB) recently issued an “open tender” invitation on October 14 for agencies to submit their company information by  October 29. A non-refundable tender fee of RM5,000 per agency is part of the TNB procurement requirement for all parties who submits for this tender.

The 4As found  it odd that a tender fee be levied even for the preliminary request for information (RFI) stage and wrote officially on October 18 to TNB stating this is an unfair requirement and appealed that the fee be waived, at least for the RFI stage.

TNB has studied our appeal and replied the tender fee requirement shall remain. They want to encourage serious parties to participate from the RFI stage onwards to put forward the best offer and to not waste the time of their evaluation panel. The Tender Fee is their way to ensure only serious parties get involved and is applied for all types of Tender.

First and foremost, the 4As is of the opinion that is unreasonable to demand a fee from advertising agencies merely to submit their credentials at the Request for Information stage. If TNB is concerned about seriousness of bids, or the ability of agencies to deliver and execute campaigns, there are other qualifying criteria that could be applied as a prerequisite. In addition, a simple review of the agencies portfolio or work, case studies, client lists, and client testimonials would also be a clear indication of their seriousness.

Furthermore, every agency’s pitch proposal is customised and complex involving hundreds of man hours and external cost in order to develop a worthy proposal that each agency is prepared to defend and uphold its effectiveness reputation.

This includes uncovering relevant consumer insights, articulation of a credible brand purpose, an inter-connected communications strategy, creative work that drives marketing effectiveness and finding ways to harness the use of people as a powerful brand medium. Each proposal includes the elusive, inspirational “idea” that with consistency and properly practiced creativity, can take the brand from good to great.

Perhaps most crucially, when an advertising agency decides to pitch for any company’s brand, they pitch to win on merit. We will participate if, in our judgment, the selection panel is unbiased. We seek reassurance that an objective scoring and evaluation system will be adopted by the advertisers selection panel. Not having one raises alarm bells and triggers a withdrawal. Not giving a clear pitch brief will also trigger the same. A clear, succinct, and inspirational brief directly contributes to great work.

Finally, every decision to pitch is a serious commercial decision made by the head of the agency as we too cannot afford to waste time in pursuit of any type of new business because the time and cost we laboriously spend preparing for each pitch (aiming for the better strategy and the better ideas) has to be carefully considered and balanced against ongoing commitments to deliver for our existing clients.

So by nature we are absolutely serious whenever we make a decision to pitch.

TNB should not generalise nor assume that some agencies might decide to enter the Tender, and waste their evaluation panel’s time, even if they know they are not qualified, competent, nor have the resources and talent to deliver.

Agencies also value time. Agencies do not participate in pitches just to ‘test the waters’. Far, far from it.

The 4As unfortunately was not able to influence a change in TNB’s practice for this particular Tender. We will however re-appeal and engage with them in order to hopefully come to a fair resolution for future agency searches/pitches.

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