Posted by Rupal Parekh on 02.03.10 @ 05:58 PM
NEW YORK (AdAge.com) -- In a move that demonstrates a hardened stance on the issue of intellectual property, the 4A's is urging agency search consultants to adopt contract language that reflects advertising agencies' right to retain creative ideas presented during new-business pitches.
In a letter sent last night to some 30 major industry consultants -- which marketers hire to help find and evaluate prospective agencies to handle their ad business -- the trade organization wrote: "Members of the 4A's new business committees would like to encourage you to consider including a stipulation in all of your agency search agreements that specifies the rights to intellectual property created by agencies during the review process remain the property of the agency until the marketer either hires the agency to execute the work or the parties agree to a commercially equitable payment for the assignment of usage rights."
The 4A's letter was endorsed by nearly 50 Madison Avenue standouts, such as JWT, Anomaly and R/GA, which sit on the 4A's new-business committee.
The intellectual property debate is hardly a new one, but the trade group contends it is growing into a bigger problem, and more ad agencies are griping about it. As the recession squeezes agencies' margins -- and as more marketers are turning to their procurement departments to try to put a specific price on marketing costs -- Madison Avenue shops are trying to protect their piece of the pie. "There are more reviews that request some form of speculative agency work," according to the letter. "Because of the economics associated with changing industry dynamics, the importance of equitably structuring agency-developed new-business IP has become more compelling."
The 4A's says the issue has taken on increasing importance as the economy picks up for some marketers. "Since Labor Day, the level of review activity has picked up noticeably, and more and more reviews are requesting some form of speculative thinking or work," said Tom Finneran, executive VP-agency management services at the 4A's. "That may well be a byproduct of marketers and CMOs being under so much pressure for ideas that can move the needle now."
Rising tension
According to Mr. Finneran, the 4A's has seen a spike in recent months in agencies complaining about clients' desire to own ideas and work shown during the new-business process. "The nature of the complaints is that [requests for proposals] will come out, and, buried in the 14th paragraph of a [non-disclosure agreement], is a paragraph or sentence that says, 'Oh by the way, and in addition to protecting the confidentiality of our agreement, we the client want to own all ideas and work product that comes out of the review process.'"
Based on a number of search consultants Ad Age spoke to about the letter, the agency search community seems to generally agree with the sentiment outlined by the 4A's. However, they don't necessarily agree there's been a rise in advertisers asking to own ideas presented by agencies during pitches -- and consultants don't think the burden should fall on them to regulate the intellectual property issue.
"We totally agree with the 4A's stance on this, and we've always adhered to the same guidelines they are articulating," said David Beals, president-CEO at consultancy Jones Lundin Beals. "Having said that, we've not had a client in the 10 years I've owned this company that has disputed this take. We don't run into clients that unfairly ask for ownership ideas."
Additionally, said Mr. Beals, "What we don't agree with is the 4A's asking us to exercise some type of contractual formal agreements with our clients. ... This is a legitimate issue, but it's between the agency and the client prospect, not something to be asking the consultants to do. The agency should be the one to make the stand that 'No, we're not going to participate if they ask us to give the ideas away for free.'"
Consultants report that if marketers do request to own ideas, they'll be willing to pay for them. The biggest reason why advertisers ask to own ideas at all? They are fearful of being sued by a non-winning agency that happens to produce a similar idea to the winning one, consultants say.
Uncomfortable push
"It isn't because clients are assholes," said Hasan Ramusevic, owner of Hasan & Co. in Raleigh, N.C. "There are a lot of legal factors to consider."
Mr. Ramusevic said that about a year ago he voluntarily altered language in contract agreements to reflect that, in a pitch scenario, agencies should retain ownership of ideas if they are not the winning agency. Still, "I don't know how I feel about the 4A's pushing that on us," he said.
"I think that this has been an issue that's ongoing, not a rise in it," Mr. Ramusevic said. "The difference is that the agencies didn't fight back on the issue as much as they are today. There's a heightened awareness, and agencies are more willing to speak up about it."
Joanne Davis, head of Joanne Davis Consulting in New York, addresses the issue by requiring agencies to sign a letter acknowledging that, in the "likely situation" where multiple agencies submit similar ideas based on the same brief, or ideas similar to ones the client has developed internally, they will not seek to enforce copyright protection.
Ms. Davis said the problem manifests itself during pitches more often than one would think, recalling a situation a few years ago when two finalists in a pitch for a retailer presented the same tagline.
Still, Ms. Davis thinks the fact that 46 of the 55 agencies on the 4A's new-business committee endorsed the letter sent last night is noteworthy. "I was impressed with the number of agencies that signed it -- it shows you it's a widespread issue that affects large agencies, independent agencies, holding company agencies ... it's not just a few agencies who feel that they've been wronged complaining."
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We propose another option. Using the internet to get new clients and sell your existing work online seems a good alternative. For once, no downside for the agency but a whole new global market that you just can't get to, even if you're a multinational.
Repurposing may not have worked in the past as, in our view, the agencies have limited geographic reach. You are unlikely to find another airline/bank/fmpg in your city. Our company launched last year to promote unsold pitches and other bottom drawer ideas to a global market. It's too expensive for one agency to do that on their own, but as part of the collective we are setting up, it becomes possible and commercially plausible.
We suggest clients that offer paltry sums of money towards the pitch can keep their money, we keep the option to resell. You could resell/repurpose in another part of the country or in an overseas market.
I agree with the observations by Hankblank, Bruce in Toronto and Charles InIn,about similarities appearing in solutions. Clients rarely divulge competitive information at pitch stage with agencies paying for research and development material. The result is often an advertising proposition based on an industry claim vs a brand specific promise. However, given the popularity of pitching among clients, it's still sellable and most importantly, works with consumers.
Let's make the system work for both sides for a change.
Vivian Greig
www.creative-exchange.com
Protection of creativity
Art. 43 – Creatives projects
Marketers planning to hire an advertising agency or professional consultant to join them on one or more creative projects to participate in a tender, or in a joint or individual consultancy, should refrain from using or imitating any creative or inventive aspects of the project(s) that are rejected or not selected, for three years as of the filing date of such material with the Secretariat of the Istituto dell'Autodisciplina Pubblicitaria, such material being filed in a sealed envelope by the advertising agency or professional consultant concerned, complying with the Regulation.
Art. 44 – Protection Notices
In order to protect the creative elements of a marketing communication, isolated messages released in anticipation of and to safeguard a future communication campaign must be filed and published in compliance with the rules and regulations of the Istituto dell'Autodisciplina Pubblicitaria. The filings in force may be examined at the Institute's offices and are published, for purposes of information only, on its website.
The protection is valid for eighteen months starting as of the date of publication.
Art. 45 – Marketing communication carried out abroad
Marketers wishing to protect marketing communication carried out abroad from the threat f imitation in Italy, may file copies of such communication with the Secretariat of the Istituto dell'Autodisciplina Pubblicitaria, as per the Institute's regulations.
The filing confers priority rights valid for a period of five years as of the date of filing.
Best regards
Felix Hofer - Firenze (Italy) fhofer@hltlaw.it
Certainly there is a "fear factor" of not wanting to get a protest letter later on if an ad campaign looks even a bit like one pitched by a losing agency. But over time there has become more of an "I want to own it because I can dictate to you agency" that I find more than a bit troublesome from a fairness or ethics standpoint.
Most agencies are sophisticated and understand what they are doing. Some are desperate to get into the mix. A few are like the proverbial sheep to the slaughter.
There are a lot of legal factors involved as indicated by others. What if the campaign you present is basically the same as one that happened to be developed internally? Where does the burden of proof lie in terms of what came first? Perhaps when an agency does engage in a search, they should acknowledge that they are subject to the ideas being owned by the agency, even if they happened to have something similar developed internally. Maybe that's the price they have to pay for exploring?
sorry
Makes the identification of who owns the idea very difficult.
That being said I repect that agencies want to protect their proprietary thinking.
Take care.
Hank Blank
(2)Select the right agency in the first place.
If you spend large sums of your stockholders' money on advertising, and if your profits are dependent on its efficiency, it is your duty to take great pains to find the best possible agency.
Amateurs do it by cajoling a group of agencies into submitting free campaigns, on speculations. The agencies which win these contests are the ones which use their best brains for soliciting new accounts; they relegate their clients to their second best brains. If I were a manufacturer, I would look for an agency which had no new-business department. The best agencies don't need them; they get all the business they can handle without preparing speculative campaigns. The sensible way to pick an agency is to employ an advertising manager who knows enough about what is going on in the advertising world to have an informed judgement.
Ask him to show you represetnative advertisements and commercials from the three or four agencies he believes to be best qualified for your account.
Then call some of their clients on the telephone. This can be particularly revealing when you call advertisers like Procter & Gamble, Lever, Colgate, General Foods, and Bristol-Myers, who employ several agencies; they can give you cross-bearings on most of the top agencies...
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Even though this is 44 year old information, it still holds true. Clients need to become involved with their agencies intimately, where observation of chemistry exists and an intent on doing business results. The worry about IP will become less of a problem.
David Berg/Business Development Director
Merge Design & Interactive
www.mergeworld.com
www.twitter.com/mergeworld
Power goes to the agency.
Paola Schifino, Principal
Schifino Lee Advertising + Branding
Jane Bedford
President, The Bedford Group
When I ran an agency I stayed clear of any pitch involving a search consultant (and SRI's the worst). It meant the client wasn't fully invested in the review. My new business win rate was above 60%.
The last big pitch I ran as a client was for an account that spent $300 million plus yearly on advertising. It was for the creative portion and started with a short list (10 agencies) which my team and I visited. Narrowed it down to a short list of 3 with an identical assignment. Each agency had full access to us throughout the process. Some did a better job of that than others. And each finalist was paid 6 figures for their hard work.
Now that's how to run a pitch. Needless to say the winning agency's work was very effective from the beginning so we reaped some great results which they benefited from as part of an incentive program.
That's how you run an pitch.
Final advice - boycott all search consultants. Soon prospective clients will get the message.
1. due diligence
2. research
By clients and agencies alike.
If you can't choose an agency without seeing spec work (that will never see the light of day, incidentally) think twice about why you're hiring an agency. Otherwise, buyer and seller beware, your marriage may be doomed before you've said "I do".
I can't imagine having to call an agency to tell them "they like your ideas, they want to buy them, but they're not going to hire your firm." Forgive me but isn't that like marrying the girl you love but keeping the girlfriend whom you had better sex with on the side? Your mother would tell you to run away from a jerk like that.
Yeah, I said it.
David Wiggs
Hitch
PS: There are hacks and sages in every business and clients will pay for value where there is value. Let's respect our clients enough to recognize they're smarter than some are giving them credit for.
We've always verbally addressed the spec ownership issue with the client, but it is a legal agreement between the client and agency, not the consultant and client.
Since clients and participating agencies sign a mutual non-disclosure agreement (MNDA), why not take it one step further.
Rather than trying to put the onus on consultants to add a "creative ownership" clause to its contract with the client, how about if the 4A's and ANA jointly developed an Client-Agency Pitch Agreement (CAPA) with consideration to 1)spec creative and IP ownership, 2)client-supplied confidential info on which spec creative is developed and how it may alter ownership, 2)ownership of spec creative when a pitch-fee is paid by clients (which is typically done to gain ownership of work and eliminate issues when there is similar ideas generated by a winning and losing agency), 3)limitations or exclusions on reuse of creative by losing agencies, 4)exclusions and protections for client when there are similar ideas from multiple agencies, etc.
And get input from some ethical consultants.
We'd be happy to provide our clients with such a document...which of course their own inhouse counsel would have to vet...for use on a pitch.
Now...is this just the first step by the 4A's to classify ALL agency work as IP, even work by agencies under contract? Over the past few years we've seen major agencies during contract negotiations with existing clients trying to push for IP-type ownership by placing limitations on where or when the creative can run, and so far clients have refused.
I'm certain we'll see lots more on this hot issue.
Laura Bajkowski
Principal, Bajkowski + Partners
However, I do strongly agree that each agency has to take a stand and act on what they believe in, and if, for some, not working with search consultants is their preferred approach, then more power to them. I tell agencies all the time that there are all kinds of ways to win new business, and winning it through a consultant-led search process is only one of them.
Any agency that jumps into a competitive review, whether led by consultant or client, without knowing and understanding the ground rules (including idea ownership) has only themselves to blame. What is even more shameful are agencies that talk a big game on their "principles", then go ahead and violate them and pitch anyway.
I spent twenty years at an agency and have said every bad thing about search consultants that can be said, so I take absolutely no offense at the potshots. But, it is about time that agencies stop blaming the search consultants (or bad clients, or procurement, or whatever other culprit) and start focusing on their own principles and behavior. Run your business properly and to the standards you want and stop blaming others.
And, along the lines of my quote in this article, it is about time the 4A's stops pushing every client issue their members have on the consultant community. By all means, call out the bad practices and bad consultants, and we'll support you. But stop pretending that a letter to consultants and a piece in Ad Age is what is required to correct bad client behavior.
Dave Beals
Laura Bajkowski