Four Common Negotiating Mistakes Agencies Make During the Pitch
Agency people have a reputation for saying “yes” to prospective clients when they’re anxious to win them over. To show that an agency is gung-ho and easy to do business with, agency leaders say “yes” to spec work, late hours and unreasonable deadlines.
That’s why, for some of us, negotiating contracts is terrifying.
I overcame my fear years ago while doing business development for a well-known digital agency. Our prospect was a financial services giant that was building its headquarters in a prominent midtown Manhattan location. I was pitching for a contract to do a series of interactive displays in the lobby. It was a big, important project for us.
The guy on the other side of the negotiating table was a project manager at one of the largest construction companies in the world. He was much older and way more experienced than me, and probably more accustomed to negotiating with teamsters than the likes of me.
I was as unnerved by him as I was of the legal language we had to unravel. But, he turned out to be an unlikely mentor and he taught me some important lessons:
Everything is negotiable
All those dense legal terms are just fancy ways to describe familiar business issues
When you are clear about which business issues are important to you and why, it’s easy to ask for what you want and to walk away if you don’t get it
My unlikely mentor made me more valuable as a business development person because I could close a deal while also negotiating with the best interests of my employer in mind.
In my experience, negotiating with their best interests in mind makes some agency executives queasy. It’s like standing up for themselves is rocking the boat.
Agencies and other creative services companies can go to dangerous extremes to please a prospective client. But being a good sport today can lead to regrets in the future.
Here are four scenarios during the pitch process in which you can regain some control and without sacrificing a win.
1. You feel pressure to sign an NDA quickly
Does this sound familiar? The prospect of your dreams just called to tell you they want you to pitch. But, they’re moving fast and before they can send you the brief, you must sign their NDA, which is complicated and mostly irrelevant to the business of advertising. What do you do?
Non-disclosure agreements are important, but
they don’t need to be complicated or long
they must always be mutual
they should never imply that the client owns your ideas during the pitch
If you don’t like the version you got from the prospect, and the prospect doesn’t seem interested in negotiating it (an early red flag, by the way), then use your own.
Don’t have your own? Get one in place pronto. In fact, get a set of standard legal documents in place. An NDA and a master services agreement are the important ones, but also consider standard templates for short-form terms and conditions, scopes of work or change orders.
2. You give away too much for free
Agencies hate the idea of doing work for free during a pitch, and yet they can’t help themselves. That’s a problem that’s not going to be solved in this—or any—one post. We await the day when a critical mass of brave ad agencies says “no” to spec work, opening the door for the rest to follow.
Fortunately, marketers are increasingly accustomed to paying agencies for ideas shared during a pitch. It’s usually not enough money to cover all your costs, but it does defray some expenses. It also settles up front the issue of intellectual property ownership but it also means the prospect takes possession of good ideas at a bargain price. This might be worth it to you, it might not be.
In the meantime, make it part of your pitch process to lay some ground rules up front. Tell the prospect what belongs to you and what you’re willing to give to them.
At the very least, add a standard copyright notice to the work you show (the proper format for a copyright notice: © 2021 Your Agency Name) and include an IP ownership clause in any written proposals you send to the prospect.
3. You start without a signed contract
Most agencies find it hard to commit to a niche, which has left us with a lot of “creative agencies specializing in all your branding needs” (sadly, another challenge too big to solve in a single post).
Because they can’t differentiate themselves through competitive positioning, agencies must rely on subjective factors that are harder to control. These are things like whether the prospect will like the spec work or if there’s good chemistry between the teams. They show themselves as likable and easy to do business with.
That makes saying “no” to starting work without a signed contract very hard, even if it means a potentially disastrous outcome.
You will never be in a stronger position than at the point when the prospect has agreed to hire you. The moment you do work for that prospect without a signed contract, you go from a position of greatest strength to a position of greatest weakness. The fall is quick and absolute.
Get out of your own head for just a minute and think about the prospect’s situation. Like you, they’ve made an investment in time, resources and even emotion to choose you over others. What’s the likelihood that they’ll walk away from that investment because you won’t start work without a contract?
Alternately, what’s the likelihood that you’ll be able to recoup costs, not to mention protect intellectual property or prevent poaching of valuable employees, if you don’t have a signed contract?
4. You don’t get permission to showcase the work
Take full advantage of your position of strength to secure the ability to publicly showcase the work you will do for that client.
Marketers would never hire an agency without looking at the work it’s done for others. Yet ironically, many feel it’s important to prevent that same agency, once they’ve hired it, from including their own work in the agency’s portfolio.
There are some very large companies that are notorious for this policy, and it becomes a business issue for an agency whether it’s worth abiding by their rules. Others are more open to negotiation, especially if the issue can be discussed in business terms and both sides are committed to a two-sided, collaborative relationship.
Don’t assume this is an issue you can bring up easily later when the work is done. Include it in the contract.
This goes for securing future client references too. Getting a client to approve the use of their name as a reference every time you want to use it is a huge time drain. Ask them to agree to it upfront.
Advertising is a services business, but sometimes I think we emphasize “service” more than “business.” It may be uncomfortable to think of doing anything that might jeopardize the chance of winning new business, but consider how much more you may be giving up in the future. Stand in your position of strength and negotiate agreements that will be as beneficial for you as they are for your clients.