RFPs, Tenders and Pitches - are they worth it?
Within AgencyLand the process of chasing and securing large accounts is well known, comfortable and “business as usual”. For smaller agencies and newbies, RFPs, tenders and pitches can be daunting to say the least. Let’s strip away some of the acronyms to find out the whats, whys and hows.
What do the terms mean?
An RFI (Request for Information) is issued when a company/organisation wants to gather information about a specific agency's services or products in an initial data-gathering phase. Usually with this data, the company can decide if they would like to further explore purchasing that service or product, and can qualify the agency for future conversations. An RFI can be a precursor to an RFP.
An RFQ (Request for Quote) is used when a company/organisation has already decided on a particular type of service or product, and wishes to see competitive pricing from multiple suppliers of that service or product.
An RFP (Request for Proposal) is issued when a company/organisation wants to purchase a service or product and makes the specifications available to multiple agencies so they can submit competitive bids for the services or products. RFPs are usually more comprehensive than an RFQ, and include service level agreements and quality standards.
A “tender” or RTF (Request for Tender) refers to the process whereby the company/organisation invites bids for large projects. These bids must be submitted within a finite deadline. The organisation then usually selects an offer or tender that meets their needs and provides the best value for money.
A pitch (in the advertising sense) is when an agency is trying to win the business of an company/organisation. Usually the incumbent (current agency), plus a number of other agencies will be invited to compete for the contract.
RFP, RTF and “pitch” are all, basically, the same thing - one company/organisation wanting to find a supplier (agency) to provide particular services. The terminology used will depend on who’s doing the asking. For example, a government department may ask for an “RFP” while a corporate company may request a “pitch process”.
An RFP or pitch could either be quite open (e.g. any agency may apply) or closed, whereby selected agencies are invited to pitch.
The request may be for the company’s total advertising/marketing business, or just a portion (e.g. digital, media, print, logistics, creative, above-the-line, below-the-line, activation, PR, etc.).
Agencies will be asked to first send in a written proposal, then some are shortlisted to make a formal presentation to the company, which may include presentation of strategy and creative concepts.
Should you do it?
That’s the million dollar question (maybe literally), and one that seems to be grumbling louder within the industry. Usually there is no monetary compensation offered for the time that agencies spend preparing for pitches (though I have heard of one company being given NZ$2,000 for their time). If an agency is not being recompensed for their time, then hard questions needs to be asked before you begin the journey.
Let’s think about this in two different ways. RFPs or pitches that contain creative concepts, and those that do not.
The reality is that if a company wishes to change their supplier/agency they need to know what other options are “out there” in the marketplace. They will wish to speak with various agencies, find out what they can offer, and try to compare apples-with-apples to make their decision. It’s easier for a company to put the word out that the contract is up for grabs, and then only those agencies who are truly interested will get back to them (thus saving time and money).
The types of companies which need to do an RFP or pitch process are usually offering BIG BUCK contracts. They will be large (or high profile) companies, organisations, corporations or government departments and the yearly spend would likely be upwards of NZ$1 mil per year, often times much, much more especially if they are prolific TV advertisers. It would be irresponsible for a company with a spend like this to not do a detailed RFP/pitch process.
I would hope that agencies understand the need to supply a detailed (written) response to a company’s questions. To this end they should be willing to invest the considerable man-hours required to prepare their proposal. A savvy agency knows that you need to “spend money (aka time) to make (a whopping amount more) money”.
The bone of contention seems to lie where a “creative pitch” is involved. The company may require agencies to submit creative concepts for a campaign, or logo or general brand concepts as part of the pitch process. This means the agency has to give away…for free…the very thing that makes them unique - their thinking, strategy and creative execution. If you are going to do a good job (and you need to in order to be competitive) a creative pitch is going to cost the agency thousands of dollars in studio time. The pitch will take multiple staff members away from doing paid work, and place them on a project which may yield nothing in return…or it may yield everything in return. That’s the risk you must decide if you’re willing to take.
What is your chance of success?
With most pitches and RFPs you will not (and sometimes never) know the other agencies you are competing against. It's nigh-on impossible to pre-qualify your chance of success based on knowledge of your competitors. Therefore you’ll need to make a call based on your own business objectives/situation and knowledge of the company. Here are some things to think about:
- Can you afford to do the pitch without jeopardising your existing client work and relationships?
- Can you afford the time and resources required?
- Can you afford not to do it? Do you need to increase your revenue, client base, reputation, etc?
- Do you have any existing clients who may object to you taking on this new client (e.g. are they a competitor)?
- Could you actually deliver the required services if you won the contract? Would you need to quickly employ more staff, get new suppliers, etc?
- Are you sure your agency is suited to this type of client? Are you aiming too high? Are the deliverables outside your core competencies?
- What do you know about the company and their relationship with the incumbent agency? Is it likely they would keep the status quo? Are they just using an RFP/pitch to sniff out a new creative direction, or to satisfy themselves that they will stay with the agency that knows them best?
Is the process worth it?
Even the mere chance to secure a large contract could be deemed to be worth it. Therefore, if you go into an RFP or pitch process with realistic expectations then that helps to soften the blow if you are not “the winner”.
The experience of participating in an RFP or pitch can hold great value. You’ll learn a lot about your agency; strengths and weaknesses will be highlighted; and you will have a base document that you will be able to use for RFPs in the future.
And, to the winner the spoils! Being the successful agency could mean your business grows exponentially in both revenue and reputation. On another note it could mean the difference between surviving or going under; meeting budget or laying off staff.
Is the process, time and money “worth it”? Only you will be able to answer that!
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