Telkom account: pitch imperfect
Advertising watchdog the ACA isn’t buying the argument by three suspended agencies justifying their fee-free pitches for the Telkom account, and Telkom is sailing above the fray
Three well-known agencies suspended by the Association for Communication & Advertising (ACA) for transgressing the industry body’s code of conduct governing tenders and pitches, are fighting back and appealing the decision.
DDB SA, Ireland/Davenport and Wunderman SA were all involved in the R80m Telkom account pitch. The business eventually went to WPP-aligned Wunderman (above-the-line creative and digital marketing), Demographica (direct marketing) and Retail Insight (retail and brand activations).
DDB, part of the Omnicom network, was the incumbent above-the-line agency.
The three agencies were sanctioned as the ACA believes the pitch was irregular because of the high number of agencies (15) invited to participate, and a decision by Telkom not to pay a pitch fee.
But Haydn Townsend, Wunderman group CEO, believes the ACA has got it wrong. He says Wunderman was simply acting as a "document vendor" to process paperwork on the pitch and that an entirely new agency, Fluid, has been created, which draws on best practice skills from a number of local WPP agencies including Wunderman.
He believes the ACA needs to develop new policies to cater for agency network pitches and has offered to facilitate a discussion between WPP and ACA.
Around the world, network pitches are becoming more popular as large complex clients require different skills sets that a single agency often can’t offer.
He further contends that global agency groups are not subject to ACA sanction as they are not members. The Wunderman agency that has been sanctioned, Townsend says, is a small direct-marketing agency with peripheral involvement in the Telkom account.
The same situation it seems applies to WPP-aligned Ireland/Davenport that was ostensibly part of the pitch because of its prior telecoms experience, having managed the giant Vodacom account. It is taking a softer line than Townsend, agreeing it should not have participated in a non-paid-for pitch, but says the penalty is too harsh.
All three agencies have been fined and their membership suspended for a year.
Ireland/Davenport claims the penalty could have a negative impact on efforts to transform, and has undertaken an extensive internal review of its pitching processes.
Emmet O’ Hanlon, who runs DDB SA, believes incumbent agencies should be allowed special dispensation in terms of ACA pitch rules, particularly on pitch fees. He says his agency had the most to lose given that 45 people working on the Telkom business are now facing retrenchment. He says he was also facing holding-company pressure not to lose the business.
It seems that the agencies taking on the ACA are in for a tough time.
ACA CEO Odette van der Haar says: "The biggest threat to our industry is that more and more clients behave unfairly towards agencies during pitches. It is paramount to the sustainability of the profession that agencies stand united against these unfair practices
in order to maintain the value and currency of the profession."
Van der Haar says participating agencies essentially provided Telkom with free intellectual property and that the collective cost of the pitch ran into millions of rand in time and material costs for the participating agencies.
She’s also not buying Ireland/Davenport’s transformation argument, saying: "Small, black-owned agencies were invited to participate in the Telkom pitch process with little-to-no prospect of success. The ACA would therefore like Telkom to explain why none of the smaller SA agencies was able to secure any of the business on offer — especially since Telkom is such an iconic SA brand."
Apart from telling the Financial Mail previously that the company does not pay pitch fees, Telkom is staying out of the fight and declines to comment.