Advertising account pitches that return to haunt you

By DITA DE BONI marketing writer

The story is a common one in the communications and advertising industries: a company slaves over a pitch without winning the account only to sees its ideas implemented later down the track.

"I poured my heart and soul into it," says one PR agent, "and was sure I'd gone in with a pitch that would win the business. But we didn't get it - and I heard that no one did."

The up-and-coming web company had played a crafty game.

"I think all it did was solicit for free ideas in the guise of a pitch to avoid paying for a public relations consultant," the agent wails.

Although the old-style pitch process is waning in New Zealand, an agency's business is still about winning accounts. And pitches remain a necessary part of that battle for many. Like a chef preparing exotic food for customers who may or may not eat what has been served, they largely take their chances.

And it is not cheap: it has been estimated that a full-blown creative pitch costs upwards of $50,000 by the time research, labour, materials and extras are added.

Cases of "theft" of ideas after a pitch process are common, say lawyers, especially given the trend for companies to include a smallish payment for creative as a "commission" and so gain ownership of copyright for material presented.

But ownership of ideas and material remains with the originator. Proving ownership is the grey area. There are ways consultancies can better protect their ideas before going into battle.



Buddle Findlay senior associate Jane Montgomery says few practitioners take problems with loss of intellectual property to lawyers, either because they don't want to prejudice a future relationship with the client, or suspect the charge of theft cannot be proven, "and are often not aware their rights have been infringed."

But intellectual property - a phrase used to describe patents, trademarks, copyrights, designs, trade secrets and the like - is one of the most important ingredients of most communications business.

Ms Montgomery says she would like to see more agreements between parties undertaken before pitches take place "and someone should record that agreement on a piece of paper, at the very least."

She offers three key ways to protect information:

* Fully define the information you wish to protect.

* Make it clear to prospective clients the information is confidential, and should not be used or disclosed.

* Both parties agree to keep the specified information confidential. Ideally, this agreement should be in writing and can be as simple as both signing a letter.

Other hints for safeguarding material include owning as many intellectual property rights and registered trademarks on material as possible, and closely monitoring the use of your agency's intellectual property over time to ensure renewal fees are paid and registrations are up to date.

"I realise that actually many see an agreement as too legalistic and too much of a formality," says Ms Montgomery. "But the idea [of an agreement] can be raised in friendly manner - they are in the communications industry, after all."

Earl Gray, a Simpson Grierson lawyer specialising in intellectual property, adds a few other tips for avoiding a stoush.

"The key is to draw breath rather than go headlong at the amazing opportunity that seems to have presented itself. Do a bit of research, check out the prospective client to ensure it is kosher.

"Ask about the process the prospect will use to evaluate your pitch and who else is being asked to pitch. "And don't be afraid to state that your ideas are not free - you're in the business of creation and that's what the clients pay for."

Mr Gray has some other tips:

* Read the request pitch for "fishhooks" such as rights to use material or ownership of rights in material, even if you are not finally given the account. "It is quite common that a business will include these rights now. Some are quite legitimate. Others are just a try-on."

* Include in the footer of each page of your response a confidentiality and copyright statement, such as "Confidential. Copyright 2001 Flowerpot Hats Ltd."

* Agencies can consider supplying two prices for their creative: one (higher) if the prospective employer wants to use the creative but does not engage it for the account, and the other (maybe zero) for the creative if it is engaged for the account.

"In a normal pitch, there is no commissioning as such. You are volunteering the creative and are not being paid for it. In that case, intellectual property rights in the creative remain with you. If the request is worded as a commission, and the prospect agrees to pay for the creative, the rules are different - even if payment is not actually made," says Mr Gray.

Just "handing over the presentation does not itself change the intellectual property ownership position," he says.

"However, the client prospect may not realise this, which is a good reason to ensure that everyone clearly understands who owns the intellectual property and what use can be made of it."

In the US, "agency brokers" are gaining currency. They negotiate the relationship between pitching agency and prospective company and step in if things go pear-shaped.

But in New Zealand, third parties are still generally lawyers and cementing an agreement in law is not cheap. Ms Montgomery says the process can take up to five hours for very complicated situations where many facets of a campaign have to be considered.

But she says the $500 outlay to seek proper advice before a pitch is nothing compared with the lost opportunity costs of a stolen pitch, which she puts at around $100,000.

Seeking someone who is knowledgeable about this new and expanding area of law is important too: "Not your suburban conveyance lawyer."

Proving theft of ideas is possible, but more difficult without some form of agreement, she says.

"If a company you have pitched to does seem to have lifted some of your ideas without your permission, you must seek advice quickly so as to prevent the information from being further misused."