THAILAND: Local agencies agree on new pitching fees

Charges cover costs, protect creative work

Bangkok Post
Thursday, December 25, 2003

By Bamrung Amnatcharoenrit

Major advertising agencies will start charging companies the costs of preparing advertising and consultancy plans on contracts they fail to win.

Effective Jan 1, a flat rate of 100,000 baht will be billed for a full "above the line" campaign pitch, including creative services, sample work and strategic plan and 50,000 baht will be charged on a pitched plan presents only a strategic idea.

The 44 leading advertising agencies, which together make up more than 80% of the total billings in the industry, have agreed to the fee structure, which is the first of its kind in the industry.

They said the structure was a fair way to compensate all agencies invited to pitch for particular contracts.

In particular, it will help protect the intellectual property of the creative and strategic plans outlined during a presentation. Even by paying the fee, companies will still not be allowed to freely use the ideas pitched to them.

Parames Rachjaibun, president of the Advertising Association of Thailand, said the new fees would not be charged to state-run agencies or those with 50% state holdings.

Also, major international companies with regional and global businesses or those that are using services from several ad agencies at the same time will be exempt from being charged the fees.

The pitching-fee collection plan was initiated in 1997 but was never put into practice due to adverse economic conditions following the financial crisis.

Mr Parames said the set collection fee would not offset all of the actual costs incurred by advertising agencies in preparing plans, but the system would force companies to become more selective when inviting agencies to pitch campaigns to them.

As part of the new plan, the association will act as a broker for campaign pitches. After an agency is invited to offer a campaign plan, it will inform the association, which will in turn will inform the company of the fee charge.

The association will deduct 20% of the total fee amount for expenses and its future activities.

For member agencies that defy the rule, the association will issue written warnings and require that the 20% be fee to handed over to it.

Violators of the industry agreement will be also be prohibited from taking part in the association's activities such as the AdFest awards competition for one year.

Mr Parames said the regulations could be fine-tuned next year if needed.