Henry Tajer calls ‘bullshit’ on Toby Barbour’s take on the pitch problem, says DAN isn’t ‘the most desperate’ network

Dentsu Aegis Network’s CEO Henry Tajer has hit back at Publicis CEO Toby Barbour’s suggestion that the flawed pitch process is a business cycle reality.

The dispute kicked off on stage during a panel at the Media Federation of Australia’s inaugural MFA EX conference. Barbour responded to an audience question from Initiative’s chief strategy officer, Sam Geer, who said the industry is “only as strong as our weakest link”. If one agency decides to undervalue its product, it impacts the entire market, Geer said.

“So how do we present a united front, from holding group to holding group, and ensure that our product is valued and paid for appropriately in the future?” Geer asked the panel, which featured Barbour, Tajer, Initiative CEO Melissa Fein and Bohemia CEO Brett Dawson.

The panel (from left): Henry Tajer, Melissa Fein, Toby Barbour and Brett Dawson

Barbour emphasised that CEOs answering to publicly listed holding companies face results-based pressure, which impacts pitching decisions.

“In that environment, your decision isn’t always local … I can list three pitches we walked away from as contracts this year because we looked at the contract and there’s no way we could service that. But I can also list the three agencies that won them. So, in that environment, there’s different business needs and cycles that inform different decisions. That’s the reality.”

Not according to Tajer, who said, after a considered pause: “I think that’s complete bullshit.”

Tajer has been in the role since January, and prioritised the restructure of a holding group that has lost major clients, such as the $40m Mondelēz International account and $20m Amart account, and faced major staff movements. But his group isn’t the “most desperate”, he said.

“This is the biggest problem we have. The biggest issue we have is what the industry is doing in terms of pricing someone else’s business, the media’s business,” Tajer explained.

“If a company chooses to give away their product, then that’s their call. But when you start to price someone else’s product, that’s, I think, a much bigger issue. Historically, that’s always been set by the most desperate in the market, which you would assume would be Dentsu, but it’s not. So I would put to you that we have to educate ourselves.”

Bohemia’s Dawson agreed that education is the answer, asking the Australian Association of National Advertisers (AANA) to play a bigger role in educating clients on the difference between a cheaply priced service and one that is value for money.

“If it was as simple as a client sees four agencies that they like and a clear outlier, if that just sent a red flag into their mind that said ‘Something’s not right here. Do I want to be the CMO that appoints an agency based on something not right?’, not many would,” Dawson proposed.

But that wasn’t enough for Stephen Wright, a pitch consultant at Trinity P3 and audience member who followed up on Geer’s question because the answers were “woefully inadequate”.

“We run pitches, and invariably, on every pitch, there will be someone who puts a lowball price in. There’ll be an agency group who agrees to 120 or 150-day payment terms. And we look at these things and we go, well, ‘How can they possibly cover costs and make money?'” Wright told the panel.

“Now, we’re forced to send those offers through to the client, and procurement are hardwired to gravitate towards the lowest price. So from that point on, it’s a real struggle to get procurement back up to what are fair and equitable terms. That lowball offer poisons the well, and, across years, that’s what’s driven margins in the industry down so that you’re all struggling to turn the levels of profit that you should, and you’re devaluing the media product within the industry.”

Wright’s contribution prompted applause from the crowd, but the panel was less enthused.

“Mate, I answered the question,” Dawson said.

“I think the answer lies in client education and I think your role is incumbent on educating the clients. They are paying you to find the best agency for them.”

Initiative’s Fein pointed to her agency being joined by holding group Omnicom in walking away from a “big pitch” because of its payment terms.

“Kellogg’s,” Tajer interjected.

When Fein wouldn’t confirm, but said the pitch was well-documented publicly, he added: “She’s under NDA [a non-disclosure agreement] guys.”

In June, Fein’s boss, Initiative global CEO Mat Baxter, blasted the Kellogg’s pitch. He didn’t name the brand (probably also bound by a non-disclosure), but everybody knew exactly which “CPG [consumer packed goods] client” it was. That keynote has since sparked a wider, and deeper, conversation on what agencies, and clients, believe the future of the pitch process to be.

“And we’ve now been invited to another FMCG [fast-moving consumer goods] pitch which is live,” Fein continued.

“The first question before we will even think about putting a team together is: What are the payment terms and what are their objectives? Because if it’s purely about driving the price down, or crazy payment terms, we had that conversation [in the] last couple of weeks. We will not entertain it.”

Barbour nodded during Fein’s response, but the elephant in the room was that Publicis agency Zenith won the controversial Kellogg’s pitch, with its equally controversial payment terms.

“And obviously I take on the question about Kellogg’s,” Barbour said.

“It’s been a client in North America for 20 years. The MSA [master services agreement] is in place. It’s not for us to locally negotiate. We didn’t even have that opportunity if we wanted it.

“It might be seen as a woefully inadequate answer, but understand the reality of our business organisational world. A global MSA is in place. I can give you another CPG brand where we walked away. We were asked three times to review our pricing. ‘Are you sure this is your final and best offer?’ We didn’t come back, not once, but I know who did and I know who won.”

Tajer claimed that the answer to transforming both the pitch and the industry is simple, but perhaps harder than it initially sounds: the truth.

“It’s very hard to negotiate against the truth,” he said.

“The truth converts into trust and trust normally converts into profit, normally, if you don’t abuse that. … It’s a little bit of going back to the future.

“Many years ago, the industry was regulated so there was a set structure on how everyone got paid and what clients were then able to do. They were de-burdened with the need to educate themselves on the dark arts of the supply chain … and they actually chose the best team, the best ideas, and what was best for their business, as opposed to what was the best deal.”

At the end of the session, Tajer asked audience members to raise their hand if they’re talking about the market positively. Two people out of the 1,500 in the crowd did, eventually joined by a third.

“That’s a problem … So if anyone’s wondering ‘Why is it a shitshow out there?’, ‘Why is everyone talking a recession?’ [that’s why],” Tajer concluded.

“SMI [the Standard Media Index, which reports on market growth or decline each month] owns the conversation. Dire straits, recession recession. It’s not going to help us.”


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.



Sign up to our free daily update to get the latest in media and marketing.