The enduring legacy of Magic and Logic

Clients and agencies were lambasted in last year's Magic and Logic report, which called for radical changes to the pitch process. So, have companies heeded the advice 12 months on? asks Ian Quinn.

In May last year, the former vice-chairman of Saatchi & Saatchi, Marilyn Baxter, wrote a paper with proposals to transform the often fraught relationship between agencies and marketing directors and their procurement teams.

Backed by the IPA, Isba and the Chartered Institute of Purchasing and Supply (Cips), the initiative, called Magic and Logic, stressed the need for major change on both sides of the trenches in the pitch process.

Many were cynical about whether it would do much in practice to change issues that have dogged advertising for years. However, Baxter claims a string of major companies have since made concrete changes to their procurement procedures.

"One of the big issues that came out in the report was that there were people applying procurement methods in our industry that were more appropriate to buying paper clips and biros," she says. "Now some companies have made really radical changes."

Huge advances

Kathryn Derbyshire, marketing director for AstraZeneca, one of the UK's largest pharmaceutical companies, claims Magic and Logic has enabled a "huge step forward" in procurement.

"We've used it to restructure our entire marketing and procurement teams," she says. "Previously, we'd probably have had a very cost management focus. Over the past year our marketing team has invested a lot of money in getting more insight into marketing and we've been striving to work in a different way with agencies.

"Clearly we're still here to make returns for our shareholders and we're not going to shy away from that, but we're trying to become enablers for our agencies rather than cost cutters."

If all this sounds too good to be true, other more familiar names, such as Nokia and Eurostar, have also been highlighted by Baxter as taking Magic and Logic onboard.

One trend is for companies to employ procurement staff with agency or marketing experience - a world away from their image as the accountant Robocops of the business.

But the buck did not stop with clients. Magic and Logic also blamed agencies for many of their own ills. Baxter let rip at creative and media agencies, who she claimed were cutting their own throats by chasing too much business and giving their best ideas away for nothing.

Jane Assher, founder and managing director of brand communications agency, 23red, whose clients include the COI, Betfair and Bacardi, says: "It wouldn't be an exaggeration to say it has changed some element of virtually every area of the business."

She claims her agency has brought in much tighter criteria for when it will pitch for business, including clients agreeing to the agencies' remuneration principles.

"We were invited to pitch for a big piece of business earlier this year, but at the same time we were pitching for two other accounts," she says. "We decided to turn down the invitation to pitch because it didn't meet that criteria and it's my view that if we had pitched for it we'd have spread ourselves too thinly and we'd probably have ended up with the standard ratio of winning one in three accounts.

"As it is, we won the other two accounts. As a business we've won much more than we would have done by having the courage to say no. Too many agencies, both on the creative and media side, are too willing to say yes to everything."

"Just say no" has been used as a strap line before, of course, but the IPA, Isba and Cips are now working on new initiatives to create guidelines for pitches, aimed at clients slimming down their shortlists and ultimately paying agencies for taking part.

Better understanding

Neil Jones, managing director at Carat, whose agency picked up more business than any other in the UK last year, welcomes the move for better understanding between procurement and agencies, but says some of the ideas in Magic and Logic are unrealistic.

"The pitch process is neither here nor there," he claims. "Of course we're always going to have to spend money on a pitch, but what's more important is intellectual property. Not getting paid for that is madness."

On this issue, however, clients and agencies appear to still be far away from agreement. While more and more agencies are being paid for results, clients still shirk at the idea of handing over intellectual property to their agencies. Agencies still rage at seeing their ideas mysteriously appear in a company's marketing plan, months after they lost out on a pitch.

Nevertheless, IP, as it is known, was also one of the key issues in Magic and Logic and is next on the target list for the three industry bodies. If they can crack that nut, then maybe the report really is magic.

MAGIC & LOGIC HISTORY

Magic and Logic was published as a "white paper" last May, calling for, among other things, a new pitch process that would see fewer agencies invited to pitch, with clients basing more of their decisions on agencies' past credentials. Isba, the IPA and Cips are now working on turning these ideas into a guide for the industry. It could see the final two agencies in a pitch go forward to the last round in which they would be paid for their ideas, which would then be used as real advertising campaigns by the client, which would then select its preferred agency. The three bodies are also in talks about a new guide for who should own intellectual property, although it is believed to be further down the line. The IPA has also launched a course on the back of Magic and Logic, aimed at giving agencies training to understand procurement better.

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