The division of Grey Worldwide pitched the account, even while the client was in the midst of hiring a new VP of marketing. Worse, that new VP was coming from IBM, where she had become long accustomed to the workings of Ogilvy & Mather. Worse still, she requested to Cisco’s chief marketing officer that the pitch be delayed until she could start her job there (request denied).
In this fractious environment, the poor souls of DarkGrey “won” the pitch, only to see the account later placed on hold by internal Cisco politics.
Agencies always lose money on pitches. Believe it or not, agency management tend to be glass-half-full type people, counting on their ability to make back a pitch’s loss in the course of a year’s business. DarkGrey finds itself in the position of not only having lost the resources spent on the pitch, but also the possibility of breaking even on the previously expected losses with ongoing business.
This deals a double-whammy setback to the San Francisco-based division, already suffering from shrinking billings. Oracle, the division’s bread-and-butter “$100 million” account, spent only $30 million in measured media last year, and is on course to halve that yet again, according to comments made by a CMR representative to Ad Age.
Last week, Adweek quoted sources as saying both DarkGrey and Cisco were trying to come to “a fair compensation deal,” but agencies seldom seem to be able to get their money back. Since their business model is based on making money back through long-term spending, DarkGrey won’t likely be fully compensated. They will be fortunate to get paid for some staff time and rental car expenses for the trip up and down Route 101.
Agencies feel a great deal of pressure to be nice to these once-prospective clients, worried that bad PR emanating from a deal-gone-bad will hurt their chances for getting in on other pitches. I once had a client CEO say baldly that if we didn’t agree to his terms of severance, then he’d lie to his CEO golf buddies up and down the valley, telling them that we did terrible work.
I hope that it turns out differently with DarkGrey. I’ve competed several times against Grey’s San Francisco office, and I’ve won some and lost some accounts. I’d go so far as to say that when I worked in San Francisco, I didn’t like their office. But they don’t deserve this. Their winning the pitch is a big accomplishment. The responsible staff should be rewarded, not laid off. Cisco should be held accountable both to the immediate costs and to the mid-term consequences of an office that gears itself around a pitch and a client win.