HP has come under fire for using an auction-styled buying process to shortlist agencies that are competing for a £2m Europe-wide PR account.
The process ranks agencies according to how low they bid for a range of PR activities. A number of MNC networks taking part in the pitch have raised their concerns to the PRCA about the process, because of the heavy emphasis it places on price as the determining factor in the review.
One agency source who took part in the one-hour auction described the experience as ‘extraordinary’. The source added: ‘You are eliminating people on price before you even get to talk about strategy. I find it quite disappointing.’ PRCA director general Francis Ingham said there was widespread concern about the focus on price over strategy. ‘People are worried that it is setting a precedent,’ he said.
‘I can see how it works if you are auctioning something such as sponsorship – but I do not see how it works in a creative environment when you are asking someone how much they would bid to provide such a service.’
But HP EMEA PR manager Manuel Linnig, who is in charge of the pitch, defended the auction, pointing out that the ‘world had changed’.
‘I understand the concern but my budgets are cut so I expect that from suppliers as well,’ he said. ‘The cheapest does not necessarily win – but what I am trying to do is take unnecessary cost out of the system.’
Linnig will use the auction results to whittle down the ten competing agencies into a shortlist that will then make the first face-to-face presentation of the review, which has now been running for two months (PRWeek, 4 February).
Separately, T-Mobile is conducting an internal review of its PR costs as part of a broader procurement-led initiative to audit ‘supplier risk’.
T-Mobile UK corporate comms manager Mish Desmidt denied the process amounted to a roster review, saying it was aimed at managing the company’s cost base in the current economic environment. One agency boss said: ‘For tech companies, if revenues fall they adjust their costs – it is just in their DNA.’
T-Mobile’s current PR agencies include Brands2Life in the UK and Europe, and Waggener-Edstrom in the US.
How I see it
EMEA PSG PR manager, HP
I do accept agency concerns but why do I need ten people writing a press release? I question whether all these efforts are necessary. This brings clarity into the process and opens the door for more agencies to participate. The world has changed, it is as simple as that.
Director general, PRCA
I think it is a universally bad idea. My concern is that the filter point in this process is purely price. It will filter out lots of decent agencies and my concern is it will reduce the quality of PR advice people receive and reduce the value they place on comms. Going for bargain basement prices is a pretty senseless thing to do.
10 Agencies taking part in HP’s EMEA Personal Systems pitch
60 Minutes agencies had to alter their bids in HP auction
£2m Expected approximate value of HP account across EMEA
10% Rise in Next Fifteen revenue to £33.5m *
27% Proportion of Next Fifteen revenue derived from the UK