Money matters at the bottom of the food chain.

By Hoa Dien Tran – s3408742 – Group 2@SGS Campus

Or at least that’s how I visualize the position of a production house.

For all of you who are still alienated with the term production house, they do the graphic part there, at Cyclo Animation particularly, they do animation graphic art for agencies. Find those dancing cows jamming to a ridiculously stupid and addictive tune on TV amusing? Chances are they were drawn and put to live by visual artists under production houses, such as Ms. Kay Mai. (From now on, I will refer to Ms. Kay Mai as Kay).

 

Proof of life taken by Kay’s friend at her private sale on 27/4/2014

 

Hope I could sketch my readers a picture of how bills are handled over at production houses after conversating with Kay from Cyclo Animation Vietnam, a production house that carries out post production, or in the academic sphere we call it the execution of big ideas, for communication agencies.

Kay started out as a VFX artists 2 years ago after graduating from her flash course in Singapore. Her initial plan was to stay and work on the small island, then her working visa got screwed and she went back to Vietnam and joined Cyclo Animation, a 5-year-old Saigon-based production house. Kay has work done for Publicis, Saatchi & Saatchi, Ogilvy and more.

 

(Quick note: The business works with PR/Ad Agency, PR/Ad Agency works with a production house. Basically the clients of production house are the agencies.)

Turn out in the reality world, there is a position called “producer”, whom I’d say doesn’t necessarily belong to the account team, but it’s versatile based on each agency.

The “producer” here usually offers the bacon to production houses, by referring them to agencies in need. He/she serves as a liaison between the production house and the client. The “producer” is the dealer who works out the remuneration package for the project.

Kay shared that the dealer usually receives 5 to 10% of overall payment for each campaign as commission, based on how “thick skinned” the dealer is. Basically, what a dealer does it that they tell the production house to come up with a price that already includes the production house fee plus the percentage the dealer wants out of a particular project. That price list later will be sent to the client. The billing method for artists do not seem to fall into any of the theoretical categories suggested by Casul (2014), however, we can easily see that it resembles the Commission Fee. My dear readers, you should always be reminded that the practical world is nothing like the textbook you learnt in school.

 

Kay explained , as a 3rd party supplier, you hold the shorter end because you’re at the bottom of the food chain. The dealer may push the price because it’s him/her who referred the jobs to the production house.

 

“If the production house refuses to compromise with the budget, then chances are there would be no future of collaboration because your production house has already been blacklisted. It’s basically how agencies are in Vietnam at the moment, deal with the ugly truth, babe.”

 

Funny how we listed “being cunning” as one of the attribution of an account person/middle man, Kay said that she detests some individuals for the exact same thing. Noted that I am generalizing this up and not every single account person is cunning and obnoxious. I guess it depends heavily on what perspective you are in and what kind of personality you possess.

 

But Heyyyyyy …?

 

After all it’s a production house where creativity does its magic, will the money matters become a burden to the artists?

Well, I managed to get a quick quote from a mysterious producer, who also works at Cyclo Animation. She apparently serves as a fairy god mother to the artists by raising her shield of defense.

 

“Artist shouldn’t know or care about the deal between suppliers and client.  As a producer, we try to keep them free from all the deal of quote/price/money and let them focus to their creativity and the deadline.”

 

Word count: 673

*Check out some of the work from Cyclo Animation here

**Typography as headers made by me

 

Reference list

Casul, M 2014, ‘Remuneration’, Lecture in COMM2384 Client Management, 19th March, RMIT University, Vietnam.

Billing the Non-Measurable

Author: Nguyen Hoang Vu (s3360648)

It all started when I ran across an old friend in an advertising workshop 3 months ago. As always, I was the one who struck up the conversation.

– Hey, long time no see! How have you been?

– I’ve finally got a job.

– Great! What kind of job is it?

– Well, I’m working as a full-time whore.

– Dafuq?

– Teehee, ain’t an account person and a bitch the same? Work your ass off day and night only to satisfy your client!

I laughed my head off. Not until I took a course in client management did I realize that joke somehow rang true, at least in terms of agency remuneration. That is, if you want to be either a good account person or a thriving prostitute, one of the fundamental tricks to learn is how to bill intangible values in a way that appeals to your clients while ensuring your (agency’s) income. Indeed, the art of account management has nothing to do with the ability to produce art or copy, but rather lies within the financial and relationship sides of this creative business (Hameroff 1998).

Billing non-measurable values is essential for account managers and prostitutes alike

Luckily, I had a chance to talk with Mrs. Truong Ngoc Minh Dang, account manager of Le & Brother Limited (or Le Bros), on this issue. Founded in 2002 as a subsidiary of Le Group, Le Bros has been offering advertising and PR services to numerous clients of different sectors, from FMCG to banking and automobiles (Le Bros 2010). As a local agency, it has always been looking for optimal approaches to remuneration, some of which fit in with the communication industry’s context in Vietnam; the others comply with the current universal practice. This process, however, doesn’t start with money, but rather with such a fluid entity called “agency values”.

 

Mrs. Truong Ngoc Minh Dang, Account Manager of Le Bros

Measuring Agency Values: Mission Impossible?

Everything is measurable as long as it stays within some kinds of frames. But when it comes to the creative industries, where “think outside the box” has become a buzzword, how can we measure the value of our creative services?

“As ‘creativity’ is a fancy word, agencies should have their own criteria for judging ideas,” said Dang. “At Le Bros, we use these four as the yardsticks: quantity, variety, novelty, and quality.”

Fair enough. Contrary to popular belief, one needs to combine left-brained and right-brained benchmarks to quantify creativity (Christopher & Wuson 2010). This is highly applicable to advertising, an industry where vertical thinking is just as important as lateral thinking (Felton 2006).

An agency’s values, nonetheless, go beyond creative ideas. “Intangible as it may seem, the agency’s reputation is a requisite for pricing its service,” Dang emphasized. “Besides the invoice quotation, the agency has to deploy their credentials to initiate partnerships and build trust.”

Vietnamese start-ups often lowered their price considerably to attract new clients. “It’s not a good strategy. These agencies had better enhance their added values instead,” Dang said. “Added values are the primary competitive advantages of big media groups. For instance, when Le Bros signs an event contract with client A, it can offer the brand extra coverage on media channels owned by Le Media. This really makes the difference!”

Money, Money, Money, Must be Funny

There are currently three universal approaches to remuneration: commission, fee, and payment-by-results (Tripathy 2007). At Le Bros, all of them are combined.

• Commission: Over the last 20 years, advertising agencies would charge clients a 15% commission rate on the media booking fees (Dickinson 2009). Today, as Dang stated, the commission rate differs from one client to another, and this discrepancy depends very much on the three-legged stool of relationship: media-agency, agency-client, and client-media.
• Fee: Vietnamese agencies, on average, charge 10-20% of the clients’ total advertising budgets for their services. These fees are based upon the hours spent on the project (recorded using time sheets). Approximately 5-15% more are drawn from the media commissions and production mark-ups. Often, 30% of the fees are deposited, 50% are paid in progress, and the rest are remunerated in the evaluation phase.
• Payment-by-results: Only “big” clients require this method. Certain key performance indicators (KPIs) such as brand awareness, brand recall, or even market share are initially agreed upon and then used to determine a certain proportion of the payment. Although this approach stimulates the agency to take responsibility of its works, it’s very risky. Communication-based, or worst, sales-based goals cannot be wholly attributed to advertising/PR effort. Other elements such as web design or retail merchandising do matter (Dickinson 2009). “Hence, it’s crucial that the account person manage the client’s expectations early on,” Dang shared. “Make sure the client’s definition of ‘success’ is identical to yours by using a common language.” Moreover, Robert Solomon (2008) advised involving both the client and the creative team in creating the brief, as well as transparently informing the client of the steps your agency’s going to take. It’s also important to conduct periodic performance reviews to mutually improve fundamentals for both parties (ACA 2011).

 

Remember to ask for a 30% deposit

Normally, the finance department will calculate an estimate. Once this is signed by the client, the account manager must supervise the activities closely to make sure the budget is not exceeded (Dickison 2009). “Should any extra expense arise, you have to be quick,” Dang stressed. “Explain to the client immediately, and find ways to reduce the budget of other items. To do so, sometimes you must know the clients’ businesses even better than themselves.” Keeping detailed records of previous projects is also a good way to avoid this risk, because it offers a quasi-accurate budget reference for each item (Dickison 2009).

Pitching: Walking the Tightrope

Pitching can be as heart-stopping as walking a tightrope

In Vietnam, when the budget for the client’s project is more than $25,000, agency pitching is a must. This, however, only happens perfunctorily on the surface if the client has already had an implicit preference beforehand. The client has to sign an agreement stating that it still pays the agency a one-day fee if the proposal is rejected. If the client picks the concept of agency A but choose agency B to execute this concept, it has to pay agency A for the concept and delegation (Truong 2013). “In case the client ‘plays dirty’ (copying the concept or part of it without any payment), it’s likely that the fooled agency won’t participate in future pitching sessions until the head of that brand leaves,” Dang said. “And of course we’ll spread bad rumors about them to other agencies!”

“Good” Things Come for Those Who Bill

An account manager is a steward of the client’s money. To wrap up the endless controversy of agency remuneration, I would use Dang’s final remark: “Every agency has its objectives for monthly profit margin, and the account department’s chore is to help the management ensure these objectives are met via wise negotiation, proactive forecasting, and excellent relationship management.”

Word count: 1,138

References:

Association for Communication and Advertising (ACA) 2011, ‘Advertising Remuneration Principles’, ACA, July, <http://www.acasa.co.za/downloads/AGENCY%20REMUNERATION%20PRINCIPLES%20July%202011%20%20Version%200.9.pdf&gt;.

Aunty Ann’s Raving’s 2013, ‘Shoes and Whip’, image, Blog Spot, 16 May, viewed 6 September 2013, <http://auntyannsravings.blogspot.com/&gt;.

Bristol Culture 2013, ‘Tightrope Circus’, image, Bristol Culture, 8 June, viewed 6 September 2013, <http://www.bristol-culture.com/2013/06/08/review-bianco-creative-common/>.

Christopher, E & Wuson, B 2010, ‘Quantifying Creativity: Finding the Right Agency Compensation Model’, A.T. Kearney, 20 May, viewed 4 September 2013, <http://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/quantifying-creativity/10192&gt;.

Dickinson, D 2009, The New Account Manager, 2^nd edn, The Copy Workshop, Chicago, US.

Felton, G 2006, Advertising: Concept & Copy, 2^nd edn, W.W. Norton, New York.

Marie Claire n.d., ‘Trafico humano meninas’, image, Getty Images, viewed 6 September 2013, <http://revistamarieclaire.globo.com/MC-Contra-o-Trafico-Humano/noticia/2013/01/mulheres-maiores-vitimas-do-trafico.html&gt;.

Hameroff, EJ 1998, The Advertising Agency Business: the Complete Manual for Management & Operation, 3^rd edn, NTC Business Books, Chicago, US.

Le Bros 2010, Introduction, homepage, Le Bros, Vietnam, viewed 5 September 2013, <http://lebros.vn/index.php?lang=en&gt;.

Solomon, R 2008, The Art of Client Service, Kaplan, New York.

Tripathy, MN 2007, ‘How Much is Your Advertising Agency Worth to You?’, Journal of Business and Economics Research, vol. 5, no. 12, pp. 25-30.

Truong, MD 2013, interview, 25 August.

No need to get your ass out of the kitchen: new jobs are waiting

Although Vietnam is developing pretty rapidly, the role of the most Vietnamese women is still behind their husband’s shadow due to the Confucianism that many families are still following. The situation becomes more difficult when a wife has their first baby and it requires her to stay at home and take care of her child. However, lots of wives still want to get back to work and when everything is almost impossible, working at home becomes their best choice.

   Freelance (adapted from Wink (2011))

Freelance is the answer. They can choose which projects they like, work at any time or any place they want and most importantly, it can help to balance between  their work and their family.

Vuong An Phuong Thao with her son and me

Fortunately, I met my interviewee, Mrs. Vuong An Phuong Thao, who is a successful mother and represents as a typical modern woman. She has more than 8 years working in different positions from a senior copywriter to creative director in different communication agencies and a real estate company such as Ogilvy, JWT, BBDO and Square Meter. After her child was born, getting back to work is not easy when she had to take care for her son. Becoming a freelancer is her best decision because it is not only good for her, her husband and son, but it can also satisfy her difficult mother-in-law. Based on her wonderful experience and strong networking, Thao marked her first success in founding her own communication agency with her husband called Vo Vuong, where she could work and introduce or get help from her friends as freelancers. Talking about this, Thao said freelance is not what she focused at the beginning because she loves her job but her son means the world to her, so she’d rather work less to have more time for her son. Personally, I think future mothers should consider carefully about this job, because it might be more flexible but the payment might not be much and unstable, especially their personal branding is not at the same level with their networking. Usually, the payment for a project in freelancing cannot be negotiate, especially if we do not have the relationship with our clients.

Personal Branding (Adapted from Stanley (2010))

On the other hand, Thao believes personal attachment is really necessary but not everyone can know how to build and maintain this relationship. There are a lot of freelancers or client just try to maximize their profits or they think they just do one-time relationship job (Fisher & Ury 1983). Their short-sight vision is the biggest mistake in freelancing because after finishing a project, freelancers can be rated from their clients. If they maintain their relationship well, they can also get a higher rating and another offer from previous clients. According to her, higher position does not mean people can make a good relationship. A good relationship is from the first impression such as appearance or outfits and it requires a good interpersonal skills as well as keeping this relationship alive. For example, she told me about Nguyen Ngoc Thuy, one of the top PR practitioner in Vietnam, he often yells at his clients but his clients still want him because he has good experience, good relationship with celebrities and maybe because he is good looking. However, normal PR practitioners cannot do that but instead of yelling, they have to keep their clients to be calm and satisfy or negotiate what their clients need. Those pressure when working in an agency is the motivation to increase productivity even though they have to work overtime and workplace might become their second home. Those challenges and pressure are also the reasons that make Thao want to work as a freelancer. Furthermore, she believes that verbal agreement cannot replace a contract but it is really important to help to reach a contract. Because freelance is a job with contract based on personal branding and personal attachments and when Thao and her client are too close, so the disadvantages is too hard to deal with her friends. For example, the negotiation dance in this case must be very skillful because it is hard to deal about the timeline and the budget. On the other hand, the advantages of personal relationship can make both sides more open to share and discuss about their project and when pitching to the client is easier to be accepted. In other words, it means that people should bring their clients into the process early and it will help a lot in their work (Solomon 2008).

 Personal relationship (Adapted from Nad (2011))

To sum up, Thao brings the role of woman into a new level who is not only standing in the kitchen. Freelance is the best choice in balancing not only the role between husband and wife but also between work and family. Freelance is a good choice for people without high education such as they are talented in painting or designing. However, freelancers’ income is changeable, sometimes it can be a lot but sometimes they might not have any offers and personal branding is really important because employers are looking for more reliable freelancers with good recommendations and great experience. That is the reason why personal attachments and long-term relationship is highlighted. Most importantly, freelancers can work at any place, any time even when they are on a vacation. Moreover, Beverland et al. (2007) believed that proactivity is important factor in maintaining relationship with clients but in freelancing, it is not recommended by Thao and I agree with her but it can be an option if freelancers want to impress and show their friendliness to their client for the first time. Finally, verbal agreement is the first step to reach a contract and it is built on trust and the long-term relationship (Morgan & Hunt 1994). Everything is just coming back to what I learn at the client management course even though some of the theories are not always suitable in practical situations.

Words count: 1,015

Written by DINH HOANG QUAN s3394172

Reference:

Beverland, M., Farrelly, F. & Woodhatch, Z. 2007, “Exploring the Dimensions of Proactivity within Advertising Agency-Client Relationships”, Journal of Advertising, vol. 36, no. 4, pp. 49-60.

Fisher, R & Ury, W 1999, Getting to yes : negotiating an agreement without giving in, 2^nd edn, Random House, London.

Gulenko, DA 2013, ‘FIRST FREELANCERS’S STEP’, National Mining University, <http://ir.nmu.org.ua/handle/123456789/2395&gt;

Morgan RM & Hunt SD 1994, “The Commitment-Trust Theory of Relationship Marketing”, Journal of Marketing, Vol. 58, No. 3, pp. 20-38.

Nad 2011, ‘Simple Ways To Become A Successful Freelancer’, Image, December 29, WordPress, viewed on 05 September 2013, <http://freelancecrunch.com/simple-ways-to-become-a-successful-freelancer/>

Solomon, R 2008, The art of client service, Kaplan, New York.

Stanley AL 2010, ‘What Is A Personal Brand?’, Image, January 16, viewed on 05 September 2013, <http://www.andrewlstanley.com/what-is-a-personal-brand/>

Wink C 2011, ‘How to be a freelance journalist: real advice from another young, unknown journalist on freelancing’, January 10, viewed on 05 September 2013, <http://christopherwink.com/2011/01/10/how-to-be-a-freelance-journalist/>

4TS – TIPS TO TIGHTEN TEAMS

Most of the issues regarding client management are about fostering relationship with clients. However, maintaining harmony between different team in your agency should not be forgotten. In order to produce good work, the creative team who tends to fill with unique things, and the account team who are driven with money should work harmoniously with each other. Nevertheless, creative team and account team represent as the two opposite sides, like black and white, thus conflicts will happen constantly.

This article will take a look into a small company where the account team and creative team must always collaborate together and how the company can both tighten the relationship between different teams and motivate all the employees using organizational culture rituals and symbols.

In a small corner of Ly Thuong Kiet street lies the small design company called Not A Basement. Having a chance to meet and interview Mr Hieu – one of the four company founders is my precious experience. Hieu graduated from Singapore Management University and had 6-year experience in the creative industry. Together with his other three fellows, the four young men made first application for Iphone in their final year of university. The application launch was a great result and it motivated them to produce more awesome apps to reach people, hence ‘Not A Basement’ was born in 2009.

The name ‘Not A Basement’ came from the idea of other application makers such as Apple and Google, they all start out in a basement. “However, we don’t want to stay in the basement forever so we name it like that. It also sounds cute”, Hieu said with a friendly smile.

The office inside is filled with lovely symbols and paintings, a funny artistic environment. The office has only twenty people, divided into three teams: Business team, or so-called Account team, Developer team and Design team.

The main role of Business team is to research the market, identify target audience and issues. Next, they create a brief for the other teams to propose solutions. The creative concept for the campaign is created by the whole 3 teams together, unlike other agencies in which the concept is decided and the creative team’s role is to work with it. Then the project will be developed under programming codes by the Develop team and then pass on to the designers. The designers in Not A Basement will also be application testers and provide feedbacks for the Develop team.

By taking a look at their working process, ‘Not A Basement’ is identified as a task culture, in which the organization is dynamic and constantly changing the task team to meet their plan with close connection between different groups and their functions (Handy 1976). This culture is mostly based on communication, integration and up-to-date information to affect the final result. However, difficulties appear “when there is a restriction in resources causing it to become more power or ‘role oriented’ (Handy 1976).  Approaching to that issue, maintaining the harmony between the employees and motivate them to do their best is an indispensable task.

TIP 1: HARMONY IS NOT ALWAYS GOOD, ARGUMENTS CAN MAKE IT BETTER

Figure 1 – Adapted from Tripadvisor.com, n.d

“We have so many arguments, almost everyday”, said Hieu with laughter, “but in the end it went well because we have the same goal to achieve. It’s like arguing to see the level of love to our project”.

One of the ways to solve conflict is to define the enemy, and remind your colleagues that the enemy is the competition, is whatever interrupts your working process. (Solomon 2008)

Hieu agrees with this statement totally and it is also the idea that Not A Basement teams cherish everyday. “We are not fighting to prove ourselves; we discuss together and decide what is most suitable for our project, which is our way of working. By having discussions, we can generate different ideas and come up with the best one”, just like Solomon (2008) stated, “We are smarter together than when we are alone”.

“If everybody just keeps silence all the time and let solely one team decide, we might not stand steady until today”, Hieu smiled. Comparing to theories, such as: “harmony helps smooth interaction among collaborators, avoid time wasting debates” (Hackman 2011), real experience may not always be the same.

Another aspect in a design company that is important to consider is how to rise up creativity among the employees. Motivation is an essential power for individuals to generate and implement creative ideas, and the employees are motivated when they have a strong identification with the organization. (Hartmann 2006) Bringing this theory to practice, Hieu kindly gave some tips to generate motivation in Not A Basement.

TIP 2: MOTIVATE YOURSELF WITH PASSION

Figure 2. Adapted from Zazzle.com n.d

“Creativity is what we all have and need, not just designers or creative director”, Hieu claims with a calm voice, “therefore everyone needs to be motivated”.

First thing starts with the recruitment process, selecting the right people that are suitable with the company. “The most important requirement, and also our value: Passion. We don’t care you do it badly or well, as long as you show us the passion to become better, we will support you by every thing we have.”

Figure 3 – Taken by Nga 2012

Take a look around the office, each working table is designed differently by their owners. The motivation that ‘Not A Basement’ gives to their colleagues is a fun working environment. People can be around the company and leave at any time, 8-hours appearance rule is not applied like other enterprises. There are free food and drinks, even games for all the employees to relax. “We do not apply mini pressures, as long as they have done the work before the deadline, it’s totally fine”

In summary, I believe that whether it’s a small or big enterprise, lacking harmony between teams in a company is as dangerous as the house lacking of wall foundation. The harmony relationship goes on with good work process in any situation. As long as you have a steady working team, you can face even the strictest clients. Moreover, maintaining harmony is not just about who is wrong and right, it is about enhancing the positive attitude and motivation with the help of organizational rituals.

Proof of life – Taken by Bang 2012

Word count: 1070

REFERENCES:

Gizel Sharon, n.d, “Do you think I love you more is good in a relationship”, image,Tripadvisor, viewed 4 January 2013  <http://tripwow.tripadvisor.com/slideshow-photo/do-you-think-i-love-you-more-argument-is-good-in-a-relationship-yes-no-3-mumbai-india.html?sid=114202674&fid=fb-100001990308046_616240>

Handy,C, 1976, “Understanding Organizations”, Oxford University Press, UK

Hartmann, A, 2006, “The role of organizational culture in motivating innovative behavior in construction firms”, Construction Innovation: Information, Process, Management, Vol. 6 Issue 3, p. 59 – 172

Hackman, J.Richard, 2011, “Six common Six Common Misperceptions about Teamwork”, Havard Business Review, viewed 4 January 2013

Hieu Tran, 2012, interview, 12 December

Solomon, R, 2008, “The Art of Client Service”, Kaplan Publishing, New York, UK,

Zazzle n.d, “Follow your passion square stickers”, image, Zazzle, viewed 4 January 2013<http://www.zazzle.com/follow_your_passion_square_stickers-217412393421778629>

Billing and negotiating: One-offs vs Retainers plus projects

Before reaching any contract agreement, price negotiation is always an important and unavoidable step for an agency to deal with clients when setting the project budget. Depending on the types of clients, i.e one-off clients or retainers, the agency normally has different ways to charging the bill and negotiating price (Luecke & Patterson 2008). An understanding about how this issue addressed in local context would help advertisers, especially those are fresh men, know the techniques of how to handle successfully price negotiating with different types of clients in real life’s communication workplace, making  profits as much as posible for the compamny.

Specifically, this article with the support of Mrs. Nguyen Phuoc Hong Hanh, Event Manager of Scarlet Communication, standing in agency’s perspective attempts to answer a challenging question: How does an agency handle billing and negotiating with one-off project clients differently from negotiating with retainers plus projects?

Reprodcued from: North 2012

With more than four-year experience working for three agencies, including Le Bros, Hong Thuy Communication and currently Scarlet Communication, which is an exciting new PR and below-the-line boutique agency based in Vietnam (Scarlet 2012),  Hanh has directly worked with several types of clients, gaining enough skills and techniques to be a good negotiator dealing price with clients successfully.

Mrs. Nguyen Phuoc Hong Hanh (Reproduced from: Cassie Chit 2012)

Proof of Life

Billing differences
“The level of commitment and relationship between clients and agencies affects significantly the way agencies pricing and negotiating the bill”, Hanh stated firmly about the main reason why advertisers making the bill of one client differently to that of the other. Specifically, she said that due to low level of commitment, one-off project clients are normally charged higher than retainers plus projects. For example, while the agency just charges retainers plus a project 15% for management fee, “shop around” clients with no or low commitment will receive a higher cost, i.e 15%-20%, for the same category. Moreover, retainers is also “favored” over one-off clients when normally being shown the fixed-price rate cards with the base cost by the agency; meanwhile,  the “shop around” ones tend to receive higher cost rate cards that the agency wishes to charge them but still in a reasonable price.
The idea that Hanh shared in terms of different ways of billing is somehow consistent with the theory suggested by business scholars which highlight different ways that advertisers use frequently when billing their clients: fixed price with base cost for long-term customers (i.e service retainers), other projects plus cost extra but not as high as charging short-term clients (i.e. one-offs or also “shop around” clients) (Carrell & Heavrin 2008; Lyons 2007).

Price negotiating

Reproduced from: David 2011

Talking about negotiation, Hanh asserted that “negotiating price with one-offs always takes longer time and requires more techniques than doing with retainer partners”. Specifically, compared with one-offs, retainers do not bargain much by looking the base cost rate cards that the agency gives them and also because “they believe that we – the agency as the long-term partner – will not charge them high” as Hanh believed. However, once retainers ask for discounts, the agency should really consider to cost down to ensure the profit it can earn. One valuable tip that Hanh shared was that the agency should show and compare its cost with the standard cost in the market to retainers, to let them examine how worth and reasonable cost that they receive from the long-term agency.
On the other hand, negotiation works tougher and longer with one-offs clients. “This type of client always bargain in order to get the lowest fee”, said Hanh.  To negotiate price successfully with one-offs, Hanh shared three valuable techniques and tips as following:

• Try to guess their BATNA without releasing the agency’s: would help the agency save time and know how much it should charge and convince clients easier. At this point, Hanh seemed to share the same viewpoint with academic researchers who encourage learning clients’ BATNA to get better chance succeed price negotiation (Lyons 2007; Lewicki,  Saunders & Barry2011).
• Asking “How could you get the same quality with that amount of money?” question: to the clients if they claimed that they can find other agencies costs them lower than yours. Asking this question would make clients consider the quality/value that your agency can offer better than others.
• Once discount one thing, increase the others, or at least do not discount the others: because if the agency discounts many items at the same time when clients require, they would doubt and re-consider how reasonable the agency charge them.

Compared with academic studies about negotiation methods, Hanh – the real life’s advertisers – did differently. If scholars claim distributive bargaining, which is “win-lose” method, for short-term clients and integrative bargaining, which refers to “win-win” negotiation method, for long-term one (Lewicki,  Saunders & Barry2011), Hanh applied the latter bargaining method for both types of clients. As she explained that “I don’t want to burn my bridge with clients, no matter those are one-offs or retainers. What a good negotiator should always consider is a long-term relationship with a client, not just a deal. An arrangement that causes one side to feel forced to accept a bad deal not only can destroy the potential relationship, but also cause a bad image for the agency”. This statement explains the reason why Hanh still accepted discounts for one-offs even though they just worked with each other at the first time.

In sum, due to a higher level of commitment and relationship, the agency tend to charge retainers’ bill lower than one-offs’. While the agency finds it easier to negotiate with retainers by showing the fixed-price rate cards with base cost and letting retainers compare agency’s cost with standard cost in the market, working with one-off project clients is tougher and takes longer time. With her experience, Hanh suggested that guessing clients’ BATNA, asking “How” question and a few discounts are some techniques that a good client manager should consider when negotiating price with one-offs. Moreover, integrative bargaining would be the best method in negotiation. As a future advertiser, i personally think Hanh shared many valuable tips about price negotiation and especially the use of intergrative bargaining suggested which i think is helpful to get more accounts and build a long-term relationship for the agencies.

Posted by Huynh My Ngoc

Word Count: 1098

References

Carrell, MR & Heavrin, C 2008, Negotiating essentials : theory, skills, and practices, Pearson Education, New Jersy.

Cassie Chit 2012, image, Facebook, viewed 04 May 2012, <http://www.facebook.com/media/set/?set=a.1288903216702.2043325.1053852903&type=3>.

David, K 2011, ‘Winning price negotiation wars with customers’, image, Open Forum, 11 February, viewed 10 may 2012, <http://www.openforum.com/media/95d40229-4261-4e83-a185-d26ab9b9af37_detail.jpg>.

Luecke, RA & Patterson, JG 2008, How to become a better negotiator, 2nd edn, AMACOM/American Management Association, New York.

Lewicki, RJ,  Saunders, DM & Barry, B 2011, Essentials of negotiation, 5th edn, McGraw-Hill, Boston.

Lyons, C 2007, I win, you win : the essential guide to principled negotiation, A & C Black, London.

Hanh,  Nguyen Phuoc Hong 2012, interview, 21 April.

North, A 2012, ‘How to Negotiate for a Lower Price on Anything’, image, Jezebel, 12 Jan, viewed 10 May 2012, <http://cache.jezebel.com/assets/images/39/2012/01/92d03c2ea4d1781e56dac54b35f66288.jpg>.

Scarlet 2012, homepage, Scarlet, Vietnam, viewed 08 May 2012, <http://www.scarlet.vn/>.

How to deal the “Late payment” issue with your client?

Delayed payment or late payment is one of the most unpleasant experiences that you will wish you’d never have in your work. It affects you really bad, like Martin Dune (2012) once said: “It can put you out of business”. It can make you suffer some stressful financial problems, lose faith in promises, hate your job and worst of all, damage the relationship between you and clients. Mrs. Le Ngoc Hien, the vice-director of Voice of Ho Chi Minh City People Advertising Agency (VOHAA) offers some advantages and tips on how to deal with “delayed payment”.

Have you ever come over the late payment issue while working with a client?

Yes, we’ve been through lots of situation about late payment and this issue in Vietnam is very normal. “Late payment” can be seen in business as delayed payment or even a sign of client that they are not going to pay you the rest of the money. Like other agency, VOHAA has to deal with same issues. In my opinion, this kind of issue is really popular.

Have you ever been in a situation of late payment? How do you feel about it?

Yes, we did. In some situation, even though that we signed a contract with lots of tight deadlines and sanctions for payment but still there are some clients flee away and never pay the money. Now with Vietnamese people, money is still a little taboo subject to talk about and people tend to say something like: “We are brothers (sisters), we shouldn’t care about the money issue” or “Money is just a small problem” etc. However, in advertising, money is one of big problems and we’re not working for free. If you meet a client usually say those sentences but never pays you on time, you should be careful.

We all know that the current economy is still difficult and this can be seen as barriers in negotiating a contract. However, we feel really unpleasant about those situations. In my opinion, as a role of the vice-director of the agency, I’ll also have to take a responsibility. I’ll lose my reputation not only with my boss who assigns that contract to me, but also with my employees who also work with me. Therefore, even though that the late payment can be caused by subjective or objective reasons, still other people will see me as unskillful client manager.

Do you know exactly what reasons for those late payment issues?

Well, if at first we don’t know, then we have to find out the reasons. On one hand, we will send emails and call our client to inform them that they are late for the payment; we spend more time to talk with them and give them suggestions. However, on the other hand, we should reach out and look for more information, by asking other agencies and by searching on internet. In general, we should look for more information from different sources. There are organizations and companies that are actually suffering bad financial problems but they don’t want your agency to know; and there are organizations and companies that they don’t want to pay. For example, if there is a company that haven’t paid you but still they are having an advertising on TV, then you should go and pressure their reputation: “You haven’t paid for our agency but still you have an advertising on TV, if you don’t solving this late payment problem, we’ll call to that TV advertising agency to inform them about this.”

Like Craig Buckler said: “You should nudge them harder?”

Exacltly.

Reasons in these situations are very necessary. They give us not only information, but also suitable ways, methods to solve it and experiences to be proactive if those kind of issues are coming back.

How do you deal with these situations?

We have three stages: before we sign the contract, during negotiating the contract and when it comes to the deadlines of payments.

Before we sign any contract with any client, we should search for information from different sources about the clients in order to avoid risks. We’ll search for their current financial conditions, their reputation and their payment ability. Not only will we look on internet, but also through other agencies. We are living in the information age, the more trustworthy information we get, the more risks we can avoid. This step is really important, the most important step that other agencies usually forgets and this is very dangerous because when you come to negotiate to settle down the contract, if you are lack of information, you are putting you and your agency on the risky edge. As a negotiator, you shouldn’t take risk. (Thompson, L. 2009)

Firgue 1(Reproduced from cfbstubbs 2009): Be Proactive

Then, when the contract is settling, we should suggest client to pay deposit money, and small payments rather than one big payment. Payments which are divided based on progress is also another good way to make client feel less financial pressure. In here, if the client refuses to have this payment and want to pay all the money in the end of the progress, you should be careful because maybe they’ll flee away and won’t pay you. Back to the progress payments, even though that deadlines and sanctions were clear in the contract, you still have to call and email to remind your client when it’s near the payment days. Be proactive and not risky.

Firgue 2 (Reproduced from Coach Rod’s Blog 2010): You shouldn’t take risks.

Last but not least, when it comes to clients who are late for the payment for a long time, we’ll have to ask Vietnamese legislation to involve. This stage takes lots of time, money, effort and sometimes, you’re still unable to get the money back. No one likes this.

Firgue 3 (Reproduced from VolumeBuyers 2011): No one like this stage.

Therefore, like I mentioned before, you should be careful right at the beginning and collecting information, using them to avoid as much risks as possible, “Prevention is better the Cure”. In order to deal with this problem, client manager needs to have experiences in signing contract and skillful negotiation to avoid as much risk as possible. If they are not careful and experienced enough, they will end up bringing more risks. Also, client manager should be ingenious, proactive and aware of issues can show up unexpectedly in unpleasant ways.

Thank you.

Posted by: Lam Ngoc Hai Son (Yuki) – s3312617

 WC: 1,033

References List:

“Be Proactive” 2009, image, cfbstubbs, viewed 11 May 2012, < http://cfbstubbs.pbworks.com/w/page/12272123/2-%20Habit%20One-%20Be%20Proactive>.

Craig, Buckler 2012, How to deal with non paying clients, viewed 10 May 2012, <http://www.sitepoint.com/how-to-deal-with-non-paying-clients/>.

Martin Dune (n.d.), Q&A: Dealing with Late Payment, viewed 07 May 2012, <http://www.startupdonut.co.uk/startup/financing-a-business/cashflow/q-a-dealing-with-late-payment>.

“No one likes this stage” 2011, image, VolumeBuyers, viewed 11 May 2012,  < http://volumebuyers.wordpress.com/category/legislation/>.

Tenbrunsel, A. E., Wade-Benzoni, K.A., Medvec, V., Thompson, L., & Bazerman, M.  (2009), The reality and myth of sacred issues in ideologically-based negotiations, Negotiation and Conflict Management Research.

UK Netguide (n.d.), How to Deal with Late Payment, viewed 07 May 2012, <http://www.uknetguide.co.uk/Business/Article/How_to_Deal_with_Late_Payment-100182.html>.

“You shouldn’t take risks 2010, image, Coach Rod’s Blog, viewed 11 May 2012, < http://rodneydwalker.wordpress.com/>.

Freelancers working for free???

Unpaid wages might be a new term with most full-time employees; however, independent workers or freelancers can become quite familiar with this problem. The questions are why unpaid wages are widespread for freelancers in foreign countries in general and in Vietnam in specific and how freelancers would deal with clients who fail to pay for them or delay their payment. This article will mention the payment troubles of freelancers and their ways of dealing with this type of clients.

According to Gunsch (2008), freelancers or independent workers are people who are self-employed, which means they work independently and are not managed by any business or employers. Most freelancers work in creative and production fields like writing, design, graphic arts or IT programming. Freelancers have more chances to choose their own work schedule and sometimes earn more money than full-time employees; however, they might be less stable and have less benefits as well as incentive policies from the companies.

Today, there is a growing trend that hiring firms depend on more freelancers rather than traditional full-time employees because freelancers are the one who work across all majors, it could be more flexible for clients to work with freelancers on short-term projects. Moreover, freelancers are not locked in the offices during 8-9 hours per day, they can work anytime or anywhere they want so they can add more creativity and unlock innovation for the clients, working more effectively (Freelancers Union 2011). Although freelancers sell their work and put their strong efforts on projects, some of them gain nothing from the clients. Clients will have many reasons to refuse paying for freelancers or delay their payment as long as possible. In contrast, during a lecture on 3 April 2012 for COMM 2384 Client Management at RMIT University, Saigon, the lecturer, Melanie Casul, said that agencies have “rules of engagement” from the beginning and clear budgets setting with clients. Agencies will revisit the program and review the billing procedures to not only fulfill the tasks but also guarantee the payment after every project.

To support the article, I conducted an interview with Mr. Tran Manh Cuong who is now a Creative Head of CLIMAXX INTERACTIVE Agency, Ho Chi Minh City. He has also been a freelance copywriter for over four years. I had a great discussion with him about this topic; especially, he also revealed that he used to face this trouble when he just graduated from university and started his career and he was really shocked because he thought that his big client were deceiving him.

 “I was really shocked for my first experience of being deceiving by a big client”

According to Freelancers Union (2011), in the United States, failing to pay money and delaying the payment might become a challenge for independent workers because labor laws will not protect them from this freelance working style. While, the state’s Department of Labor will help traditional full-time employees collect their money if they suffer from this kind of violation. With fully-written contract, it is possible for freelancers to hire an attorney and take their clients to the court. Nevertheless, this will cost them an amount of money. They will not have enough money and time to chase client nonpayment. Moreover, this is not worth the trouble.

Similarly, Cuong also shared “In Vietnam, some freelancers are unable to pursue their unpaid wages because they cannot waste their ‘precious time’ that they should spend on another job instead to earn for living”. They do not want to sue their clients either because this can affect their relationships as well as their reputation with these potential clients later. He stressed that “Many freelancers usually look for projects from their friends or close relationships so they tend to believe their clients and make their strong attempt beyond doubt”. Hence, many of them do not officially sign contracts with clients nor have a clear budget commitment with clients, which might be disadvantaged for freelancers to collect money.

How to handle with clients who refuse to pay

Fishman (2011) mentioned that firstly, when clients do not pay on time, freelancers should act quickly and call them as soon as possible because the longer clients fail to pay, the less likely you are paid. During the first call with clients, freelancers should be aware that they are talking with an appropriate person who is in charge of account and pricing. Freelancers also need to politely mention how much the clients owe them, avoid fighting with the clients or they will not get full payment. Especially, no matter how angry freelancers are, they should not try to harass or threaten their clients by repeatedly calling or using violence because clients might sue you for this kind of harassment. After some calls and reminders, if clients’ decisions unchanged, freelancers must decide whether they continue or not. If the clients are unable to pay them anything, they should give up because there is no point in chasing those clients. If the clients can pay but do not want to or delay the payment, freelancers should take a legal action. They will send a ‘final demand letter’ as a warning that they will sue their clients if they do not pay money back on time. This letter actually works with some clients. However, in the worst scenario, the freelancers have to hire a collection agency to assist them to collect debts. Freelancers do not have to pay for this type of agency but the agency will take a part of the money it can collect. More importantly, before hiring agencies, freelancers should guarantee that the debt is worth the suing and they will not work for those clients again; moreover, the contract should be clear and support their rights.

 

 Reproduced from: Thomas 2012

 Cuong also shared his ideas about how to deal with clients who fail to pay debts. In Vietnam, what most freelancers can do is just calling and reminding their clients, they are less likely to take legal action. He also mentioned a way that might be often used in advertising industry in Vietnam, which is using media or creating a scandal to damage the clients’ reputations and images. “When the clients insist not paying the debts, some freelancers might write an online article and spread them widely the Internet, warning other workers in the network to avoid these clients”. This way might be ineffective and even bad for both parties but at least, it can help some independent workers avoid this situation.

To conclude, nonpayment or delaying the payment might be a familiar term to freelancers/independent workers. It is quite hard for them to spend most of their time and money on chasing their clients and collecting the money. They put their strong efforts on projects but they gain nothing. It is important for them to know how to deal with these clients. They can call, write letters and hire an agency to help them but they should not harass or threaten their clients or this will affect their career later. Facing the trouble will be a lesson for freelancers and it will give them more experiences in order to work with clients more effectively in the future.

Ho Chi Minh City, 11 May 2012

Posted by Pham Linh Chi

Word Count: 1,210

About:  Tran Manh Cuong is now a Creative Head of CLIMAXX INTERACTIVE Agency. He used to work for LOWE and EDGE Marketing Company as a copywriter before. He has also been a freelance copywriter for over 4 years. CLIMAXX is a full-service interactive agency specialized in digital marketing. Agency’s big clients are now SAMSUNG, PEPSI, FRISO and CASTROL.

 

References

Casul, M 2012, ‘Setting Budgets and Managing Client Expectations’, lecture in COMM2384 Client Management, 3 April, RMIT University, Saigon South Campus, viewed 4 May 2012, Blackboard@RMIT.

Fishman, S 2011, Working for yourself: Law & Taxes for Independent Contractors, Freelancers and Consultants, 8^th edn, Delta Printing Solution, California.

Freelancers Union 2011, ‘Independent Workforce Issue Brief: Unpaid Wages’, FreelancersUnion, viewed 4 May 2012, <http://www.freelancersunion.org/political-action/policy-resources.html>.

Gunsch, J 2008, ‘What is a freelancer?’ wiseGEEK, viewed 4 May 2012, <http://www.wisegeek.com/what-is-a-freelancer.htm>.

Ngoc Truong, 2012, ‘Nhung nguoi lao dong tu do’ (freelancers), Baomoi, 31 April, viewed 4 May 2012, <http://www.baomoi.com/Nhung-nguoi-lao-dong-tu-do/47/3592399.epi>.

Thomas, D 2012, ‘What do I do when my client will not pay up?’, image, Freelanceswitch, 12 January, viewed 4 May 2012, < http://freelanceswitch.com/the-business-of-freelancing/client-will-not-pay-up/>.

Tran, M.C 2012, interview, 19 April.

Quality vs. Price Triumvirate Model

Monica Morelos, former General Manager of River Orchid Vietnam talks to us about the realities and benefits of evolving “From Transaction to Relationship: Converting short-term customers into long-term clients” in Vietnam and offers her own interpretations of an industry practice on the issue of quality/value vs. price.

"You are the face of the agency"

In a more low-key and personal affair last 20^th of March, the client management class met with Monica Morelos, a client service expert with over 13 years of experience in applying marketing communications as business-building solutions across several industries in Asia.  Her visit marked the 2^nd industry seminar for the course this semester.

From how to choose clients carefully to how to make it easy for clients to work with you her advice kept the room silent and attentive with just the frantic (or was it manic?) scribbling sounds of pen to paper and finger taps to iPad’s as students hung on to her every word.

"Make them remember you over others"

Vietnam in particular she notes is quite known for clients who shop around for new agencies every time a creative requirement is needed. Partly owing to strict company policies of asking for three quotations/ cost bidding per project, most transactions end after just one project, a one-off instead of a long-term retainer relationship as clients seek out the most cost effective option for them.

The first practical tip in getting retainer accounts according to Monica is to seek those who would potentially have an ongoing need for your services and the budget to support it. And even if at the onset these clients do start out as short-term, good client managers should have the mindset to aim for long-term. Part of this mindset, is passion for the work; making a good impression; and constantly learning about your client’s business and how to help them develop it.

There are many academic journals, business articles and books that we can use to help educate ourselves on how to become professional client managers and maintaining long-term relationships with clients. But have we ever considered that maybe one way to maintain retainers is to educate the clients?

This suggestion was met with both surprise and curiosity by the students. And in what could be deemed as the most memorable part of the guest lecture was Monica’s presentation, of what I suggest should be termed as… The Quality vs. Price Triumvirate Model. A very practical guide every client manager should consider in educating clients and curbing expectations in a time and budget challenged environment such as that existing in Vietnam.

The Quality vs. Price Triumvirate

This model, was a result of her musings with her husband (who is also involved in advertising client servicing), experience with countless negotiations and re-negotiations with clients, and from reading tips in advertising magazines. Humbly, she shares that she claims no copyright over it and is just happy to share her own interpretation of how it works.

Simply put, clients should be made aware that they cannot have it all! Expecting agency to deliver a creative quality idea + in a quick time frame + costs cheap… is not possible. Something has got to give. Realistically, client managers need to make their clients choose two from the triumvirate. Monica funnily shares that she has had to print-out this model and show it to her clients whenever they start to make unworkable demands on her creative team.

By the end of the session, students were abuzz with questions including the sensitive topic of kick-backs and commissions as a device to maintain relationships which unfortunately is too juicy to share on record and online. This means, dear students you need to come to the next seminars to fully enjoy the tales from this exciting world of client management in Vietnam.

~Mel C

Your #1 goal should be to educate Clients on what is the point of differentiation you have to offer

ABOUT: Monica Morelos was instrumental in securing the Imperial Tobacco account on retainer (from 2006 to present) for River Orchid Vietnam.  She was also influential in winning the Green Cross Hand Sanitizer business, and being a key player in shaping the business strategies of the brand (from 2008 to 2010). Hired primarily to head River Orchid’s Client Service team she became General Manager in May 2010 and played a central role in the streamlining of processes across departments (Client Service, Creative, Activation, Public Relations, and Finance) and the overall growth of the agency. Currently she is on sabbatical and does freelance training for client servicing and maybe contacted directly through: monica.morelos@yahoo.com