New Zealand’s all-of-government creative and media panel has disappointed the local industry, insiders tell AdNews.
With major changes preferring agencies which could provide lower fees, leaving most of the big agencies out in the cold.
The tender opened earlier this year and saw the account restructure to combine both creative and media.
The contracts were then awarded July 31 with over 250 providers appointed from sole traders to large enterprises.
The panel is not mostly made up of global networks that send profits offshore, but instead local businesses.
So some of the largest advertising, media, and creative businesses have been dropped off the roster such as dentsu, Ogilvy, Special, The Monkeys, VML and more.
Many of these agencies have previously handled or currently handle significant government accounts, for example VML with Te Whatu Ora, ACC, and Stats NZ; Ogilvy with the Human Rights Commission; and Stanley Street with the Ministry of Education and Tourism New Zealand.
Stick it to Hep C campaign for Health New Zealand/Te Whatu Ora via VML.
The local industry is also angered due to the new pricing model.
Evaluating agencies solely by hourly rates is not only short-sighted but disrespectful to the valuable work done by Aotearoa agencies over the years, independent agency Jnr. managing director and founder John Marshall said.
“Ignoring capability, quality, and experience in their criteria is baffling,” Marshall told AdNews.
“Then, claiming to save taxpayers' money while most of the roster is made up of global networks that send profits offshore, is not only contradictory, but is crazy.”
But the RFP initially highlighted that cost was a key driver
The Ministry of Business, Innovation and Employment (MBIE) [the Government's lead business-facing agency] advised in the tender documentation that they were seeking rates no more than 20 per cent above the average tender response rate.
“Given the wide range of services required by each agency, it was not practicable to assess in detail the capability and experience of respondents without turning the tender process into one that was overly onerous for respondents,” New Zealand Government Procurement general manager Liz Palmer told AdNews.
“The focus instead was to identify those suppliers who could meet the mandatory criteria within the price constraints and then to assist government agencies to select the supplier who best meets their specific needs.
“Respondents who met the mandatory criteria, but initially failed to meet the pricing threshold, were given an opportunity to revise pricing.
“Those who met the pricing requirement were then subject to due diligence before being appointed to the panel.
“The RFP was transparent regarding these criteria and was subject to independent probity to ensure fairness throughout the process.”
MBIE manages 19 other All-of-Government (AoG) contracts and each aims to achieve cost savings and efficiencies, as part of a wide-ranging cutback in taxpayer spending.
Annual savings amounted to over $200 million in 2022/23. Financial savings are a positive outcome in this climate of change and fiscal restraint, Palmer told AdNews.
The contracts ‘save time, duplication and offer ongoing supplier management which fosters greater supplier/agency collaboration, standardised processes and consistent Terms and Conditions’.
New Zealand’s peak body for creative, media and PR agencies agencies Commercial Communications Council CEO Simon Lendrum told AdNews he understands the government’s need for cost savings but the process is still flawed.
“This process is unlikely to deliver the outcomes they claim to be seeking. In inviting participants to apply for panel inclusion, they failed to ask any questions that would enable applicants to demonstrate or substantiate their capability, experience or credentials to actually deliver quality outcomes,” Lendrum said.
“Instead, the only material hurdle to overcome was to blindly achieve rate card pricing that was within 20% of the average across all companies applying. So with no quality overlay, the pricing comparisons were unreasonable.
“It required applicants to guess what the average price might be when any company, from small, 3-person companies to the very largest companies, were being compared. It drove ratecard price down for everyone concerned.
“Perhaps more stubbornly, it resulted in many of the most experienced government providers being unsuccessful.
“Without getting too granular, it asked for 5 ratecard levels of price to be submitted, and a blanket discount applied uniformly across all levels. So even if a large company did want to deliver additional discount to their senior leadership rate card, to anticipate the effect of a wide-open panel, they couldn’t.
“We all know that our industry’s value cannot be reduced to a single measure of rate card price. It ignores the other two critical components of value; time required to deliver, and outcomes resulting from the work.
“The whole process returns to the old-school procurement belief that professional services are just paperclips in disguise, and if the private sector looks to the public sector to set an example, this ranks amongst the poorest.”
However, not the entire industry is disappointed
One of the appointed panel agencies independent DigitalxMarketing told AdNews its observation is that some of the traditional and incumbent advertising and media agencies have been slow to adapt business models and deliver disruptive business services remaining expensive and uncompetitive.
The Government has clearly signalled it wants to use this opportunity to drive down costs whilst delivering better outcomes, DigitalxMarketing managing director Matthew Collins said.
“Its game on. The tide has turned. Media and Creative services delivered to Government Agencies have to change with the times and technology,” Collins said.
“The cookie-cutter solutions and old business models have come under attack as the use of AI in marketing allows innovative service providers to deliver better outcomes at lower prices.
“We embraced the opportunity to deliver this to the NZ Government Agencies."
MBIE said it will be continually monitoring performance of providers and the panel to ensure it is working as intended.
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