Speculating On Gold: A Losing PropositionIn most industries mere mention of the word “speculation” cultivates images of risk, potential losses, dilution of assets, and mining for riches that never materialize. However, in the advertising and graphic design trade, speculation means something entirely different. For many practitioners spec work, as it’s often called, is considered a means to an end—the practice of accepting assignments without any guarantee of payment after the work has been completed. In today’s marketing-driven business environment, it’s important to understand that spec work is not an appropriate component of effectively managing the creative process and getting the most from your ad agency or design firm. Here’s why.
False Hope and Bad BusinessTo the agency or firm, agreeing to spec work is ultimately based on the hope of getting a new account and walking down the proverbial Yellow Brick Road to Emerald City and big payoffs. Ironically, provisions for compensation are rarely announced in advanced. Instead, this practice almost always results in diminished hopes, diluted concepts, and most important, lost revenues for the artist or the firm. Businesses like to sugar coat the acceptance of spec work as “a shot at stardom.” Critics label it “prostitution.” At Catapult Strategic Design, we prefer to just call it “bad business.” Most creative industries such as photographers, fine artists, and architects would never consider doing work without a contract to be paid. Why would an architect spend precious time and talent to design a beautiful building hoping that a prospective client might choose it and then set a value on the work? They wouldn’t of course. Why then do many ad agencies and some design firms readily give up their only true assets—their ideas and intellectual property—to gain favor with potential clients? The answers are as varied as the work that’s given away. For years it’s been common practice for ad agencies to pitch a new account with ideas for an upcoming advertising campaign. The investment and risks involved are usually accepted by the agency because of the oft tremendous, ongoing revenues garnered from media placement should the agency win the account. Graphic designers, however, who typically do not enjoy these media commissions examine spec work much more critically. Either way, respected industry associations have long voiced warnings against this practice.
Hearers and Doers of the WordGraphic Artists Guild’s, Pricing & Ethical Guidelines Handbook, reminds industry professionals that, “Speculative ventures, whether in financial markets or in the visual communications industries, are fraught with risk. Individuals who choose this course risk loss of capital and expenses…risk not being paid for the work, take valuable time from pursuing other paying assignments, and may incur unreimbursed expenses.” The American Association of Advertising Agencies’ (AAAA) Standards of Practice states, “Unethical competitive practices in the advertising agency business lead to financial waste, dilution of service, diversion of manpower, loss of prestige, and tend to weaken public confidence…in the institution of advertising.” And finally, the American Institute of Graphic Artists’ (AIGA) Standards of Professional Practice affirms, “A designer shall not undertake any speculative projects, either alone or in competition with other designers, for which compensation will only be received if a design is accepted or used. This applies not only to entire projects but also to preliminary schematic proposals.” Notwithstanding standards of practice and other clearly defined ethics, it can be difficult to be both “hearers and doers of the word.” This is especially true in tight, economic times when cutting marketing and advertising spending is always considered a business’ first income source to boost their financial bottom-line. When the pot of business at the end of the rainbow appears substantial or when an agency or firm is given a chance to get into a new market, it’s tempting to say yes to spec work. Sometimes a design firm will say yes to spec work just to compete with an ad agency whose willingness to do spec work is part of their normal business practices. In these cases, both lose to some degree regardless of who is awarded the account. It’s been said that the toughest word to say in the English language is simply, no. This axiom applies to advertising and design professionals as well when asked to consider performing spec work. Saying no should be considered a reflection of one’s business maturity, and not an implication that there’s plenty of work on the books already. Avoiding spec work is not about restricting free trade, but rather it’s about doing what’s right and what’s good for the industry.
Concept Work That Doesn’t Feel Like Spec WorkA number of years ago the largest specialty pet-related retailer in the U.S. approached Catapult Strategic Design about redesigning their entire line of premium store brand pet food. We were excited about the prospects of what would have been one of the largest pieces of business we had ever landed. Three firms from around the country were selected, including Catapult, to present a proposal for project work that would last a several months. There was one catch though. Each firm was asked to present their best new ideas for this product line. No compensation was offered. Instead, they simply wanted us to learn, discover, prepare, develop, and present concepts on spec—on our own nickel and on our own time. Of course, we refused and politely explained why requesting and doing spec work was wrong. We then offered the following solution. Pay each firm $5,000 to develop a limited number of initial design concepts that meet some general strategic parameters. If our design firm was selected, we agreed to credit them $15,000 to cover the concept fees paid to all three firms. We were confident the other two firms would agree to these same terms. The prospective client, however, was unwilling to assume any risk with what would have been a win-win offer for all parties involved. Nonetheless, they invited us to present our portfolio and capabilities to the team in spite of clearly being at a disadvantage to the other two firms who developed package concepts on spec. A year later, I bumped into the brand manager of this company and asked him about the project, assuming it had long been completed. He said, “Even though the other two firms presented great design ideas and one of the firms was selected for the contract, we never actually executed the complete overhaul of our store brand and the project didn’t go much farther than the original concepts they did.” Surprise, surprise—once again, choosing the right was validated. Remember, giving away your ideas for free is nearly always a lose-lose proposition.
So, why does one say no to spec work in the first place? Here are three reasons to stand up for this principal, educate prospective clients, and add value to one’s reputation and goodwill.