2010: the year of the cheap annual report?
Jan 12, 2010
New website could see price comparisons for annual report agencies
UK companies will soon be able to compare annual report costs with the launch of a new budget comparison website called Moheko. It is hoped the website, which launches on January 18, will simplify the existing process by assembling a pitch list of agencies, all within a defined budget range.
Robert Moser, former managing partner of Merchant and the man behind the initiative, thinks it will improve price transparency and value for listed companies. ‘Public companies say they’re finding it increasingly hard to get their head around the prices they are being charged because of the low level of price transparency,’ he explains. ‘This is particularly important when it comes to budget setting.’
The founders hope the website will help reduce the amount of time listed companies spend on procurement for annual reports. Moheko requires corporates to input information about the format of their desired annual report. This information will then be sent out to more than 15 annual report agencies as an anonymous order for an ‘agency and budget comparison report’. Agencies can then respond with a pitch for the annual report.
‘At present, there is confusion among buyers and a lack of comparability, as well as big time commitments on both sides,’ Moser says. ‘Moheko will allow listed companies to anonymously and confidentially ‘sense-check’ an incumbent agency’s budget each year. At the moment, companies have no way of knowing whether they are paying the current market rate or simply an old rate.’
Moser says it can also help tackle the complaint that larger companies tend to feel over-charged by the agencies.
The scheme is not without its dissenters, however. ‘There is a good reason why a smaller company gets a lower quote for an annual report: a company listed on the Alternative Investment Market will be relatively easy to please while a large firm is more likely to be a demanding client,’ one annual report provider tells IR magazine.
Some agencies also claim the system oversimplifies the annual report pitching process. ‘The problem is that agencies are very different. We would never pitch on price because we are not interested in getting lots of new clients so for us it isn’t as much a pull as it might be for other agencies,’ explains a representative from another annual report agency.
Arguably, the potentially damaging effect on margins could act as a disincentive for agencies to take part in the pitching process. ‘The print mark-up could also be an issue,’ explains a third agency. ‘Some agencies may be cagey about this because print-cost discounts agreed between the agency and the printer may not always be passed on to the client.’
Despite the opposition, Moser believes Moheko will be attractive to some agencies and corporates. He says all budgets are standardized, in terms of their detailed scope and format, making them ‘extremely easy’ to compare. ‘There is also a big section on differentiation between the agencies including information such as staff turnover, expertise and size of firm,’ he adds.