Question

Topic: Advertising/PR

New Business Conflict Of Interest: Yes Or No?

Posted by Anonymous on 9/28/2005 at 1:35 PM ET 250 Points
Issue: at our new design group, we are currently doing (design and marketing) work for a large software client. While they have not signed any agency of record with us, we count on them as our "cash cow," and would not want to jeopardize this. Ultimately, we would like to become an agency of record.
Dilemma: as a new agency, we want to aggressively pitch for new businesses. We would like to pitch to a company whose main product focus is in direct competition with one arm of the first company with whom we currently work.
Question: Should we pitch ahead since there is no formal agency of record with the first company? Do we let the opportunity pass us by? I welcome your input and advice. Thank you!
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RESPONSES

  • Posted on 9/28/2005 at 1:45 PM Accepted
    I would never do this. I think it is a breach of ethics to pursue a direct competitor to one of your clients, regardless of size.
  • Posted by michael on 9/28/2005 at 2:10 PM Accepted
    I think it's a great opportunity to open negotiations with your current customer. Tell them you have been approached by a competitor to do some work and get their feedback.

    On the other hand if you're trying to go after new business I would steer clear of any direct competitor. In fact, you may want to explain to your "cash cow" that you're looking to grow your client list and you want to be certain there are no conflicts. Ask THEM who THEY feel is a direct competitor. You may be surprised at the answer.

    Like everyone has said, open communication is key so to your client.

    Michael
  • Posted on 9/28/2005 at 2:35 PM Member
    I would consider this a conflict of interest whether you have a contract or not. If it's in direct competition you have to pass on it based on ethics. This could be a reason for them to discontinue work with you or cause relations to become frayed.

    I had similar situations myself. I discussed a similar concern with a client who is close and knows that in my business as a freelance business writer that it's feast or famine. When the opportunity to work for the competitor came up I discussed it with the client. In one case they were very supportive and expressed how they were happy I brought it up with them, but that it was ok if I did work for both as they were moving in different niches even though from the outside they looked similiar.

    In another scenario where two software companies were in similar space I also discussed it with the client and their preference was that I say no to that work and they assured me that with our working relationship we'd more than make up for the loss in revenue.
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