Omnicom pulled direct agencies out of Post Office pitch in protest over indemnity clause

The short-listed agencies - the incumbent DraftFCB, Lida, TMW and OgilvyOne - took part in chemistry meetings with the Post Office last week and on Monday. The pitch, due to happen on 12 November, is being led by marketing director Gareth Hockey-Morley.

But Omnicom direct agencies Rapp, Proximity London and Tequila\London were withdrawn at the ‘long list' phase in protest at the Post Office's insistence on agencies agreeing to unlimited liability.

The clause means that the winning agency would have no ceiling on what they might have to pay out should they cause any damage to the Post Office.

Royal Mail, parent of the Post Office, confirmed that Omnicom had withdrawn. "Omnicom is entitled to its opinion and we respect that opinion," a Royal Mail spokesperson told Marketing Direct this morning.

"But we have an exciting and creative group of agencies who continue to want to be on the roster and have accepted the conditions of that roster, which we think are really important in order to get good value for money for the Post Office and our customers."

The decision to withdraw Omnicom's agencies was thought to have been taken at the global group's New York head office.

WPP agency OgilvyOne remains in the race. Annette King, CEO of OgilvyOne, would not comment on the issue except to say that the Post Office "is a great brand and having worked on the pitch, I can say this is a genuinely very exciting and interesting piece of business."

The issue of unlimited liability is a divisive one, particularly in a downturn. One observer described unlimited liability as "a worrying trend" while another said Omnicom's move was "a little naïve. You do what you have to do to get through to the next stage and then negotiate".

Richard Marshall, new business development director at TMW, said that unlimited liability was "not something that any agency would welcome but our pre-existing relationship with the Post Office - in the sense that we are on the Royal Mail digital roster and through that do some work for the Post Office - means we have an imperative to expand that relationship.

"Our stance is [that despite the indemnity clause] we were still prepared to compete for financial services part of the Post Office business."

Neil Cowan, new business development director at Chemistry Communications, which was not involved in the Post Office pitch, said agencies had to be practical in the current climate.

"To be honest, we tend not to reject business opportunities out of hand. While we're conscious that the [client] demands placed upon us can be onerous, if we reject them we simply don't get into the review process."