Technique 3 minutes, 38 second read Mark Johnson, Editor, Just.Marketing
As the fragile economy emerges from lockdown it is unlikely there will be a frenzy of new agency appointments. But given that creative pitches requiring insights, planning, creativity and other specialist skills can cost up to 20% of the first year’s account fees, there are fears that not all agencies will be able to afford to take part; or worse, they could go out of business altogether.
According to research by professional client and agency intermediary AAR Group in 2018, the average cost of a creative pitch across all disciplines was £188,000. In today’s economy, to invest so much and not win the business could be deeply damaging to agencies.
So is it time to share pitch costs between agency and client?
No client currently funds creative pitches
Alex Young, Business Director, AAR Group says, “No pitches are currently completely funded by clients but almost 10% contribute around £5,000 to the cost of a pitch.”
In his 35 years in the marketing industry, Giles Fraser, Co-Founder of Brands2Life, says, “Once you’re on a roster, clients are more inclined to give a contribution but it’s relatively rare that a client pays for a pitch.”
He believes that over the next six months, it is even less likely to happen as agency competition will be fierce.
“In a buyer’s market, this is not necessarily the time when clients will be willing to consider this,” says Giles.
There is also the danger, warns Alex, that when a client compensates an unsuccessful agency, this may equate in the client’s mind to buying the ideas presented by the agency without giving them the business.
A long-fought battle
The idea is not a new one. But according to Francis Ingham Director General of industry trade body the PRCA, the idea’s time may finally have arrived.
He says, “We’ve been batting this idea back and forth for probably twenty years now –maybe longer – and the moment never seems quite right. But perhaps now is just that moment, because when so many certainties have disappeared, why not question another one?”
So is the timing right? Alex says despite her company “always talking to clients about giving a contribution to those agencies who pitched” and such efforts always being unsuccessful, there is hope for agencies.
She says, “Clients understand that agencies are becoming invaluable to them as they pivot during the lockdown.”
The hope could also come in the form of a change to the agency selection process. She suggests that a fairer model would be to narrow the list of agencies asked to invest time and resources into a pitch to just two, having eliminated other candidates based on credentials and chemistry.
The first three months of the lockdown have already seen some client-agency relationships put under strain.
Francis says, “Over the past three months I’ve seen both the best and the worst of client-agency relationships. The worst have seen a complete lack of trust and transparency, and if I’m quite honest, some brands using this as a great opportunity to hammer down costs. The best have seen both parties doing their best in the most trying of circumstances and working to help one another.”
It is in this spirit that trade bodies like the PRCA hope clients will view agencies as valued parts of the marketing eco system. At the very least, clients can find self-interest reasons for rethinking the wasteful current approach to pitching, says Francis.
The first point of self-interest, he argues, is that more agencies will survive the economic whirlwind, which will offer a greater range of creativity and quality of ideas to clients in the long run. He even argues that proposal quality will improve.
Francis says, “The no-pay pitch means that quite honestly too many proposals are put together at the last minute – simply because there are too many pitches live at any one point, and because clients construct shortlists that are far too long because, well if you’re not paying for them, why not invite plenty of them?”
The alternative to a strong and flexible relationship between agency and client, he points out, is agencies fighting for survival – especially in Q3 when many agency heads face deferred rents, taxes and new redundancy costs.