Earlier this month, Ebiquity was an active sponsor and partner in the third, annual ProcureCon event, Europe’s only conference dedicated to marketing procurement decision-makers. At the event, Neil Duncan – Ebiquity’s Managing Director, Media – ran a session for advertisers titled “To pitch or not to pitch?”, a best-practice workshop on the pros and cons of reviewing agency relationships. Here, Neil shares his perspective on the key issues advertisers need to keep front of mind when considering and carrying out a pitch, and why it’s so important to be clear about your motives and reasons before calling one.
So many of the world’s biggest-spending advertisers are currently reviewing their media agencies that US trade magazine Adweek has dubbed the current market “Mediapalooza 2015”. Global accounts currently under pitch include: Unilever, P&G, J&J, General Mills, VW, L’Oreal, Sony, 21st Century Fox, VISA, and Citibank.
An estimated $26bn of billings are under the microscope, reckoned to be as much as 6.9 per cent of global billings by RECMA; as little as 3.7 per cent in France but as much as 6.3 per cent in Germany and 10.3 per cent in India. Analysts including Nomura have observed a significant acceleration in the number of large tenders in recent months. Throughout 2013 and 2014, billings under pitch averaged just below $2bn per month, whereas this figure was more than $4bn per month for the first five months of 2015 alone.
Ad Age recently observed an unprecedented state of affairs under which “marketers reviewing their media businesses now outnumber the agencies with resources to compete in the reviews”. Pitches are traditionally the lifeblood of agencies, when they do their best work and expose their finest talent and most creative minds. But there are so many accounts up for pitch right now that many are also very stretched, both to pitch successfully and to manage existing business, whether or not it’s under review.
There are five complementary reasons we’re hearing from our clients as to why media agency pitches have become so popular all of a sudden.
- The rush to digital. With digital advertising expenditure predicted to eclipse TV budgets in the next two years, advertisers are putting much greater emphasis on understanding the role digital should be playing in support of their overall communications approach and are assessing which agencies are best placed to help them navigate through the rapidly evolving digital environment.
- Lack of transparency. With the rapid spread and growth of new ad serving and buying platforms – including programmatic and agency trading desks – many clients have a limited understanding of precisely where their money is going online or how it is performing. What’s more, the fastest growing elements of online advertising – programmatic, mobile, and video – are among the least well understood by clients. They’ve had enough.
- FOMO (Fear Of Missing Out) or the House of Cards theory. If your competitor is reviewing their business for the first time in many years and you’re not, they will have access to the best, most current – digital – expertise, and you won’t.
- Concern over rebates. Again a transparency issue – particularly for US-based advertisers – with commentators in Ad Age speculating that up to two-thirds of current pitches are fueled at least in part by the rebate debate.
- Lack of audit rights – that is, in some cases, restricted access to bought media and performance data to validate agency claims. An accountability and transparency issue, embedded in current contracts.
Like all complex issues, there isn’t a single or easy answer, and all factors doubtless play some role in most advertisers’ decisions to pitch. What is clear however is that the scale and volume of reviews are more structural and strategic than the usual three-year itch. According to Nomura research, up to 40 per cent of the accounts currently up for pitch include agencies that have been incumbent for ten years or more, including P&G’s $2.7bn, which has been held by the Publicis group since 1997.
As a P&G spokesperson told Adweek at the end of May 2015:
“Marketers don’t know if they have best-in-class media players in areas like mobile and social marketing simply because the disciplines are so new.”
– Laura O’Reilly, $25bn in media money just went up for grabs – and nobody can agree why, Business Week, 29 May 2015
But pitches are often costly, time-intensive exercises, and so before deciding whether or not to tender media agencies, advertisers need to answer two critical questions:
- What does my organization want to achieve by reviewing and pitching my media business?
- Do we understand the demands on our time and the broader impact on our organization that pitching will have?
Objectives and motivations
There are a number of different outcomes an advertiser may be keen to bring about as a result of changing their media agency relationships. These can be categorized broadly as financial, service, and personnel.
Financial: better media deals, improved media value, and better commercial terms.
Service: enhanced service and resource, strategic input, better media planning and support.
Personnel: innovation and proactivity from agency teams, and the most talented individuals working on their business.
Whatever your primary objectives – and you should be clear about what yours are before taking the plunge – all advertisers should be looking to improve the transparency with which their agencies transact on their behalf, improving agency accountability. These issues have been pushed up the agenda as a result of the relative lack of visibility and accountability that newer, digital media buys – and particularly automated, programmatic media transactions – have brought with them. Even WPP’s Sir Martin Sorrell, speaking at Advertising Week Europe in Spring 2015, said that there are areas where the ad industry doesn’t report transparently enough. By improving transparency and accountability, advertisers can fundamentally shift control back in their favour.
Reviewing and potentially changing media agency should not be entered into lightly and without due consideration of the impact and disruption that the process could have on your business, during and after the pitch has been concluded. This is true whether or not the incumbent agency is asked to pitch, and whether or not it retains the business. And it is particularly true for major advertisers spending hundreds of millions of dollars across dozens of markets, a process which – done comprehensively – can take considerably longer than a year to complete.
The best reviews demand significant amounts of time from a variety of different stakeholders in advertiser businesses. So, before deciding to pitch, you should have a frank conversation with the incumbent to learn whether they can address your objectives and motivations without changing agency. But if you do choose to switch, you must plan carefully who inside your business will be required to give how much time and input, setting deadlines, and actively managing contributions.
Our clear advice is that advertisers are best served by working with an intermediary to help with the whole pitch management process. We would say that, wouldn’t we? Well yes we would, because we know how complex and time-intensive media agency reviews need to be if done right … if you’re to agree a new contract with unambiguous guarantees that addresses your ambitions, objectives, and motivations as an organization, and is fit for the challenges on the horizon … and if you’re not to find yourself in the same place again in 18 months’ time because your didn’t ask the right questions in the right way first time around.