I think that agency management has to ask the question – Is advertising agency pitch pain killing your agency?
I kicked off “The Levitan Pitch. Buy This Book. Win More Pitches.“, my book on how to win a pitch (still selling well if you are wondering if books have a long life), with a discussion of the hardships that come from running after every new RFI, RFP, and pitch. We are now in a marketing world where the number of client-driven, post-pandemic (well the worst of the pandemic) pitches are on the rise. However, make sure you know which client-based pitch you should go for.
At best, you have a 30% chance of winning. If you are the incumbent, you might even want to bow out fast. The win rate for incumbents is not, um, great.
Pitching Is Good. Pitch Pain Is Bad.
The good news.
The number of clients seeking new agencies is up. I hear this form agency owners, from pubs like Campaign Magazine and pitch consultants including Avi Dan as he wrote in his Forbes article, “Marketers Plan To Shed Even Good Agencies In The Coming Months.” Here’s a tidbit…
Almost all advertisers that I spoke with are considering an agency change. Surprisingly, only a few are motivated by bad advertising. For most, the issue has more to do with the future than the past. As one CMO put it, “Our agency is doing an OK job, but times are changing and I’m not sure they are ready for what’s next. We need a different type of agency, with different skills than the one we have.”
Why are clients looking for new agencies?:
- Clients orgs and CMOs are worried. Worried about their marketing programs in light of the pace of digital transformation. And, they are worried about their jobs. Agency change represents some form of quick solution and a sense of progress.
- Clients are looking for more and more digital expertise.
- Many incumbent agencies are somewhat somnambulant. Their client contact people have not been trained on how to hold and grow clients. A serious training issue that I will help address this year.
- Many clients simply have no clue what they need and want. Let’s politely call it being fickle.
These factors, and more, lead to agency shifts. This can be good for the agencies that “get it.”
The bad news.
The bad news is that agencies will need to figure out what business they should pitch. I’ll get right to the point…. do not pitch everything. Why? Do not pitch every new account prospect that comes your way – it will be a waste of your time, money, and – importantly – agency mental health. Have a plan for what the right clients look like and have a budget (oh, and a process).
I offer this agency CEO mantra:
We will not pitch every account that comes our way. The pitch process is simply too costly. Before we pitch any account we will work hard to determine if the prospective client is a good fit for the agency based on a set of predetermined criteria. Here is a start. Is the client famous? Do they respect marketing? Do they actually know what they want? Do they want us to do brilliant work? Will they pay well? Are they a cultural fit?
Hopefully, you can say yes to two or three of these.
The $$$$ problem.
Writing RFIs, RFPs rather time-consuming and expensive. Understatement. Here is a bit from my pitch book’s chapter: More Painful Math. Clearly, your numbers may vary. But, you’ll get the point that not having a business development plan with objectives and strategies is a loss-leading problem.
From The Levitan Pitch. book…
Agency CEO’s and Business Development Directors occasionally use metaphors to help describe their business development efforts. One of the all-time favorites is how similar agencies are to cobblers and shoes. Cobblers do not have the time to make shoes for their children, and too many agencies don’t make the time to run smart business development programs.
Here’s another metaphor.
Agencies (OK, American agencies) often point to the career batting averages of major league baseball players when they discuss the success rate of their new business programs. As they put it, even baseball Hall of Famers are perceived as victorious if they have a career batting average of .300 or more. That’s only 3 hits for every 10 times at bat. Even the great Hall of Famer Reggie Jackson only had a .261 batting average. In agency think, this would mean that the agency would be Hall of Fame material if they won 3 out of every 10 pitches.
Let’s do some agency math using the 1:3 ratio.
Based on my personal experience, conversations with agency CEO’s, and a review of existing data, on average, small to medium agency responds to 10 RFP’s and participates in 6 pitches per year. Your mileage may vary but let’s go with this.
My estimated cost per RFP is $15,000 based on 150 hours of work at a direct labor cost of $100 per hour. At ten RFP’s per year, that’s a participation cost of $150,000 per year.
A conservative estimate of an average finalist pitch, which includes external and internal meetings, pitch management, strategic planning, writing, creative work, pitch design (as in leave-behinds and supporting digital programs), the pitch itself, T&E, and post presentation follow-up costs an agency approximately $35,000. If an agency does 6 pitches per year that’s $210,000.
Obviously, given the size range between multinational networks and small shops, an agency’s mileage may vary but these numbers seem fair for the average agency, and they help frame the issue.
Using my scenario, the total annual cost for RFP’s and pitching comes to $360,000. This number does not include the day-to-day costs of business development. If you add in management, creative, analog and digital market- ing, and business development director time, an agency could easily top out at over $500,000 in labor and outsourced business development costs per year. I am ball-parking here just to get to a reference number.
It can get much more costly. The search consultant David Wethey of Agency Assessments International reports that the average pitch cost per UK agency was £178,000 in 2010. Channeling Las Vegas, as an agency owner I’ve put my own hard-earned cash on the line to win new business. As I write this book, Microsoft just handed their international account to Interpublic. Just imagine how much it took to win that pitch.
Bottom line… an agency could easily spend $500,000 to have a “Hall of Fame” business development batting average of .300. Given today’s decreasing creative services industry profit margins, these numbers could be considered depressing.
Do you like this math? I don’t.
The People Pain Problem.
Pitch Pain is real… Pitching, too often, results in significant agency employee pain. I started my book by quoting a research study of advertising professionals by Provoke Insights that supports the idea that agency employees are dissatisfied with their agency’s pitch process.
“Approximately half (47% of respondents) of advertising professionals surveyed by Provoke Insights say they are dissatisfied with the current internal approach to pitching.”
And, again from Avi.
During the last year I had been traveling all over the country, meeting with advertisers and CEOs, except, for the fact that I’m not actually traveling physically. I’m still stuck at home, in New York, relying – like many of us – on virtual meetings.
As much as pitches represent a chance for agencies to win some much-needed revenue, they’re also an additional cost. Already short-staffed, in light of cost cuts during the pandemic, agency bosses will need to weigh their chances of winning new business, along with the impact it will have, on work for current clients. It can be a slippery slope for those CEOs struggling to balance short-term gains and the longer-term stability of their business.
One more point. Responding to RFIs and RFPs and pitching takes time away from current clients. need I say more?
The Advertising Agency Pitch Pain Bottom Line?
Look, winning new business is good. However, winning the right new business is very very good.
Running after every “available” account is bad. You will lose more than you win. Have a plan and decision-making criteria for what account you should pitch for.
Back to the main question: “Is RFI, RFP, And Pitch Pain killing your advertising agency?” The answer can be a disastrous – yes.
Give me a shout if you want to have a talk about my perspective.
Even More – Winning The Zoom Pitch
I built a video presentation on how to run a winning virtual advertising agency pitch on Zoom. It is guaranteed to help reduce advertising agency pitch pain. Check it out.
