August 13, 2019
Agency View - The Cost of New Business
Winning New Business, At What Price?
“Ditch the Pitch” was the rally cry that made headlines last month when Initiative’s Global CEO, Mat Baxter, issued an industry wide call to action at a Mumbrella 360. He called the dog and pony show a “culture-killing, unsustainable model, leading to the industry’s burn and churn rate.”
Baxter cited staggering statistics such as global pitches costing on average $300,000, with the process evolving from presenting a strategy for eight channels to more than seventy, with hundreds of agencies competing, and margins going from 15% to less than 5%.
The financial drain is taking its toll across many of our agency partners, and it was also highlighted as a key topic at Ad Age’s Small Agency Awards in New Orleans at the end of July. Lisa Colantuono, President of AAR Partners, a leading agency search consultancy, suggested that rather than participating in every big pitch you can get into, working for clients on an initial project basis is a better route and in tune with what clients are often looking for. “Roll up your sleeves and get in the trenches with them,” Colantuono suggests. She went on to explain that more and more clients are looking to work with more than one agency, and project testing is the way in.
We are seeing many of our agency partners taking the approach of letting their good work be noticed (and measured), and slowly aggregating a bigger piece of the client’s advertising needs. This has historically been Active’s approach as well, as we prove ourselves, we gain more and more media buying assignments.
In fact, Active has been getting more involved with our agencies’ new business efforts, by routinely assisting them to enhance project work, extend their media capabilities and keep their pricing competitive in both project and pitch scenarios. Keeping their pricing competitive becomes our biggest role when our agency partners do decide to participate in a large pitch or grueling RFP. We help them price for the win. Active can swiftly join the team and work under the specific direction of the agency. We often can add some insights as well, given our purview across agencies and clients. We all need to win new business to prosper, and our incremental media buying efficiencies often serve as a secret weapon for our agency partners.
Mumbrella: Mat Baxter Blast The “Dog and Pony Show” Pitch Process, Urges Industry to Ditch it and Bad Clients