This post is by Darren Woolley, Founder of TrinityP3. With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.
Most agencies, and perhaps a few advertisers, would know TrinityP3 as a pitch consultancy. However, of all the work we do, managing pitches is less than one fifth of our business. But, it is the part that gets the most attention from agencies and the trade media for obvious reasons.
In fact, we regularly finding ourselves doing more work to avoid an advertiser pitching. While this is good news for an incumbent agency, it is a lost new business opportunity for everyone else. But in actual fact avoiding the pitch is better for all those involved including advertisers, procurement, the incumbent agency and even us.
There are important reasons to have a robust and fair procurement process to select new agencies and suppliers, but in recent times pitches have become the default approach to solving problems and also a standard operating model, which has contributed to short client / agency tenures and impacted on the performance of those relationships. So here we explore why in many cases no pitch is better than pitching for everyone involved.
When to pitch
When you consider the time involved from both the marketer and agencies participating in a tender, it is not something to be entered in to lightly and certainly not the first solution you should consider. But here is a list of reasons you should go to tender:
- Your strategic requirements change and your agencies cannot deliver
- The relationship with your agency become untenable despite all efforts
- Either the advertiser or the agency materially breach their contract
- There is a fundamental failure of trust that is irreparable
- Your agency resigned the account to take a more valuable competitor
When not to pitch
But if you have a terrific relationship with your agency and the contract is coming to an end it is possible to assess the agency to the market without going to the trouble, time and cost of a tender. How?
As you are generally happy with the incumbent agency’s performance it would be possible to undertake a detailed 360 degree assessment of that relationship. But this we do not mean from both sides, agency and advertiser, but from the perspective of all stakeholders to the relationship, including other agencies on the roster and all the internal stakeholders within the organisation including marketing, procurement, management and others who critique the agency’s performance.
You will also want to assess the cost of the agency. This is not weather or not you can get the services cheaper, because you can always get it cheaper, but you rarely get it any better. So why would you want to end up paying less to get less? This means benchmarking the value the agency delivers and this is best done against the outputs of the scope of work.
Finally you would want to ensure the agency contract is up to date and captures and protects all aspects of the commercial relationship.
If you were able to independently verify, validate and certify the commercial arrangement and performance of the agency, is that all you would really achieve if you took your current well performing agency to market?
Benefits for the Advertisers
It will save you significant amounts of time
If you are already in back-to-back meetings on an average week do you really want to take on 12 – 14 weeks of additional meetings with more agencies and the internal meeting to discuss progress?
You are less likely to be disappointed
After the initial honeymoon period many new client / agency relationships fall into a period of disillusionment as many of the promises made to win the pitch are not delivered. But to be fair, it is often because in the negotiations to deliver savings most of them were cut from the scope of work.
You will be taking a smaller risk with your strategy
As part of testing the new agencies you will need to reveal aspects of your business and your strategy to a number of new agencies desperate to ‘get to know’ your business and no amount of pages in the non-disclosure agreement will protect you from them sharing these with competitors, especially if they are unsuccessful.
Benefits for the Incumbent Agency
You can focus on helping your client grow
Defending a pitch is hugely time consuming for all agencies, but particularly for the incumbent who must also ensure that the relationship and day-to-day business remains highly productive and functional. One of the biggest issues for the incumbent is that when the pitch is called, often many staff on the account start contacting recruiters just to hedge their bets in case the account is not retained.
You don’t need to radically reinvent yourself
One of the reasons incumbents often are unsuccessful defending an account is that the potential new agencies will be offering and making new promises that can be highly attractive to marketers, irrespective of the ability of the agency to deliver. The defence for this is many incumbents try to radically reinvent themselves only to be criticised for it.
You can deepen the relationship
Instead of putting all of that agency energy into a pitch, you can use the review process to engage in open and constructive discussions on ways to improve and deepen the relationship with the client, other stakeholders in the organisation and the other agencies on the roster. This is an infinitely more valuable investment than participating in the pitch.
Benefits for the Procurement Team
Be seen as a commercial partner rather than a disruptor
Rather than turning up every three years at the contract end and disrupting the client / agency relationship, this is an opportunity to manage and co-ordinate the commercial arrangement and take on the responsibility for ensuring the contract and the commercial arrangements remain relevant, competitive and sustainable.
Take ownership of the commercial management
When the pitch is over, many marketers feel that procurement disappears to leave them to put the relationship with the agency back together. But done right, this process means that procurement can with a light touch, be involved in an on-going basis with marketing to assist in managing the on-going commercial arrangement not just for one agency but the whole roster.
Add significant value, not just deliver savings
Many involved in the pitch from both the marketer and agency sides often feel that the measure of success for procurement is delivering savings by negotiating lower fees. This is because it is often a particular commercial focus in the process. But in fact the real value is in the delivery of a sustainable and performing commercial relationship between the marketers and their agencies,
Benefits for the Consultant
Pitching is hard work
At the risk of having you play the smallest violin in the world on my behalf, managing a pitch professionally and properly is time consuming and often difficult work for our team. Dealing with many agencies, scheduling meetings, providing advice, providing feedback and qualitatively and quantitatively assessing agency performance can take hundreds of hours over many weeks for the team.
Delivers on our measure of success
Our focus and our measure of success is that all participants feel they have been treated respectfully and fairly with an equal opportunity for success. But ultimately, while we do not make the decision, we want the outcome to be successful and sustainable in the long term. This is why we offer a 6 month guarantee that if the client finds they have made the wrong decision we will fix it at no cost. In almost twenty years this has only happened twice.
Little or no impact on revenue
Pitch management is highly competitive. Many marketers feel they can do it themselves. Most procurement people know they can do it, its their job. But then there is everyone that has ever worked in advertising and marketing can easily hang up a shingle and call themselves pitch consultants. In a pitch or in a review we believe the revenue for the job should be commensurate with the value provided.
The marketer’s choice
So if you have a performing agency relationship and you are told to take it to market, there is a choice that gives you assurance without the disruption. Plus there are benefits for everyone involved. In fact the only people that should be disappointed will be those agencies who expect you to go to pitch every three years, based on past behaviour, and have been counting down the days until they can have a go at winning that business.
But on the basis that long term client / agency relationships have delivered the most long term value, doesn’t it make more sense to independently review rather than disrupt what is already working well? If so, we can help you.
TrinityP3’s comprehensive Search & Selection process provides extensive market knowledge, tightly defined process and detailed evaluation and assessment. Find out more