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What’s causing all the agency reviews?

agency reviews

This post is by Darren Woolley, Founder and Global CEO of TrinityP3With his background as an analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader in optimizing marketing productivity and performance across marketing agencies and supplier rosters.

You are probably surprised that a pitch consultant is questioning why it is that this year we’ve already seen an unprecedented number of reviews being called. Why are we not simply busy taking the work and being thankful for it after the impact of the pandemic?

But it is interesting to see a large number of pitches this year, considering that unless it’s a corporate governance requirement, global realignment or competitive conflict, calling an agency review isn’t something most clients undertake lightly.

For sure, this year is different. And we think there are four major factors that are creating the current conditions for reviews:

  1. Agency searches that were delayed last year, because of uncertainties caused by the pandemic, have now been given the green light and are adding to the normal cadence of reviews that would otherwise be taking place.
  2. Working remotely has highlighted and exacerbated flaws in the process – whether within agencies or client-side – that are perceived as impeding progress.
  3. The great resignation has created such a monumental turnover of resources that marketers are quickly re-evaluating agency capabilities with a view to stabilising staffing on their businesses elsewhere.
  4. With agency resourcing becoming unstable, marketers are moving their agency internalisation strategies from ‘test and learn‘ to standard operating procedures.

It’s our view the pitch storm (a pitchpalooza?) will subside once things begin to normalise, and resources become settled in new environments – although we may still see another year of upheaval before things settle down.

If you are facing one of these issues or challenges, then perhaps we can advise you on the best way forward. You see, as a pitch consultant, you do not necessarily believe that a pitch is always the best solution. In fact, often the pitch may in fact have the opposite effect. So, let’s review these contributing factors and examine the solutions.

Return to business as usual

Yes, for some it may feel like we have returned to business as usual. In March 2020, we had a week when four of the six pitches we were managing were indefinitely postponed because of the uncertainty of the pandemic. The two that proceeded were both successfully managed remotely using video conferencing. Since then, and all through the pandemic, we have managed many pitches and have seen many pitches proceed.

But for those who are holding pitches more as a process for renewing a contract, then simply postponing the process is a legitimate solution. Now the markets are opening, thanks to vaccinations, and business is learning to live with the COVID-19 virus and its variants, many advertisers are going back to their old practices. Or are they?

Since 2019, we have found a significant number of marketers that come to us for pitch advice are interested in avoiding the disruption and cost of the pitching process and embracing our commercial review approach. This allows an advertiser to get all the market value and insights you would get from a pitch and more. Beyond knowing if they are paying the right fees and getting the quality of resources and services they are paying for, we also identify areas where both agency and client can improve the performance and productivity of the relationship.

Flawed marketing processes

Working remotely and working from home was a blessing and a curse for many. But one thing it did test was the current practices and processes both advertisers and their agencies were using. Lines of communication and collaboration were put to the test as we all embraced video conferencing like never before. One of the benefits is we have all realised how easy it is to work and communicate with people and teams spread all over the world. But we have also realised how back-to-back video conference meetings can absolutely destroy your productivity for the day.

We have found that marketers are now much less concerned if the right agency is in the same city or even in the same country. Video conferencing means that marketers are willing to cast their net much broader to get the right agency. But beyond providing marketers with a much broader global field to find an agency, pitching is usually unlikely to solve the process problems and issues that were identified through the pandemic.

The trouble is that pitching is a bit like dating in many ways, with both parties often on their best behaviour and promising that any obstacle can be overcome if only they work together. A much better approach to solving process issues between marketers and their portfolio of agencies is to work with the agencies you have first.

Instability of staff turnover

You will have read or heard about the great resignation. A fall out of the pandemic and its economic impact is that millions of employees across all sectors are resigning, causing a shortage of skills and talent. This is of particular concern for the advertising industry, which over recent times has experienced flat salaries and low recruitment and training efforts to attract talent to the industry.

At the same time, agency fees and business models have meant that many experienced and older talented personnel have been lost to the industry. It makes for a perfect storm, when at a time that marketers are increasing their demands on their agencies, the agencies are struggling with attracting and keeping talent.

But going to market and tendering your business for pitch is not the solution. In fact, it is likely that the very act of pitching your account will accelerate the process and drive up the cost of the resources working on your business. The winning agency will need to recruit people to work on your account. They will be competing in a market were scarcity of resource means higher cost to attract.

Likewise, your losing incumbent will be letting people go, and not necessarily the best ones, who will be snapped up at an increased cost compared with what you were paying. A far better approach for you and the industry is to manage the disruption and work with the agency to minimise and manage the staff turnover.

Accelerating In-Housing

In-housing agency services is on the agenda of many advertisers. Most will have some in-house capability, perhaps a small studio or a data analytics and insights team. The primary drivers of this are not, as most think, cost reduction. Instead, it is the ability to apply increased control and improve responsiveness.

Interestingly, the way the pandemic drove customers to e-commerce and online solutions has played into this trend to in-housing. One of the key areas where in-housing comes to the fore is performance marketing, where the secure analysis of artificial intelligence and automated marketing systems allows marketers specifically to target individuals and groups, particularly online, and thereby drive sales and results.

The responsiveness, security of customer data and control of the in-house environment means this approach supports the trend. It does not mean it replaces external agencies, which continue to have roles in supporting the overall marketing function. But the pitch process is very different for selecting an agency or agencies to support an in-house team compared to a more traditional agency of record.

How to manage the increased pitch activity

If you are an agency, it is far better to think carefully about which pitches you will commit to join. Simply diving into every opportunity will quickly burn out your team, burn hours and funds and perhaps result in less business than if you are more selective. Go only for the pitches where you have a better chance of winning.

If you are a marketer, make sure you have a valid reason for going to the market. Pitching is highly disruptive, demanding of your time and a potential risk. With so many pitches happening, it means that you may not end up with the best result. Agencies are open to pitching for your business, but with so many pitches, advertisers are pitching for the agencies’ commitment to the process.

As always, with two decades of experience, we are available to advise you on the best solution, which may not be going to pitch. Which, coming from a pitch consultant, is proof we live in interesting times.

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    Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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