Verificom Pitch Cost Calculators

What is the financial cost for an agency to pitch?

In developing a financial cost model for the agency pitch process, you need to accept there are many variables that will impact the result. These variables broadly include the actual process scope, timeline and steps, the number of people involved both on the agency and advertiser side, and the scope of the appointment from project to a global appointment and all variations in between.

For the sake of manageability, we have made some assumptions (based on the most common pitch or tender practices and not on the BetterPitch approach, which is typically more efficient and less time and resource consuming) to define the process that we have used to create a pitch process and then applied the relative data and benchmarks to calculate the financial cost for a pitch. Even then, the result is a range to accommodate the variations within this defined model.

Procurement Impact

Procurement managed pitches can increase agency resources utilisation by up to 50%. This is driven by a more complex and comprehensive RFP, which replaces the Credentials document. The RFP adds significant time as it increasingly requires detailed responses to procurement supply chain issues such as compliance with the Modern Slavery Act, Zero Net Emissions, CSR, Diversity, Equity and Inclusion programs and supply chain security and risk. These are topics rarely addressed in the Credentials document, which focused more on capability and case studies. They are also issues which requires a wider engagement across the agency to provide the detailed response required. The procurement managed pitch will also require greater detail and rigour at the financial and negotiation stage, with the negotiation process often becoming longer and more protracted as procurement investigate all possible opportunities with the agency.

Instructions

1. Select the currency for the market under consideration from the pulldown menu. e.g. GBP
2. Select the appropriate calculator for the pitch type – Media or Creative, Pitch versus Procurement Tender (RFT)
3. Enter the duration of the pitch in the field in months (Usually between 1 and 12)
4. Enter the weighted average agency billable hourly fee in the field in the currency selected.
5. Read the resulting cost calculation in the selected currency. e.g. GBP

Next

1. Enter the number of agencies being invited to pitch or tender (Usually between 3 and 8)
2. Enter the number of agencies that will go beyond credentials and chemistry session (usually 3 and up to the number being invited to pitch or tender being 8)
3. Read the total cost of the proposed pitch in the selected currency. e.g. GBP

The real cost of pitching

The fact is that while we have calculated a cost to the agencies for the pitch, most pitches are resourced through agency staff spending unpaid overtime to complete the pitch process. The additional average 63 hours per person, per pitch, across a 15-person team, is primarily time spend after hours and on weekend to either undertake the pitch work or complete the work required for existing clients.

And if the hours seem high – consider not just the client meetings or the amount of development work involved in the actual pitch solution or milestone meetings, but also the brainstorming sessions, the discovery work (store visits, product testing, research gathering), the progress meetings, the intelligence gathering internally and externally, the tailoring or reworking, the rehearsals and the production of various elements involved. Hours can quickly mount up.

It’s why the industry has a mythology, based in fact, of pitches being adrenaline driven late nights and weekends. While agencies do invest an average of 950 per pitch, it is the staff working on that pitch that carry the cost in burnout and loss of work/life balance.

We have explored this in more detail here.

Assumptions

We have made assumptions based on the most common pitch types and circumstances seen in the market.

This is for a single market pitch. e.g., UK (or could be simply England, Wales, Scotland, Ireland, or combinations of these). But it is not for a multimarket, regional, or global pitch. The assumption is that all the client-side stakeholders would be centrally located and not require travel to multiple locations.

The pitch would be for the appointment of an agency for a contracted period. Typically, this is two to three years. But it is not for a single project or to qualify for a panel or roster of agencies.

The number of agency staff involved for both media and creative pitches is approximately 15. For creative this would be CEO, MD, GAD or SAD, CSO, CTO, ECD, Snr Planner, 2 x 2-person Creative Teams, 2 x designers, Production and Studio Managers. For media this would replace creative staff with media strategy and trading personnel. In both cases we have also considered an element of ‘support staff’ – administration, meeting logistics, etc.

The pitch would need to be for a reasonable spend and therefore fees to justify the process and the relative cost. We have assumed a creative agency pitch of a minimum of £2 million (or equivalent) in fees per annum and a media pitch with a minimum media spend of £10 million (or equivalent) per annum.