The COVID-19 pandemic might have unleashed havoc on the global community but work in the adland never stops. Agencies are still pitching for work and according to a study by ID Comms released in March, 57% of agency leaders are confident they could respond to most pitch briefs that come through in the next month or so, despite remote working.
Meanwhile, 16% said if advertisers want to run pitches, a "total rethinking" of the process is required. ID Comms said in the study that pitches need to be considered carefully and "pitch conditions must not exploit any agency vulnerabilities or be unfair to the limitations of remote working."
Singapore-based One Faber Group (1FG), an operator of a suite of leisure and lifestyle services, for example, recently called for a media pitch with the appointment being for a year with the option to extend for another. In response to the story, CEO of S4 Capital Michel de Rijk said four to six months will be spent on the pitch, where a slew of agencies will sign up, be shortlisted and many will end up doing all the work for nothing as in the end, one will be rewarded. In most cases, budgets will be adjusted downwards due to COVID-19’s negative impact on the tourism business, he speculated. "At a time where agencies are having difficulty maintaining their teams and work on clients that pay, is this really what we want to do in our industry?" de Rijk questioned.
It is no myth that the pitch process can be gruelling, especially when competing against numerous agencies in mass pitches and spending countless hours toiling on the pitch brief. Meanwhile, clients in general are rethinking their ad spend and the economy does not show any signs of improving any time soon. Last month, the International Monetary Fund said growth in Asia is expected to stall at 0% in 2020 for the first time in 60 years, and there is even more uncertainty about the 2021 outlook. In today's context, this process might be even more taxing on agencies that have to maintain overheads and are struggling to stay afloat. While agency leaders worldwide surveyed by ID Comms said they are ready to pitch, it is time to reconsider if pitches are necessary in this economy.
Pitches are important in any economy, to ensure that a buyer gets to trade with the relevant or right seller, Happy Marketer’s managing partner Prantik Mazumdar said. But this is with the crucial caveat of being fair, legal, pragmatic, and economically beneficial for both parties. Mazumdar explained that the traditional process is not the only or necessarily the best way for entities to get into a commercial partnership.
Some of his concerns about pitches being held during this time include an oversupply on the agency side, with many agencies willing to pitch for anything and everything. "Most agencies tend to play the low-cost card with the hope that eventually they will make money, but that hardly ever happens," he said.
On the client side, most pitches are led by the procurement teams, where the incentive is primarily to select the lowest cost vendor.
"Clients invite and entertain 15 to 20 agencies for the pitch process. Whilst they have the right to do so, I am not sure it helps either party as it can be a very expensive process for both parties given the time and opportunity cost involved in managing such a large, long process," he added.
Unlike the tech industry, Mazumdar said marketing as an industry is notorious for short term contracts running for less than a year with" a very myopic view" on results and business expectations and in most pitches, there is the expectation to do free work. Marketing pitches do not usually value chemistry, relationship and trust quotients, and very little time is spent by the client on strategic thinking around goal setting, people, process and marketing technology.
Instead, the industry is guided by what Mazumdar calls "short term campaign thinking without long term focus on business goals". In many cases, there have also been ethical issues where after a long, multi-party pitch process, no agencies have been selected or the process has been very long drawn and draining. In other cases, the intellectual property from agencies that did not win, have been used by the client without payment or credit, he explained.
Meanwhile, Havas Malaysia's group managing director, Andrew Lee, said pitches for a one-off campaign or project is time-depleting for both agencies and brands. For a creative agency, investment in research, analysis and idea creation is "way too high" and tends to generate an extremely low ROI from a single campaign or project.
"Advertisers running pitches for every campaign and project run the risk of being short-sighted and losing agency loyalty and rigour on their brand. This is unlike agency of record appointments, where the agency becomes an extension part of the advertiser’s marketing team where they live and breathe the brand," he explained. Lee added that this is extremely important as agencies can help navigate uncertainty, pivot plans quickly, offer support and most importantly make a meaningful difference.
This is best achieved when both agency and brand work together, openly, transparently with an eye on long-term strategy and benefits, especially during a time of such monumental change.
But he also agreed that pitches are overall an integral part of the industry for clients to find a capable, compatible and trusted partner in marketing their products and services. However, pitch success is dependent on key factors such as commitment, future-forward vision, focus on understanding and solving the business challenge which is best achieved in a long term partnership rather than a short fling.
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Moving away from the itch to pitch
Agencies are familiar with the price war that comes with the pitch process. In light of this, Happy Marketer's Mazumdar said agencies need to ditch the itch to pitch for anything and everything that comes their way. Whilst every new lead may create excitement, especially for many of the younger and independent agencies, their goal should be to win profitable business by leveraging their strengths and resources and not fall for the trap of penetrating a new client as a loss-leader and hope to make profits in the long run, he explained.
"Once the low, non-profitable price points are established, it is virtually impossible to go higher and not only does it hurt the agency in question but also the industry ecosystem at large and a low-cost solution definitely is not the right answer to client's briefs as well," Mazumdar said.
He added that while it might be "tantalising and ego-boosting" to see 20 agencies pitching for the business, it is important to consider these factors when choosing the right partner:
- Company credentials, reputation, references and past case studies;
- Chemistry and trust quotient with them - by far one of the more important tenets of any relationship;
- The exact team that will be on the account to prevent the classical syndrome of Team A pitching and being served by the B team;
- Alignment on business goals and KPIs to set and manage expectations;
- Fair pricing and incentive mechanisms to ensure that the agency is motivated to grow along with the client;
- Agreeing on the ways of working to ensure a smooth, fair & sustainable process for both sides so that one doesn't succumb to regular last-minute requests;
- Agreeing on escalation and conflict resolution mechanisms as these are bound to happen.
He also said that ideally, clients and agencies should look to structure a three to five year working relationship agreement with clauses to exit if things do not work out. Short term agreements can be very expensive, both materially and otherwise, for both parties.
It is crucial to see the client-agency relationship is also a two-way street, Wavemaker Indonesia's managing director by Amir Suherlan said. He explained that the two-way street involves both parties being given the opportunity to grow the relationship together and push the boundaries to achieve marketing and business goals. "The agency should be adapting and evolving innovative solutions on an ongoing basis, constantly reviewing market demands, being informed and picking up new trends that will help grow the client's business objectives," he said.
Suherlan explained that a pitch is necessary when there is "substantial deviation" from the client’s expectation with the agency’s ability to deliver. As such, the intention of pitching should be driven by the ability to offer innovative, ground-breaking solutions to identify valuable opportunities to grow the client’s business.
Pitching during this tough time can provide a sense of optimism.
"It is also a shot at business growth for the agency as well as yield experience and practical learnings for the pitch team," Suherlan explained. On the other hand, constructive feedback from clients will also go a long way in building mutual trust with the agency. Regular check-ins will avoid the accumulation of negative feedback, where assumptions and the widening of the expectation gap might potentially result in an unpleasant outcome, he added.
Adding on, founder and MD of Mat Hat PR Rengeeta Rendava said particularly big ticket businesses, relying on credentials and case studies alone may not be feasible beyond for shortlisting pitching agencies. Rendava said the agency views pitch processes to be akin to candidate interviews whereby it is an opportunity for both client and agency to evaluate the potential of the relationship. As such, any issues and difficulties surrounding the pitch process typically arise when there is disparity between what the client and the agency puts in.
According to her, cornerstones of effective pitches, regardless of the economic weather, include:
Defined briefing process, with opportunities to discuss, ask questions, gain clarifications etc
Outline of criteria on which the pitch proposals will be evaluated
Clear budgets to allow agencies to understand the potential return on the resources invested in said pitch and provide resource indications to guide their pitch proposals
Clear timelines on pitch process that are adhered to by clients
Commitment to appoint an agency at the end of the process