Guidelines for the Pursuit of New Business

The purpose of this position paper is to provide guidelines for agencies in pursuing new business.

The following nine points serve to emphasize the obvious need for agencies to add quality new business to both build the agency and replace lost or reduced revenues while remaining mindful of some current new business pitfalls.

Guidelines for the Pitch Process

Here are some guidelines to follow during the pitch process:

1. Compensation can be the determinant in selecting the winning agency. Bringing in compensation discussions at the beginning of negotiations can minimize turmoil and help you focus your new business spending on accounts that would provide valid economic returns.

2. Clear potential conflicts early.

3. Requests for speculative strategic thinking and creative executions are a reality, even though at a lower level than in the recent past. Try to match the volume of speculative thinking and speculative work with the potential value and likely conversion of the prospective account.

Remember that the best strategic input a prospect will see often comes during the course of the pitch. If speculative creative work is requested, presentation materials should be to a degree of finish that would be normal in an ongoing agency-client relationship.

4. Value your input. If you give your thinking away, clients and prospects will discount its value. Consider charging market rates for it. If there is a problem with that, consider retaining copyrights.

Token payments for a new business pitch are generally intended to ensure that the prospect feels confident that they own the thoughts or the work. This practice is frustrating and unrewarding for the agency and is considered by many to be bad for business.

5. Pay for play is odious. It is wrong to have to pay to participate in a new business pitch, either directly or indirectly. It is a conflict of interest for a consultant to take fees from both agencies and clients; such a consultant should not be subsidized by agencies.

6. Provide prospects (and their consultants) only the information you are comfortable sharing. Avoid providing information you consider confidential, even if you are told that similar data is normally shared with marketers and their representatives.

The Association of National Advertisers, Inc., and the 4A’s agree that it is always inappropriate to share individual salary information with prospects, clients, or consultants.

Prospects and consultants sometimes ask for other clients’ billing, revenue or other financial information. Sharing this information could be construed as a departure from client confidentiality constraints.

7. Value your services, especially during fee negotiations. If you truly believe that you can help build the prospect’s business, charge accordingly.

If you accept an agency fee that is much lower than it should be just “to get the account,” your chances of increasing it to where it should be in subsequent years are slim to none.

Many say agencies that under-charge their competitors solely to get business are working specifically against their own interests and more generally against the interests of the agency business as a whole.

8. If you determine during the search process (the earlier the better) that the budget is too small to help the prospect, or their only criterion for selection is cost, consider withdrawing promptly.

9. Develop the negotiating skills of anyone in your agency who has anything to do with setting or updating fee amounts.

Done well, the search for new business is a growth and revenue replacement engine and not a major drain on key agency resources.

Pursuing and winning new business in a way that provides a reasonable return on your investment in the new business process is essential for continuing success and makes your agency a winner. Application of the above points should help to achieve that success.

As always, your input on approaches that will help all member agencies is welcome and encouraged.

 

Adopted by the 4A’s Board of Directors, June, 26, 2002.