New research shows that US advertisers may be failing to get the most value from media pitches as a result of flawed processes and lack of communication. Better processes will ensure advertisers are more effectively partnering with agencies.
November 28, 2018: A new study, released by ID Comms in partnership with the 4A’s, reveals that US advertisers are likely failing to get the best responses from potential media agency partners due to a failure of brands sufficiently defining what they are looking for, and refusing to share details around the selection process. (Find the full study here.)
The study, which is based on qualitative and quantitative research carried out with media agency leaders across the US, found that the most important factor that media agency executives consider in prioritizing pitches and determining how much time and money they invest are the clarity on the advertiser’s pitch process, including the evaluation criteria and the ultimate decision makers. Respondents scores on this factor averaged 4.26 where five is extremely important and 1 is not very important.
Respondents represent agencies from both major advertising holding companies and the independent sector, and in total, they handle media billings of more than $55bn, according to 2017 billings information from industry specialist data company COMvergence.
The 4A’s and ID Comms will use the insights gathered from these leading agencies to build a plan to address the major pain points, which, currently risk suboptimal outcomes for both agencies and advertisers. The goal will be to help marketing and procurement leaders understand how to improve current practices and design agency pitches in a way that is more productive and tests capabilities in a more effective way.
Ultimately, this requires advertisers to take more time to prepare a better quality pitch brief before they go to market. That means creating detailed evaluation criteria upfront, using simpler pricing exercises that focus on the majority of spend that can be easily audited, as well as being more focused in the questions they ask at the RFP stage. These efforts will encourage agencies to prioritize the advertiser’s pitch and invest more resources to win.
“Pitches are a big drain on the resources of a media agency, which is often managing multiple reviews simultaneously. While agencies have gotten better in recent years at prioritizing the pitches they compete for and being more focused with their resources, more discipline on the advertiser side would enable agencies to be more strategic and do better work. A clearer pitch process enables all participating agencies to present their best talent, resources and ideas to the advertiser. This in turn creates more business value for the advertiser,” said Tom Denford, North America CEO, ID Comms, which has recently opened a dedicated US office in New York.
The research found that the importance of clarity ran right through the pitch process. Where clarity was poor, the costs increased both financially and in terms of resources to the agencies involved, or simply made it harder for them to identify how best to meet the advertiser’s needs.
Agency respondents suggest that a transparent pitch brief benefits marketers through more strategically focused ideas (4.45), better quality agency talent working on the pitch and ultimately the account if they win (4.43) and a higher level of engagement from the wider agency team (4.43).
Also, running right through the process are concerns over the issue of media pricing, which respondents said was often sub-optimal. The media pricing exercises in a typical media pitch (for example run by a media auditor), was consistently highlighted as an unproductive element of the pitch process, requiring heavy agency resource throughout multiple rounds of bidding. Media pricing exercises were often managed inconsistently and lacked clarity, agency leaders said.
“Advertisers need to think deeply about how they run their pitches as they look to get the very best out of the agency community. This is a competitive industry and everyone wants to show their best face but agencies need clarity on the advertiser’s goals and objectives if they are to identify the more appropriate solutions,” said Matt Kasindorf, SVP Management Services, 4A’s. “Better structured pitches can help our members to demonstrate the value they can add more effectively.”
When asked about the detail of the pitch process, agency respondents said that key stages were often hampered by inefficiencies:
The RFI stage: Respondents said the RFI phase was typically too demanding, noting that specific requests, such as creating an expensive video submission at this early stage or requiring too much detail on Master Service Agreements (MSA) added significant upfront resource requirements and costs for outputs that could be more productive later in the pitch process and should not be part of this early “filtering” stage.
Advertisers should focus their efforts on gathering the information they need to identify those partners with the right capabilities rather than demanding slick videos or delving into legal detail at this early stage.
The RFP stage: Agencies were having to frequently answer unclear or generic, lengthy RFP briefs, making them overly onerous and unproductive for agencies. RFPs would benefit from more focused questions surrounding thought leadership, in order to effectively provide valuable insight on capabilities and expertise.
Advertisers should focus on the key questions that relate to their particular business challenges. Fewer, but more important questions would stop this stage feeling generic and untailored to the advertiser’s needs.
Chemistry sessions: Respondents expressed concerns that the focus of chemistry sessions is typically unclear to agencies. In some cases, clients expect a working-session, some expect a progress check-in and some only want to gauge agency culture and personalities. Where the expectation is well communicated, agencies are able to prepare and use resources selectively to make this stage more productive for both sides. Agency respondents were also concerned about the increasing number of live meetings and the depth of content required at each session, often needing to be coordinated across multiple markets.
Advertisers should focus on delivering greater clarity around chemistry meetings to ensure that agencies know exactly what is expected of them and be mindful of the resource required where they go beyond a basic ‘meet-and-greet’ session.
Final presentations: This is usually the peak pain point (4.05) for agencies, with the highest level of senior management engagement and resource investment of the entire pitch process. While the resource and senior management engagement were seen as justified, there were questions about the tight timelines often set for final presentation deadlines. Agencies suggested that teams should be able to work iteratively with the advertiser to ensure they are delivering valuable content and are given enough time to produce their best work.
Advertisers should offer more realistic timelines and review agency work in the run up to the final presentation to ensure everyone is focused on the right challenges and the agency has enough time to prepare and present their best work.
Contract Negotiations: This stage sees a significant fall in agency resource investment and a slightly reduced overall senior management engagement. This is reflective of negotiations typically being managed at a senior level in isolated specialist meetings. The stress level of this stage depends on where it occurs. Moving up MSA and Scope of Work early in the process – at the RFI/ RFP stages – creates a lot of additional work for agencies. Respondents recommend that contracts should only be reviewed towards the later stages of the pitch process, so the level of resource investment is proportional to its significance in the overall process.
Advertisers should ensure that only those agencies with a realistic chance of winning their business have to invest resources in detailed contract negotiations. Advertisers should aim to have the MSA agreed in advance of final presentations, to help more efficient negotiations focused on scope and resources, rather than creating conflict and delay over commercial terms so late in the process.
“We strongly advise US advertisers to carefully consider how they plan and manage agency pitches. They should seek advice, to draw on best practice and maintain clear, consistent lines of communication with all participating agencies,” said Denford. “Advertisers can’t take it for granted that all agencies will always prioritize their pitch. The best agencies make that decision based on the quality of the advertiser’s brief, the clarity of the process and transparency over decision making.”
The findings of the study were recently presented to the 4A’s National New Business Committee and Media Leadership Council by Tom Denford.
About ID Comms:
ID Comms is a global management consultancy, specializing in media and advertising. As a trusted media partner to the world’s leading advertisers, ID Comms provides the Ideas, Knowledge & Network that give marketers the advantage to succeed in the digital age.
ID Comms, headquartered in the UK, was recently named as the most used media consultancy amongst members of the World Federation of Advertisers and in 2018 opened an expanded office in New York to specifically work with US advertisers.
Founded in 2009, ID Comms provides independent, expert consulting in the areas of Strategy, Operations and Audit to the most ambitious marketers around the world and works closely with marketing, media and procurement teams to improve media performance. ID Comms has advised on more than $50bn of marketing investment and works with leading brands across most categories.
ID Comms services a range of national and multi-national clients including Mars, Inc., L’Oréal, ABInBev, P&G, Suntory, IKEA, LVMH, GSK, Estée Lauder, HSBC, Johnson & Johnson, Virgin Atlantic, Puma, Levi Strauss & Co and Eurostar.
Find out more at www.idcomms.com
Founded in 1917, the 4A’s was established to promote, advance and defend the interests of our member agencies, their employees and the industry at large. The organization serves 700+ member agencies across 1,300 offices, which control more than 85% of total U.S. advertising spend.
As the leading trade organization for marketing communication agencies, the 4A’s purpose is to help empower its members to deliver insightful creativity that drives commerce and influences culture, all while moving the industry forward. The organization provides community, leadership, advocacy, guidance and best-in-class training that help enable agencies to innovate, evolve and grow.
The 4A’s Benefits division insures more than 160,000 employees, and its D.C. office advocates for policies that best support a thriving advertising industry. The 4A’s Foundation fuels a robust diversity pipeline of talent for its members and the marketing and media industry, fostering the next generation of leaders. The organization is dedicated to, and vested in, our members’ success just as they are dedicated to helping brands create, distribute, and measure effective and insightful advertising and marketing. Visit the 4A’s at www.4as.org.