What’s next and what’s now for new business?
The past year and a half have taken us through a dramatically changing landscape. New agencies have opened with new business models and value propositions, posing new competition. Key marketing channels are in flux, as are marketing budgets and client relationships. And COVID-19 remains a question mark, as we continue to face a mix of virtual and in-person conditions for working, new business, and events.
Perhaps most importantly, agencies are ill-equipped to face 2021’s flood of client reviews as they struggle with agency burnout, under-staffing, and a competitive hiring market.
In this context, what has changed about how agencies are finding opportunities and closing new business?
Here’s what you need to know about changes that may affect your agency and its competitive position for new business opportunities.
Four new business trends to have on your radar (and use to your advantage)
Nontraditional agencies continue to shine
While Campaign recently reported the two largest new business wins for agencies in May went to (Omnicom) holding company agencies, they note that independent agencies still had a strong showing, with big wins by StrawberryFrog, Fig, and Code and Theory. This is consistent with an ongoing trend of bigger brands willing to give greater consideration to independent agencies as disillusionment with the traditional agency holding company model continues.
Additionally, a growing number of alt-agency organizations and startup agencies with differentiated business models continue to compete successfully for new business.
The economic conditions and overall disruption caused by the pandemic have not only changed marketers’ budgets and agency relationships, but as Campaign’s Jennifer Small points out, it’s prompted some marketers “to rethink their approach, [broaden] rosters, and [consider] different types of agencies.” In this climate, alternative agency models have a unique opportunity to connect with marketers looking to try something different instead of just switching from one big agency to another.
If your agency isn’t getting the desired response from prospective clients, what can you do to make it stand out more — with a focus on improved effectiveness, efficiency, value, and results?
Agencies are increasingly scaling back on the number of pitches they pursue and opting out of pitches they might have pursued in other years. This is largely out of necessity, as agencies face internal resource shortages — particularly with talent. More demanding RFPs and thinner margins due to procurement are also factors (Digiday). But, I like to think it’s also a sign that agencies are getting smarter about resource expenditure and how they do business.
We’ve long advocated for agencies to protect their resources by being aggressively selective about the RFPs they pursue and saying “no” more often, especially to “reach” opportunities. It’s much smarter to focus only on the work that you truly have a right to win. And it allows the agency to make stronger presentations, winning the pitch “at every touchpoint” (as Chris Shumaker of Hasan + Shumaker has recommended).
Some of the alternate paths agencies are exploring in pursuit of new business include leaning into existing client relationships, building new relationships, farming lost opportunities, and reaching out to prior agency employees, partners, and colleagues who’ve moved on to prospective client companies. Leaders at agency startups have reported that they’ve done well by “avoiding lottery pitches.” Instead, they gain new business via informal calls and recommendations or through meetings and discussions with prospective clients.
And that’s not all agencies are doing to generate new business outside of the formal pitch process…
Agencies are taking new paths to gain attention
Independent agencies, in particular, have drawn attention for their advertising campaigns. Digiday reports that in the past 18 months, more agencies have begun running self-promotional ads due to increased competition and low-cost but “highly effective” marketing opportunities.
Agencies are advertising via “digital banners on LinkedIn, Facebook, and other social platforms,” but they are also pursuing other opportunities to generate awareness and raise their visibility. For example, they are investing in their thought leadership through podcasts, published articles, and speaking opportunities at industry events. They are also running trade ad campaigns and paid search campaigns.
Dan Eisenberg, svp of marketing and business development at independent agency Blue Chip, told Digiday, “forty percent of our new business opportunities are inbound requests, many of which saw our marketing.”
Evolution of the pitch process
Not all pitches can (or arguably, should) be avoided. When your agency goes to pitch now and in the coming months, what can you expect?
Virtual meetings may be here to stay, but in-person pitch presentations seem to be universally preferred. I’m sure no one will miss pitching to 25 black squares representing the prospective client’s team tuned in sans camera. (Thanks for your attention!)
According to unidentified experts cited by Adweek, longer-term holdovers from the "shelter-in-place" era will include more upfront meetings conducted virtually and (hopefully) a less costly, more fair, more streamlined pitch process.
Another, probably less desirable change, is the “turbocharged” role of procurement (per Tracey Barber, global CMO for Havas Creative Group, in Adweek). However, Barber notes that “the amount of direct contact from procurement” they are receiving now marks a more interesting shift, which opens up greater opportunities for conversation with procurement much earlier in the process (particularly helpful “for those agencies two aim to solve business problems, not just answer marketing briefs.”)
Whether your agency finds opportunity in greater involvement from procurement may also influence its decision to participate in pitches (as it has for a growing number of media agencies, according to Digiday).
While many indications project a healthy outlook for agency new business as the economy continues to ramp back up and marketers spend through their 2021 budget allocations, there remains a greater degree of uncertainty for agencies than in many other years.
For example, COVID is again threatening a return to the office and greater normalcy. Campaign and R3 recently reported that global new business slowed down significantly in May compared to April (according to total estimated billings). Gartner found that marketing budgets in 2021 are at the lowest level since they began tracking them — at just 6.4% of overall revenue. And Marketing Dive reports Gartner’s research also shows funds for external agencies continue to decline, with 29% of work previously handled by third parties now moved in-house.
In short, we can’t be lulled into complacency just because we’re doing better than this time last year.
Agency leaders can never afford the luxury of getting too comfortable. There is constant consideration for what is on the horizon and how your agency can stay ahead. What is the next best way to get an edge on the competition? Part of that is looking at what’s working for other agencies and staying ahead of changing dynamics. Hopefully, these four new business trends will keep you thinking about new ways to advance your agency’s new business efforts.