Report Urges Brands and Agencies to ‘Ditch the Pitch’
May 13, 2023
By Olivia Morley
The agency pitching process is broken, bloated and overtly complex, according to a new Forrester Research report. Fixing the model requires both brands and agencies to make major changes, said the report’s author, Forrester principal analyst Jay Pattisall.
Making those changes will be economically beneficial for everyone involved, and probably lead to happier partnerships. At least, that’s what the analyst argues in the report, Forrester’s 2022 Buyers’ Journey Survey.
Tension between agencies and brands catalyzed the research. Underscoring how fraught relationships between partners and vendors really are, a staggering 83% of global purchase influencers expressed dissatisfaction in one or more areas with a vendor they worked with.
Pattisall identifies four areas contributing to brands’ dissatisfaction:
- Procurement-driven reviews that prioritize cost savings above identifying the right partners.
- Marketers’ tendencies to show up to their own reviews unprepared and lacking intentionality.
- Agencies that over-invest in pitches and offer up free IP. (He calls this “performative showmanship,” while acknowledging agencies have little choice.)
- Conventional pitch consultant processes are bloated and overcomplicated, adding to agencies’ financial stress.
“Agencies are often their own worst enemies in pitches,” R3 co-founder Greg Paull told Adweek. “There is an arms race approach of more and more visuals, videos and ideas. That doesn’t help.”
Economic pressure on agencies directly affects marketers
Agencies are shelling out billions of dollars every year to attract new business.
The Forrester report cites a statistic from SI Partners’ affiliated New Business Methodology: Agencies spend up to 17% of their revenue to cover the non-billable hours spent annually on pitching.
That amounts to agencies taking on a lot of risk. That’s been normalized, the research implies, to everyone’s financial detriment.
Pattisall assumes that if the U.S. agency market is worth $73.3 billion, agencies spend $12.46 billion on pitching per year. For context, Publicis Groupe’s 2022 revenue was $13.5 billion.
Other data highlights how expensive it can be for agencies to pitch. Assuming a midsize pitch of an account worth $50 million to $500 million, a single pitch can on cost agencies $120,000, according to an estimate ID Comms CEO Tom Denford shared with Adweek last year.
Competing agencies that do not earn the client’s business can consider the pitch overhead a sunk cost. Never mind the heightened risk for incumbent agencies, which stand to lose both the account as well as whatever costs they allocated to retaining it.
As for why nobody’s address this? “It’s a phenomenon where nobody’s looking at it, necessarily, through the lens of the entire category,” Pattisall told Adweek. “They’re looking at it through the lens of their individual P&L, and their cost-per-value ratio is likely within the threshold that they’re comfortable with.”
Parallels to last year’s 4A’s/ANA research
Last fall, Adweek obtained a copy of joint research from the 4A’s and the ANA’s Agency Search Simplification Report, which revealed discrepancies in how agencies and brands view the pitching process.
While agencies voiced numerous concerns, including retaining their IP, knowing budget size up front, transparency in regard to which competitors they’re up against and getting the go-ahead from media-shy brands to publicize an account win.
Brand leaders, on the other hand, said they worry about meeting agencies’ senior leaders, as well as the employees slated to regularly work on their account. They also expressed frustration at agencies that veer from established pitching guidelines.
The 4A’s/ANA research also showed agencies are concerned with retaining their IP. Ownership issues were one of agencies’ top concerns, and 80% of agency respondents found it painful when prospective clients wound up using material or strategies they provided during the pitch.
Contention between one brand and agency publicly came to a head following the 2022 Super Bowl. The Martin Agency CEO Kristen Cavallo called out Coinbase for claiming no agency could have come up its bouncing QR code Super Bowl ad, when her agency had pitched a similar idea to the brand.
Pattisall’s advice: Reject the model
Agencies and marketers are on the same page about at last one thing: The pitch process is broken. There are ways to fix it, though—at least according to the Forrester report.
Pattisall’s proposed strategy is straightforward. Brands should employ “test run” models that evaluate agencies based on real work, instead of flashy pitches.
Paull finds a version of the proposed approach works well in Germany, where he said 80% of pitches end at the chemistry stage and involve project-based evaluations. “U.S. marketers need to better investigate this approach,” he said.
At the same time, agencies must embrace temporary, project-based work instead of pitches. And they should be compensated for the projects they complete.
As it is now, it’s rare for pitching agencies to charge brands a fee. Paull estimates this happens in less than 5% of reviews he manages. “We encourage it whenever there’s a high amount of creative ideation required on the pitch,” he told Adweek.
A change that benefits everyone
This situation will benefit brands, too, according to the research.
Marketers can more easily evaluate partnership chemistry by working directly with agencies. This has the benefit of engaging with the employees staffing their account, one of brands’ aforementioned concerns identified in last year’s 4A’s/ANA research.
Embracing a new model will be challenging for both brands and agencies used to doing business-as-usual. While existing research highlights significant issues in the partner selection process, there are other factors agencies must consider if anything is to change.
For example, they’ll have to reframe organizational and staffing models to ensure they can scale these project-based teams up, or down, as needed. It’s a particularly complex pivot to make now, as marketing budgets contract under current economic strain and agency teams are already straining to keep employees.
Pattisall has an answer to this, too.
If brands were to compensate agencies for delivering on project-based engagements, agencies could save significantly on the overhead costs now allocated to pitching new business—reducing that $12 billion estimate and agency fees along with it.
“The monies that are being paid to agencies in fees are, in fact, what are subsidizing excessive new business,” Pattisall said.