More positive diagnosis for H1 new business figures

Figures from AAR’s latest New Business Pulse have revealed that the total number of completed new business reviews in the first half of 2018 showed a decrease of 8.9% over the first half of 2017. This compared to a 38.3% decrease in the first quarter of this year versus the first quarter of 2017.

It should, however, be noted that the data only includes appointments that were made up until the end of June 2018, and does not include ongoing reviews.

In terms of specific disciplines, the changes were as follows:

Discipline % difference

H1 2018 vs H1 2017

Total (8.9)
Advertising (7.7)
CRM/Direct Marketing (5.8)
Digital 11.8
Integrated (25.7)

Source: AARnewbizmoves

As can be seen, the majority of disciplines were down in the number of appointments made in the first half of the year versus 2017 with the exception of digital, which was up 11.8%, and media which remained at the same level.

Advertising appointments decreased by 7.7% compared with H1 of 2017. There were, however, the same number of £20 million plus advertising clients (five) who selected a new agency (Asda, Camelot, Coral, Harveys/Bensons for Beds and MoneySuperMarket) as in the same period in 2017. However this year, all of these major accounts awarded their business after a competitive review compared with the first half of 2017, when the majority were awarded without a pitch.

Integrated agency appointments (involving three or more disciplines) were down significantly year on year (-25.7%) but, where they did take place, were often Government/CCS reviews or involved group wins e.g. Asda, P&O Ferries etc.

Media agency wins were at the same level as the first half of 2017, compared with a year on year decrease of 40.7% versus the first quarter of the same year. UK based clients who made appointments in the first half of the year included Betway, the Government/CCS, Sky and Whitbread.

In terms of the ways that clients/brands were making appointments, there was very little difference compared with the first quarter of 2018. Just over half (58%) opted for “open” reviews (i.e. considering all potential agencies via a competitive pitch), while 21.2% awarded their business to an agency without a “comparative” review taking place and 20.8% used their existing agency “rosters” to award new briefs.

The vast majority of brand owners who awarded an account without a competitive pitch were relatively small in terms of agency fee/income, and it is our assumption that the majority would have had a previous relationship with the appointed agency.

Those clients who awarded business to an agency via a roster review fell into two groups. First, those providing additional work to an agency with whom they already worked and secondly, those who held a competitive review among those agencies with whom they currently worked or who were on a pre-defined roster or framework e.g. Government, Unilever, Diageo etc.

Commenting on the figures, Kerry Glazer, CEO of AAR said: “On the face of it, it may have looked somewhat alarming when we saw that, in the first quarter of 2018, the new business market was down by 38.3% year on year. As we mentioned at the time, this was in comparison to a frantically busy first quarter of 2017 and the fact that our Pulse report only covers reviews that have been completed.

As a number of reviews that were begun in the first quarter have only recently made appointments, these latest figures are consequently a truer reflection of the health of the new business market. Whereas in the first few months there may have been major concerns, the diagnosis appears to be much more positive as we enter the second half of 2018.

The more significant issue is, however, that a similar sized new business market place is being shared out amongst an increasing number of very capable agencies.”

More on this story can be read here, as published in Campaign on 6 July 2018.