New business appointments decline significantly in H1 2020
Figures collated from AAR’s newbizmoves database have revealed that the total number of appointments made in the first six months of 2020 showed an overall decrease of 44.2% versus the same period in 2019. This compared with a decrease of 12.2% in the first six months of 2019 versus 2018.
Whilst comparative, it must be remembered that the figures only cover appointments and, with many reviews taking longer to sign off and wins taking longer to announce than normal, it will only be at the end of the year that we’ll see the full impact of COVID-19 on the new business market.
As it’s not always possible to ascertain the exact nature of the relationship, for comparative purposes, the data concentrates on retained rather than one off, project-based appointments.
For benchmarking purposes, the comparative health of the specific communications disciplines in the first half of 2020 (versus the same period in 2019) in terms of volume of appointments was as follows:
H1 2020 vs H1 2019
In the first six months of 2020, the number of advertising appointments reported decreased by 38.5% compared with the same period in 2019.
However, as previously mentioned, many reviews (particularly those that started during lockdown) are currently taking longer to complete and there are a number of reviews that still remain live, including Three and Walkers, that are subsequently not included in the report.
This volume decrease has also been mirrored in value terms with only two brand owners with media budgets in excess of £20 million (Halifax and Very) making appointments in the first six months of this year versus four (Barclays, GoCompare, Virgin Media and William Hill) in the first half of 2019.
Media agency wins are down by 27.5% versus the first six months of 2019 but do include a number of major UK and global brands including BBC, Costa, Deliveroo, Diageo, Duracell, Emirates, Vision Express and Zoopla.
The volume of CRM/Performance appointments decreased dramatically versus the first six months of 2019 (down two thirds) although a number of major reviews, including O2 and VW, remain uncompleted.
The first six months of 2020 also saw stand-alone digital appointments continue to decline (down 6.3% versus the same period in 2019) with digital comms reviews a rarity and the majority of the appointments being made in the areas of innovation, strategy, social and search.
Integrated agency appointments (involving three or more disciplines) remained identical to 2019, the majority of which were driven by Government framework reviews, although two major energy providers (EDF and Eon) launched reviews but hadn’t made appointments by the end of June.
Commenting on the report, Victoria Fox, CEO of AAR said: “At the beginning of the year, who could have forecast what the following six months would bring? As can be seen from the figures, the new business market (particularly in terms of retained relationships) has been severely impacted by COVID-19, with brand owners concentering their efforts on the health of their own families and businesses, and external agency resource taking a significant back seat.
Equally, with the limitations of lockdown, it is likely that brand owners have been looking to their existing agency partners to fulfil requirements, often for capabilities for which they were not originally retained. This behavior particularly applies to outputs such as social, PR and digital comms, which were disproportionately important in the early stages of the pandemic, resulting in a further dilution of traditional pitch activity.
In contrast, there are also numerous examples of brand owners’ in-house talent being furloughed, which may well drive clients to rely more on existing or new external agency resource.
Whether there will be a torrent of pitches and appointments as soon as lockdown finally comes to an end or the new business market takes its time to recover currently remains an unanswerable question”.