Agencies become more selective as pitch market stabilises in 2018

04 Feb 2019

Overall, the number of brand owners who reviewed their agency arrangements in 2018 has stayed relatively stable, with only a minor decline in volume of just under 3%.

However, the picture within specific disciplines is more mixed.

Discipline % difference 2018 v 2017
Total (2.9)
Advertising (0.3)
CRM/Direct Marketing (13.4)
Digital (2.5)
Integrated (6.4)
Media 18.9

Source: AARnewbizmoves

Advertising/creative reviews have held their own, with a higher percentage of big spending brands being seen in the market.  Eleven clients with media spends in excess of £20 million – Asda, Betway, Camelot, Co-op, Coral, Ford, Lidl, MoneySuperMarket, SimplyBe Sky and Sofology – reviewed their business versus seven clients of the same magnitude in 2017, an increase of 57%.  It was also ‘the year of the pitch’ for these clients, with almost all of them choosing to appoint their new partner by way of a competitive pitch process.  Contrastingly, in 2017 all seven £20 million plus clients moved to a new agency without a competitive pitch having taken place.

Encouragingly, there were a significant number of brands – particularly in the tech area – who had not previously advertised and were appointing agencies for the first time, including Emoov, Good Hemp, Habito, iZettle and Pertemps. Let’s hope this trend continues in 2019.

The volume of media pitches was up by 19% year on year, the increase partially accounted for by several global brands using the pitch process as a means of evaluating their incumbent’s transparency versus the marketplace.  Media agencies were also kept busy by brands such as CCS, Co-op. Coca-Cola, Heineken, LV=, Lloyds, Mondelez, Specsavers and Whitbread undertaking UK pitches.

CRM reviews were down, due in part to brands preferring to stick with their incumbents in the face of the new rigour of GDPR rather than seek a new partner at a very complex time for CRM marketing.

There was a change of emphasis abroad in the digital space.  We noted an increase in the number of appointments where clients needed to seek specialist assistance in areas such as UX, digital strategy, and ecommerce, and very few stand-alone digital “comms” reviews.

Another emerging trend we picked up was a change in the brand owner sectors most frequently bringing their accounts to pitch.  For the first time in several years, the retail sector lost its place at the top of the table.  Motoring clients provided the greatest number of new business opportunities for agencies in 2018, with Food closely following.

Rank Pitches by Sector 2018 Rank Pitches by Sector 2017
1 Motoring 1 Retail
2 Food 2 Motoring
3= Finance 3 Charity
3= Retail 4= Finance
5 Charity 4= Travel
6 Travel 4= Alcoholic drinks
7 Alcoholic drinks 7 Food
8 Government 8 Government
9 Cosmetics & Toiletries 9= Telecommunications
10 Clothing 9= B2B

We also observed an increased propensity for agencies to decline an opportunity to pitch which, previously, they would have accepted. With unrelenting pressure on limited resources, agencies have become more selective and commercially pragmatic about the pitches they choose to participate in.

The prevailing attitude is that unless they have the available resource to give a pitch one hundred per cent in terms of team resource, effort, and belief that they can win the business, they would rather turn down the chance to pitch.   This is in direct contrast to the cultural optimism of the past where many agencies would be prepared to “give it a go” and accept the consequences – and cost – of not being successful.  Agencies simply don’t have the bandwidth to accommodate relentless pitching without return and we do not see this changing in the coming year or beyond.

Commenting on the report, Kerry Glazer, CEO at AAR said: “I don’t have a crystal ball to help me forecast how the market will perform this year, but I can confidently say that 2019 has kicked off at very brisk new business pace.  Despite the business anxiety caused by Brexit and fears for the economy, brand owners aren’t following the ‘better the devil you know’ approach.   Agency reviews are still happening and are still primarily driven by a failure of some part of the relationship between the brand team and their incumbent agency.”

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Martin Jones

Counsel to AAR

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