Green Shoots Starting to Emerge In AAR New Business Pulse After 2020 Data Showed Appointments Down by 39.2%

Figures have shown the number of new business enquiries amongst agencies has returned to pre-lockdown levels in encouraging data released in AAR’s Lockdown New Business Pulse from w/c 1 March 2021.

This sits in contrast to the 2020 AAR newbizmoves data out today, which shows an overall decrease of 39.2% versus 2019 for new business enquiries. This compared with a decrease of 12.2% in 2019 versus 2018.

It should be noted that the figures only cover appointments and, consequently, any pitches that took place in 2020 where an appointment has been put off until this year have not been included in the final figures.

The extent of the impact of COVID-19 on the new business market will come as a surprise to nobody.

Commenting on the report Victoria Fox, CEO of AAR, said: “2020 was clearly a unique year for the new business market and we hope that we will not see its like again. 2021 is already looking more positive and our hope is that the early signs of recovery will continue as we enter a post-vaccine world of normality.

“We are anticipating that the volume of reviews will return due to a mixture of pent-up frustration caused by the inertia of 2020 and the need for brand owners to keep up with changing customer demands by adding capabilities to their marketing ecosystem (sum of internal and external capabilities). This will be either by in-housing, adding new external partners to their rosters or developing the remits of their existing agencies.

“There is little doubt that lockdown has provided brand owners with an opportunity to start to consolidate and simplify their existing agency arrangements and reassess their agency mix.

“We are excited to monitor the trends and data as we progress further into 2021.”

The 2020 AAR newbizmoves report has shown the reasons behind the decline are manifold, but principally can be put down to a number of factors including:

• Clients prioritising their own customers and internal functions over external agency considerations
• Agency management teams ensuring their existing client base was over-serviced during lockdown, thus removing one of the traditional reasons for reviews being called in the first place i.e. a relationship breakdown/ lack of service
• The inability for brand owners to physically meet with potential agencies, leading to them “putting off” a potential review until normality resumed

That said, the 2020 new business market was conversely supported by other key ingredients including:

• International and global reviews continuing as such businesses were used to working remotely and consequently weren’t fazed by virtual pitching
• An increase in the number of project-based rather than retained relationships
• New brands seeing lockdown as a positive reason to launch and exploit a gap in the market

The comparative health of the specific communications disciplines in 2020 (versus 2019) in terms of volume of appointments was as follows:

Source: AARnewbizmoves

The number of advertising appointments reported decreased by 38.3% compared with 2019. This volume decrease was replicated in value terms with five brands with UK media budgets in excess of £20 million making appointments (3, Deliveroo, Halifax, Very and Walkers) compared with eleven in 2019.

Media agency wins were down by 41.2% versus 2019 but did include several major UK and global brands such as BBC, Diageo, Duracell, Emirates, Estee Lauder, Jacobs Douwe Egberts, Lidl, Lionsgate and Zoopla.

As previously mentioned, both the advertising and media new business communities gained through new brands, often in the direct to consumer space, coming into the market for the first time.

The volume of CRM/ Performance appointments decreased by 45.0% compared with 2019, having seen a 21.2% year on year increase the in the previous twelve months. At the same time, the overall health of this sector of the market was also depressed by a number of reviews being kicked off and then paused for practical reasons.

Stand-alone Digital appointments continued to decline (down 26.2% year on year) although the focus of these reviews continues to evolve. Digital comms pitches remained a rarity, but there was a rise in the number of brands looking to appoint a consultancy to assist with digital innovation or a specialist social agency such as Foot Locker, Lidl, Samsung and Subway.

Integrated agency appointments (involving three or more disciplines) were down by 20.9% year on year, the majority of which were modest in terms of budget. The exceptions being EDF and the global Walgreen Boots reviews, and numerous Government framework pitches, particularly those that were COVID-19 related.