The New Business Market January to June 2024

As we head into summer vacation time who amongst us will be looking forward to some respite from an active H1 new business market and who will be more concerned about their agency’s new business growth targets for the year and wondering how they are going to deliver them?

Analysis of new business activity for the first half of the year indicates an overall year-on-year decline of 20% in the volume of completed pitches, which is a slight improvement on the comparable figure of -23% for the same period 12 months ago.

A summary of all activity split by discipline is shown below:

A lack of scale advertising and integrated opportunities

While opportunities have declined by one fifth, which is of concern to those agencies with an over-reliance on growth through net new business, the market sentiment is one of mild disappointment at the lack of scale opportunities so far this year.

There have been only four completed reviews with billings reported in excess of £20m - Molson Coors, Perrigo and Pfizer (both global) and Vodafone, which announced their result in early 2024.

All other opportunities where billings have been reported were below £20m and, while it’s recognised that billings are not necessarily an accurate reflection of the commercial opportunity, in the absence of more accurate data, it’s the only proxy to use.

Undoubtedly, there was other commercially significant business won for which no billing figures were reported (Co-op, Uswitch, EDF Energy and Iceland) but, overall, when looking through the lenses of fame, fun and fortune, it’s the last category - fortune - where there have been less scale opportunities than agencies would have hoped for.

Pitches for CRM/CX continue to be few and far between

The data would suggest that those agencies delivering CRM/CX expertise and solutions need to focus their growth efforts beyond the increasingly shallow waters of the new business market as the H1 2024 decline in new business opportunities has more than doubled vs the same period in 2023.

Given the importance of and investment in all things customer we have to ask what’s the explanation for the continued decline in CRM/ CX new business?

Previous AAR commentary has pointed to the investment made by brands in tech and customer-focused platforms, a consequence of which has been greater reliance by clients on incumbent agency partners to help leverage the power of all this new kit.

Another contributory factor is the in-house CRM/ CX capabilities that 20th century brands have built and that 21st century businesses have created from scratch, both negating the need for services that were once the sole domain of external agencies.

Then there is the growth of agencies offering multiple capabilities that can service the full customer journey be it under a single agency brand or connected family of expertise, removing the need for their clients to look to the wider market when a new marketing service is required.

Whatever the exact reasons, the decline in opportunities for agencies looking to grow through open market competitive pitching appears to be not just a trend, but the new marketplace norm.

Digital reviews down by a quarter

There were 24% fewer digital pitches for creative services in H1 2024 vs the same period last year. Given that everything is digital and has been for a while, the long-term future of digital-only reviews would also seem to be in question.

And it’s not that these digital accounts have been won exclusively by specialist digital agencies, which may have suggested a capability gap between them and full service agencies with digital expertise.

The ebb and flow of CMOs choosing to have more or fewer agencies will always have an impact on the market, but current preference is for fewer agency partners which will be another contributory factor to the paucity of digital reviews.

Social continues to outperform the market

As can be seen by the figures, social is the poster child of pitching (pun intended and no apologies!).

There are two dominant trends that are working in parallel and, unusually, in opposition. The first is the consolidation of disciplines into single agencies with multiple areas of expertise, most notably a coming together of social and PR.

The second trend has been the appointment of single discipline specialist agencies, most notably influencer briefs being separated from social briefs, and content briefs being split from advertising and PR opportunities. We interpret this as suggesting that there’s still a significant enough delta in the expertise and capabilities that single discipline influencer and content agencies offer for brands to add them to their roster of agencies rather than appointing an incumbent agency with a wider suite of services.

You’re always going to be pitching if you work in media

A 4% decline in the number of media pitches is materially insignificant, and the reality is that a significant proportion of brands will be pitching their media at any one time throughout the year amongst a relatively small universe of media agencies.

Add to this the global super tanker media pitches that are ever present in which the network media agencies are either an incumbent and so having to defend, or a non-incumbent that can’t afford to ignore the opportunity, the result of which feels like a continuous conveyor belt of media pitches.

All this adds up to it being a busy time for media agencies across domestic and global opportunities - HP, L’Oreal, Pernod Ricard and Singapore Airlines have all completed in H1 2024 with Amazon, Unilever, Sky and eBay still in the throes of their review at the time of writing.

We anticipate a buoyant second half of the year in media, so take your vacation while you can!