01 Jan 2018
AAR’s annual review of the new business market has revealed that in 2017, the total number of completed new business reviews in the disciplines that are measurable showed a marginal increase of 0.5% versus 2016.
In terms of specific disciplines, the changes were as follows:
2017 vs 2016
As can be seen from the table, the number of completed advertising reviews in 2017 increased by 9.2% compared to 2016.
Whilst there was an increase in the overall number of advertising agency appointments, the most significant factor in 2017 was the lack of scale reviews compared with previous years.
In 2017 there were just seven brand owners with a UK media spend in excess of £20 million who called a review of their agency arrangements (Boots, Dixons Carphone, Dreams, Hilary’s, KFC, Paddy Power and Vodafone) compared with eleven in 2016. From an agency perspective, however, equally significant was the fact that of the seven brands that reviewed, only four went to the open market whilst the other three, Dixons Carphone moved to roster agency AMV without a pitch, and Boots and Vodafone only considered WPP owned agencies.
However, although the number of major UK spending brands reviewing was down, the advertising market was kept very busy with some significant clients including Britvic, Cadbury, Carling, Costa, Debenhams, Domino’s, Green Flag, Halfords, JD Williams and Lastminute.com changing agencies.
At the same time, a number of international brands called reviews which involved a lot of work and opportunities for many UK based agencies. Brands that went to market in 2017 seeking agencies for international or global accounts included AirBnb, BA (now part of IAG), Citroen, EA Sports, Ebay, Kia, Mondelez (Philadelphia) and P&G (Lenor).
Like the advertising sector, the volume of CRM appointments also showed a year on year increase in 2017, up by 9.0% compared with 2016. A few major companies made appointments (often after lengthy pitch processes), including the combined BT/EE account, Costa and IKEA, whilst CRM was included as part of WPP only reviews for Boots and Vodafone. As the year drew to a close the result of the highly prestigious TV Licensing review was still in the balance.
While 2017 saw an 8.4% increase in the number of integrated appointments, the majority were relatively modest in terms of budget with most of the major spending clients still preferring to appoint specialist agencies.
In contrast, however, the Government’s integrated agency framework offered significant opportunities for agencies to win consolidated accounts including HMRC and the Department of Transport, a trend which is certain to continue into 2018.
In 2017, digital pitches (of any description) were down by 15.5% over 2016, although the types of digital briefs has definitely changed, with clients looking to appoint specialist agencies for digital strategy and innovation rather than communications.
Finally, following a number of years of pitch activity and consolidation, the number of media agency appointments in 2017 was down 22% compared to 2016.
However, new business teams in media agencies couldn’t take it too easy, with pitches being called by a number of large UK client companies including Barclays, BT, Carpetright Freeview , LadbrokesCoral and (after much toing and froing) Sainsbury’s.
UK media agencies were also heavily involved in a number of major global/international reviews including Akzo Nobel, Carlsberg P&G and PSA.
In 2017, retail clients were the most likely to call a review, followed by those operating in the motoring and charity sectors. It is perhaps unsurprising that there is a direct correlation between the “competitiveness” of a sector and the number of new appointments, as brands strive to identify ways in which they can make significant or even marginal differences to their performance.
In volume terms, the top ten industries that made appointments (in any communications discipline) in 2017 were:
Commenting on the results, Kerry Glazer CEO of AAR said: “For many agencies, 2017 was not so much a game of two halves, but one of four quarters.
Brand owners seemed to enter the year with a renewed confidence (or perhaps bravado) and the year started with a bang as reviews were called across all disciplines and sectors. Indeed, for many agencies, it was the busiest quarter in living memory in terms of pitching.
This momentum continued into the second quarter but, by the beginning of July, the market had gone quiet again in terms of new reviews being announced. There was much conjecture as to the reason for this phenomenon, but we suspect that it was not down to one particular factor, but a combination. These included a busy first quarter, increased concerns over macro issues including Brexit, the result of the UK election, the implications of Donald Trump’s “governance” of the largest economy in the world, combined with many brands being focused on internal rather than external issues.
However, as we approached the beginning of the summer break, confidence appeared to be reinvigorated, so that by the time the schools went back, the new business market was again in full swing as marketers sought to make appointments before the year end.
It is always difficult to predict how the new business market will look in any new year, but as we enter 2018, we remain cautiously optimistic that volume levels will remain similar to 2017, although the size and type of review may well change. Equally, as agencies increase the number of disciplines that they can credibly deliver to their clients, it will be interesting to monitor whether this will lead to an increase in the number of major integrated reviews.”