New-business appointments fell significantly in the first half of the year from the same period in 2019, as a result of brands postponing or delaying their reviews as they adapted to the unprecedented circumstances caused by the coronavirus pandemic.
According to AAR's latest New Business Pulse, overall agency appointments were down 44.2% – although the intermediary said that with many reviews taking longer to conclude than they would have done previously, it would not be possible to see the full impact of the outbreak on new business until the end of 2020.
While this year's particularly steep decline is the result of exceptional circumstances, it also continues a long-term decline in agency appointments in the first six months of the calendar year; they have fallen in each of the previous five first-half editions of New Business Pulse – by 12.2% in 2015, 11.7% in 2016, 24.3% in 2017, 8.9% in 2018 and 12.2% in 2019.
These falls are cumulative, meaning the number of appointments in the first half of this year was almost three-quarters (73.8%) lower than in the first half of 2014.
AAR's full-year data, in contrast, has shown the level of new-business appointments fluctuating but not changing significantly over the past few years – although it was down 12.2% in 2019, the same fall as in the first six months of the year.
CRM was the sector with the greatest impact, seeing a two-third (66.6%) decline in appointments. Integrated accounts (those including at least three disciplines) were the only category not to experience a fall, with no change year on year – something that AAR said was largely due to government framework reviews.
As well as fewer appointments made this year, there have also been fewer large accounts awarded, with Halifax and Very the only two brands with media budgets above £20m to make appointments. This compares with four in the first half of 2019: Barclays, GoCompare.com, Virgin Media and William Hill.
AAR pointed out that a number of significant reviews remain uncompleted, including advertising for Three and Walkers, CRM for O2 and Volkswagen, and integrated businesses for EDF Energy and E.ON.
Victoria Fox, chief executive 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 behaviour 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."
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