Client businesses continue to change at a pace that has obvious knock-on effects on their agency resources. Industry churn remains a macro challenge. And to compound the pressure on resources, new-business enquiries keep on coming on a weekly (nay, daily) basis.
JPMorgan’s prediction of "elevated" new-business activity in 2022 feels like an absolute certainty.
As a result, some clients may not be seeing the best of their agencies right now and may be considering other agency options. I would encourage those in that position to take a moment to consider giving their agency more time and to support it in the way, hopefully, it may have supported them during their own tough times.
A lot, but not all, of the resource challenges agencies are facing right now have been brought on by factors out of their (direct) control.
By the end of 2020, we estimate the "big six" networks had laid off about 15% of their people, to plug the short-term income gap. In addition, many people left agency life to go client-side or pursue careers perceived to be more purposeful.
Fast-forward to the rebound in 2021, and those same legacy networks began re-recruiting at pace due to the intensity of resource shortages. But this recruitment drive is distorting the market by inflating salaries as agencies buy people back with bonuses or over-promote them – all of which creates a problem further down the line.
Although Goodstuff pledged to make no redundancies in 2020, we are facing a similar challenge. We lost more talent than we’re used to (interestingly, many went client-side) and, due to our continued growth, we have significant recruitment needs.
So, my message to CMOs (and procurement departments) is that all agencies are being challenged by staff shortages. Therefore, if you are considering a pitch due to this issue, I’d encourage you to pause and consider how you could support your agency. The grass may not be any greener elsewhere, despite what other agencies will tell you when they pitch.
In this situation, it’s encouraging to see that some marketers appear to be acknowledging the pressure agencies face and trying to build collaborative partnerships. As Gareth Turner, head of marketing at Weetabix told The Marketing Society: “There appears to be a short-termism creeping into the client’s world ... but even the best relationships would have had sticky periods … it’s looking to how those relationships navigate the choppy waters.”
If, however, you decide that having tried to work things through with your agency, you still want to call a pitch, I have one more request of the client community, and that is to consider the welfare of the incumbent.
Repitching is a tough experience, whereby you are expected to find the resource and energy not only to ensure the existing day-to-day client service is faultless, but to also show up with the same level of excitement as the agencies trying to win the business. When resource is tight, this is double-counting. Maisie McCabe highlighted last week that “advertisers will never get the best possible work out of agencies where staff are under extreme conditions”.
It’s therefore reassuring to see the IPA and ISBA launch a joint initiative to improve the pitch process for both agencies and advertisers. As Andrew Lowdon, director of agency services at ISBA, said: “There are a lot of pitches taking place and it’s likely a significant number ultimately may be unnecessary. And even amongst those that are necessary, the existing approach often generates a lot of unnecessary work taking place. This represents wastage that we should look to reduce.”
When pitches are unavoidable, I would ask clients to be honest with the incumbent on their chances of retention. Too many times I’ve heard from the client or an intermediary that the incumbent agency “doesn’t stand a chance” which in the current climate of workplace stress, is unprofessional and should be unacceptable. I’d suggest having a frank conversation with the agency and agreeing an exit service fee to ensure service remains high while you go about finding someone new.
Since I have both client and new-business responsibilities within Goodstuff, I can see both sides of the pitching challenge, but on balance, I would encourage clients to have patience before calling a pitch and if they do pitch, be decent and honest with the incumbent.
It’s time to change the old saying that “new business is the lifeblood of an agency” to “motivated and supported talent is the lifeblood of an agency”.
Sam Drake is a managing partner and responsible for business development at Goodstuff
Picture credit: Mike Russell (iStock/Getty Images Plus)