Published in Media Week 20th April 2004
Agencies need to be more selective about the accounts they pitch for and their offering to advertisers – because they are “stretching themselves too thinly and trying to be all things to all clients”, according to a new report from business consultancy The PACE Partnership.
The study, which came out of a survey of managing directors across the top 160 UK marketing services companies, claims agencies “are wasting resources on pitching for every invitation that comes their way”, irrespective of whether they have a good chance of winning an advertiser’s business or not.
Paul Denvir, a partner at PACE, said: “Media agencies will often pitch for every piece of business that comes up, no matter if they are suited to it or not. These agencies need to be able to turn down unsuitable pitches, as pitching drains resources when they could be doing other things.
They need to focus – and sometimes focus is about saying no.”
The report says that, by casting such a wide net, agencies risk being viewed simply as a commodity and could see further pressure on their fees.
It goes on to say that media agencies need to build up relationships with advertisers before pitching and that the scattergun approach to seeking potential new business has been putting agencies in danger of wasting valuable resources and ultimately damaging profitability.
The PACE study also showed that, because agencies generally make similar offerings to clients during the pitch process and a new agency essentially offers the same services as its predecessor, most advertisers can expect little difference in the way they are served – irrespective of how important they are to the agency.
Agencies that do not currently offer a payment-by-results approach came in for heavy criticism by the survey’s respondents, indicating that return on investment is viewed as increasingly important throughout the industry.
Antony Young, chief executive of ZenithOptimedia, whose agency last year rebranded as the ROI agency, said: “We’ve been single minded about pursuing ROI. We see it as much as a survival strategy as where we are taking the company, we’re in the environment where accountability counts and this is at the front end of any marketer’s agenda.”
The report also reveals that participants think that while agencies are good at building relationships in the short-term, they don’t proactively plan and manage those relationships for the future. It also emerged that agencies are perceived as being over-reliant on tenuous personal relationships – sometimes between just one employee and one person on the client side – as a basis for maintaining business.
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© 2008 The PACE Partners LLP London England
