Global Initiative boss urges industry to ditch the ‘dog and pony show’ pitch process
The global boss of Initiative has urged the industry to ditch the pitch process, describing it as a “dog and pony show” that’s a culture-killing, unsustainable model leading to the industry’s burn out and churn rate.
>Mat Baxter revealed that he’s registered the domain ditchthepitch.com to hopefully – should Initiative’s holding group IPG Mediabrands allow him – set up the Glassdoor equivalent for pitches, where agencies can hold bad clients to account.
Speaking at the Mumbrella 360 conference in Australia this morning, Baxter said: “There is a concern in our industry, and I’m talking for both creative and media agencies here, that, when you speak out publicly about what goes on in the pitch, well, there could be some form of retaliation from the client and the pitch consultant community.
“I really hope that isn’t the case today. I really hope that we can have this kind of discussion in a grown-up way and that the kind of concern about retaliation is unfounded. So fingers crossed, otherwise, I might be in some trouble.”
He noted that industry peers could also retaliate, and throw figurative tomatoes in comments sections. Placing a literal basket of tomatoes in the centre of the stage, Baxter challenged a room filled with colleagues and competitors to ask him tough questions.
He called on them to say no to pitches, and more radically, to scrap a process that he said it costing adland time, money and people.
The pitch is the only “enduring relic” of the Mad Men era, he said, suggesting that it made sense at the time when there was less competition, and it was cheaper.
“You know when you pitched 30, 40 years ago, there may be two or three competitors in a pitch,” he said. “Now we have hundreds of agencies competing. So back then, the economics of a pitch, you can argue, made a little bit of sense. Today though, it doesn’t.”
To prove the point, Baxter assembled a team to dig through 13 years of Initiative and RECMA data.
The results? What Baxter called the “degradation of what I believe to be just fair play”, to the point where it now takes “about a year for an agency to break even after a [global] pitch” that costs, on average, $300,000.
“Now, often, these clients are much bigger than the agencies that they asked for this relief from. So, at the big end of town, 12- day payment terms has become an expectation that agencies are going to accept,” Baxter said.
“Just in this market, right now, there is a pitch going on for a CPG [consumer packed goods] client. The mandatory requirement to participate in that pitch you’ve got to agree to 120-day payment terms and if you don’t, you’re out. And I want to call out publicly Omnicom, PHD, who took a stand with us on not participating in that pitch.
“The really good agencies have got to start saying no.”
He turned then to overheads – “spicy”, but not talked about often. The travel bill alone on a recent global pitch, he explained, was US$1m.
“To convert a really competitive global pitch, you’ve got to be willing to take an overhead recovery of 70%,” he said.
“Even though your real overhead might be 110, 120, 130 and you’re probably going to have to agree to take the business on at a zero to 10 margin.
“And as I said, on the really competitive pitches, clients might just say: ‘You’ve got to earn in your entire margin, you don’t get any, you’ve got to recover it all through performance.’ So you can see how, financially, it gets really hard to sustain this long-term.”
And the biggest victim of the pitch process, he claimed, is clients.
“Senior people tend to have to work on pitches because pitches are complicated and there’s a lot of top to top interaction,” he said.
“The number one problem that clients have is, ‘We don’t get enough senior resource on our account’. Well, the reason is, increasingly, because they’re constantly having to pitch to either retain your business or go for other business because the lifecycle of a client’s tenure has reduced so much that we’re in a perpetual state of pitching.”
And clients lose out when they demand pitches are run over holiday periods too.
“That adds to the culture-killing nature of working the agencies and increases the churn rate because people get burned out and feel that they don’t get the time to rest and recharge,” Baxter argued.
“So again, It impacts clients negatively because clients constantly have staff churn on their accounts because the culture of the agency is getting impacted.”
He explained the volume and cost of pitches is “a lot of money that’s getting taken off the table” for investment in existing clients.
The reason for putting an account up to pitch so often, Baxter hypothesised, is cost pressure; in the last 10 global pitches Initiative was involved in, six clients expected a cost reduction of 21-25%.
“And this kind of high-speed cycle we’re in, where the minute something goes wrong in your agency relationship, you leap straight to divorce not to marriage counselling, that feels like it’s contributing to the short term-ism and to some of the marketing challenges that we all face in building brands over the long term,” he said.
Baxter split his proposed solutions into two buckets: simple, and radical.
The simple solutions include: agencies saying no and having a “backbone” when terms are unfair, clients dealing with costs in the first round if it matters most to them (rather than forcing agencies to spend time and money through multiple rounds first, with price as a “surprise” at the end), clients flying to agencies and bearing some of the cost for the free work they get, and procurement incentives that prioritise the tenure of agency relationships.
As for the radical “ditch the pitch.” Baxter wants clients to choose agencies like they would a law firm, on reputation, portfolio, client references, and a financial proposal.
He wants agencies to share pitching horror stories with the hashtag #ditchthepitch. And if IPG Mediabrands gives the green light, he wants ditchthepitch.com to become a place of accountability.
So I see. Initiative just want it all handed on a silver plater.
ReplySo much wrong with this article I don’t know where to begin.
First and foremost – don’t put anyone on a pitch that won’t be working on the business. It’s simply misrepresenting the agency to the client. There, that solves the problem of having senior people too busy on pitches to do the work for clients.
Quite a bizarre article in all honestly. Lift your game agencies. Focus on honesty and transparency and if you don’t want to pitch then it’s simple – don’t pitch !!!
I totally agree with Lizzle. Is Max willing to give up his current clients if they don’t fit within the commercial ideals he is looking for?
Maybe Max should open another domain called ditchedmyclients.com so that the industry could grab the pie too. A good CSR project for IPG too.
ReplyInteresting article. Honestly though, as a consumer, I wish agencies AND clients would get a clue about who WE are…and use common sense, not focus groups. I’m reminded of an old Terri Garr movie, where she told clients to just be honest, and ditch the spendy ads and instead, lower prices. And tell the consumers just that! It was a wildly successful campaign. I’ve often wondered why it’s never happened in real life. I’d rather NOT see coupons, TV ads, print ads, mailbox flyers, all that junk and instead just have one, plain ad SAYING…”we’re passing all that we save directly to you, Mrs. America!” No more time and money wasted on all the junk most of us dump anyway! Way to increase pollution!
Personally, I KNOW what I am going to buy before I leave the kitchen! Though part is based on quality, the biggest part of my thought process is about PRICE! Most housewives are the same, too. Less packaging, less fancy ads, less money spent on getting it in our face translated to LESS money out of my pocket means I will come back – again and again and again!
Y’all spent far too much on getting the biz! Remember free samples in the mail? Towels in oatmeal? Glassware with fillups? Sure, WE paid for it but we got something besides a sexy model yakking at us for 30 seconds! A model WE don’t even look like, for a new product we don’t need or want! There isn’t a real housewife in the US that wouldn’t prefer fewer ads and fewer products on shelves in exchange for cheaper prices.
We want good quality, safe products, stable access through time and LOW COSTS! Wrap it in recycled packaging and you’ve got a winner! It’s not rocket science. KISS! KEEP IT SIMPLE SILLIES! And TELL US you are, for OUR budgets and you’ll win every time, I bet!
And quit insulting us. “Gluten Free” on plain milk? Seriously?!? SMH. Honestly, there are few true gluten allergics but wow, what a marketing field day! Why not try “Glyphosphate Free” IF the product actually can pass that test! Ditto: GMO FREE, if it is! If they’re not, why not? Make it truth, sellers!
ReplyWe have enjoyed success in acquiring new accounts by offering prospective clients an interesting alternative to the traditional pitch.
Rather than invest our time and resources in developing speculative creative work and strategies which may (or may not) be on target, we offer to bring “our” key people to the table with “their” people for an in-depth review of their marketing plan. If they don’t have a marketing plan, if their plan is non-functional, or if they are not yet ready to share their plan; we propose this alternate approach.
Over several evenings or Saturdays, while the cellphones are a bit quieter, “our” people will meet with “theirs” to engage in a free-flowing dialogue that is based on a discussion outline we’ve developed. The product of these meetings is a concise, actionable plan. We have developed this plan together, with their people. Of course, the relationships we’ve developed during this process ensure that we will be a finalist, if not the outright winner.
Depending on how badly we want the account, we may offer to give the plan to the client with no obligation. Sometimes, we agree at the outset that the client will pay us a modest fee for this plan, after which they can use the plan as they wish. At other times, we offer the plan for a fee but offer to forgo the fee if, at the end of the process, we both decide to establish a relationship.
There are many side benefits to this approach – including educating our creative, media, and account people on the nuances of this client’s position. This knowledge and the personal relationships we develop in this process will ensure that we will sustain the client/agency relationship for years to come.
ReplyGood read. I think you should have a look at the best alternative there is. Here is an article I write some time a go about a New pitching process we did for Amsterdam Airport. And I think the answer to some of the core issues adresserend in your article. https://www.linkedin.com/pulse/clients-who-dare-ditching-pitch-jonne-kuyt
ReplyQuite an Utopian article.. or maybe a rant of frustrations on how more players are taking away their market share.
Things are going to get tougher in any environment or industry we are in. That’s the reality we have to accept. The game is not sit on the laurels of the past. Innovate, be transparent in your dealings and drive more efficiencies to cut costs. Leaders should leverage bulk of their remuneration towards their targets and not just enjoying the Ferraris granted to them. That will help the overheads.
Those days of making mark ups in programmatic buys or hoodwinking the arbitrage gains through the complicated barter/finance set ups are gone. Find a new path to stay relevant and profitable.
But I have to admire his thoughts on this.
ReplyEnjoy the tomato juice!
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