Life’s a pitch? David Wethey, Chairman of Agency Assessments International.
27 Aug
David Wethey believes “better pipers get to call the tune”.
David Wethey is Chairman of Agency Assessments, an agency search and relationship consultancy in the UK. David will be a panelist at our upcoming event called The Art of New Business on October 10th. Here he shares his thoughts on the pitch process, in particular, why he feels it needs to change.
Anyone observing the agency/client relationship over the past few years (especially long term residents of the global jungle like me) would have to be struck by three phenomena – none of them particularly encouraging:
- The balance of the relationship has become skewed to a master/servant level never seen in the last 40 years with, I believe, client respect for agency expertise at an all time low
- The pitch circus has become nearly as important in terms of agency focus as the day job of handling clients – and the defining criterion in most pitches is now subjective reaction to the speculative creative work developed by candidate agencies
- Agency scope of work has become largely commoditised, as increasingly powerful procurement departments have taken control of fee negotiations.
I have been a client-side pitch consultant for many years, watching clients demand, and agencies offer more and more free creative. I now strongly feel that pitches should be faster, less expensive, involve fewer agencies, and be based on proven expertise, fit, strategy and affordability, rather than on which agency can come up with the most convincing free ideas. Giving away creativity is not just a bad idea for agencies. It also makes it less likely that clients will choose the best agency for them – ie the one that ticks all their boxes. We have devised a proprietary and much better-balanced new system of running pitches called Mutual Decision™. The name recognises that an agency’s decision to negotiate with and take on a new client is just as important as the client’s to choose a new agency
We also need to do something fundamental about the commercial basis of the relationship.
I think it is now clear that the industry took a huge leap into alien territory when it moved from commission to fee in the 1980s. The commission system had many faults – not least the fact that the commercial relationship was effectively between media owner and agency, not agency and client. Commission also didn’t measure input cost and effort. What commission did, however, was act a pretty effective performance kicker. The better the brand did, the more the client tended to spend on media – so the agency benefited too.
But the input-based people/hours fee remuneration method – purloined from the creativity-free zone inhabited by solicitors and accountants – is the superglue that threatens to stick the communications industry to the floor of commoditisation. Before long, ads and ideas will be traded on some commodities exchange alongside wool and base metals.
Of course clients call the shots. The brands are theirs, and it’s their money. But there are agencies that have earned the right to premium fees by dint of a superior track record in creativity and effectiveness. Better pipers can call the tune, for the excellent reason that they regularly outperform their less talented rivals. Winning service providers – from film directors to kitchen designers – are generally selected on their record, and that enables them to charge more.
So why does our industry give crackerjack, award-winning agencies two or three weeks to prove they are creative? Worse, why do we expect them to work for the same money as their mediocre competitors? A more civilised and rational pitch system will produce more productive and long-lasting partnerships. Within these relationships there needs to be a compensation regime that fully reflects outputs and deliverables, but also recognises quality, added value and results.
Follow @davidwethey
Want the opportunity to meet David and ask him questions? David will be a panelist at The Art of New Business, our event that will be held in London on October 10th 2012. Sign up to attend here. You can also follow @theartofnewbiz and join our Linkedin group.
Karla – thanks for sharing this article and this perspective. I hope you are well… and still delivering great value and growth for your clients.
David – excellent piece. Thanks for sharing your experiences, perspective, and your recommended solution. Much has indeed changed in the industry – since I first interned at Y&R in NYC in the mid-80′s.
I agree with your insights on 3 emerging phenomena. I also agree that client practices have become so focused on the “wrong” things with respect to screening, selecting, inspiring (or not), and evaluating performance. And certainly much has changed related to agency compensation.
As a client-side search consultant, I am quite surprised that you did not touch upon the substantial lack of differentiation of agency offerings. You did briefly mention agencies that have earned the right to premium fees versus their mediocre competitors. This is a direct function of their ability to set themselves apart for the “noise” of the industry – a luxury that most of the industry is unable to achieve due to their choices to look and sound like everyone else.
As a former client “gatekeeper” (and now like you – a client/agency relationship consultant), I contend that one of the key reasons that client selection processes have (indeed) devolved to “beauty pageants” and bidding wars resides with the incredible ‘sameness’ and homogeneity among agency USPs. While in my role as client process-owner (but not sole decision-maker) for agency reviews and selections, we saw about 250-300 agencies each year.
The VAST majority (literally 97+%) “created noise” in the industry as that all sounded like every other. Those rare firms (2-3% of all firms that we reviewed) – who chose to stand for something (instead of try to imply they could do everything – were the usually the one we sought out… and those that earned the higher rates and fees, BECAUSE they stood out. The other theme that emerged about these firms was that they were not afraid to tell us what we REALLY needed to hear, instead of the typical sugar-coated, politically-correct mush they agencies most often tell clients so as not to upset them. We were happy to pay premium rates to these firms to get their best thinking, their best people, and to hear from them what we NEEDED to hear about our brands, our choices, and our practices. We were also happy to pay premium rates because they delivered work that drove our business – whether it won awards or not. Since you plugged one of your processes, I’ll do the same – I created a tool that is applied to agency messaging, which is called, “What You Say, What They Hear™” that filters agency-speak through the various roles, levels, and responsibilities of a variety of client resources and stakeholders. It also compares that agency’s messaging with a number of other agencies with whom their clients might know and interact (i.e. competitors).
To be clear, we did expect to negotiate with our agency partners, as we did expect “value”… and we used all of the usual procurement tools to help “inform” our discussions (benchmarking rates, etc.). But, our focus when negotiating with these “elite” firms was to help drive MUTUAL SUCCESS. We wanted them to succeed. We wanted them to WANT to work with us. And we wanted their best people to WANT to work for us.
So, each “side” of the industry can continue to point to the “other” as the reason that the industry is in the state in which it currently finds itself – and will likely continue to do so. But until each “side” holds up a mirror to truly understand that they are complicit in this dysfunction – there will be not real solutions, only ones that best suit a single firm/client or one “side” or the other.
Thanks for sharing your thoughts and your experiences.
Regards,
John Gleason
Hi John
Thanks for taking the time to respond to David’s post. A valuable contribution as always!
I’d like to say it’s great to hear a viewpoint from the US, but in some ways, I’d say it’s kind of depressing to hear differentiation is as much a problem there as it is here in the UK.
In an upcoming blog post I talk about two of the dirty secrets of creative agencies, both of which tie into the lack of differentiation rife in our industry:
Dirty secret no.1: Most agencies do exactly the same thing and aren’t meaningfully differentiated from one another. They haven’t spent any time at all developing a unique process, team, specialism or toolkit.
Dirty secret no.2: Many agencies that promote themselves as experts in brand positioning struggle to articulate their own proposition in a way that can be simply understood and bought.
What motivates me is the 2-3% of “rare agencies” you mention, a great example of which is eatbigfish, creators of the term ‘challenger brands’ and written about on this blog. If some agencies can do it, others can too. They just need the right support.
I’ve recently repositioned a relatively unknown agency that now refer to themselves as ‘frontline marketeers’. They’ve been working with a famous automotive brand for the last 12 years; largely managing their dealer marketing for them. They’ve developed systems to help the client better relate to the frontline, an expertise that many national brands could benefit from. Now when a client asks them, “what do you do?” they respond with, “we are experts in frontline marketing. We help national brands sell more through their sales outlets of franchise network”.
It’s been quite a big change for them, but they’ve embraced it because it helps them narrow their focus in terms of who they are targeting and what they have to offer that audience over and above the competition. They have redesigned their site and case studies to fit with this proposition and created ‘Frontline Thinking’, a free quarterly publication that they send to clients. It includes thought-leadership pieces, client interviews and insight.
To test the positioning we contacted two major brands, both of which wanted to meet with them.
This is how a real business development consultant adds value. Not just cold calling on an agency’s behalf.
My point is that using the right consultant, someone who understands the value of strategy, can get you to a differentiated proposition relatively quickly. Of course owning that proposition is a lifelong journey – one that can involve completely restructuring your business. It’s worth it though, as I’m sure you’ll agree.
John, I remember you telling me once that P&G wanted an agency that would “tell us if we have an ugly baby”. You came straight to Williams Murray Hamm, an agency I used to do new business for. We were known for being honest and it meant we held a defined position in the client’s mind. Their proposition of ‘creating difference’ still exists as the core of their business today – a never changing principle that defines everything they do.
When an agency hits upon a true and relevant proposition the results can be astounding. It’s just a shame more agencies don’t invest in defining one.