November 08, 2009
Login | Register Now

Advertising Age: Your Online Source for Marketing and Media News


More from Ad Age:
Creativity
Ad Age China
Bookstore
Jobs
Ad Age On Campus
Sign up for E-mail Newsletters

Stay on top of the news, sign up for our free newsletters


Agency Reviews During a Recession

It Sure Is a Little Wacky Out There

Share on Twitter Share on Facebook Submit to Digg Add to Google Share on StumbleUpon Submit to LinkedIn Add to Newsvine Bookmark on Del.icio.us Submit to Reddit

Noelle Weaver Noelle Weaver
I don't know about you but my RSS feeds sure are depressing these days. A recent sample of news headlines told me which American cities were dying, the steep decline in retail sales, that the foreclosure rate in America has climbed to 55% in the past year, ad spending was further being cut and as a result of all of it, joblessness is up and layoffs are increasingly happening at both the corporate and agency level.

It's been a long time since I have worried about the ability to get new business in the door. This summer I'm just plain freaking out.

Don't get me wrong. There's still a lot of new-business activity out there. Some sectors seem to be performing better than others. But what is worrisome are the types of reviews that are beginning to come in over the wires. Companies are putting their business into review, not because they are necessarily looking for a new agency partner but because they are either going through agency consolidation; looking to dole out a little project to boost or promote the bottom line; reshuffling the budget to include lower cost tactics like direct and online; or simply making sure they are still getting the most/best value out of the current agency they have.

Like the Farmer's Insurance review that hit news headlines last week, clients with long-standing agency relationships are putting up accounts for review to see if they are still working with the "best agency" that can help them "take advantage of the best opportunities" in a "rapidly changing marketplace."

As a new-business director, I'm not hearing crickets quite yet, but I have noticed that many of the RFPs we have received are either project-based and/or aren't quite as solid of an opportunity that we'd like to think it is.

Consider two increasingly common questions found on RFPs:

Question #12: Tell us what a creative program/campaign might look like.
Question #13: Please tell us what a program such as the one you outlined above might cost.

It's becoming a trend. And it is a very big buzz kill for me as an agency person for several reasons.

Most important, these two questions in the RFP completely devalue what we do as an agency. The consumer research, the media, the channel planning and the creative that is tied to a strategic insight or recommendation are not taken into consideration. Sure, you want to see what types of great ideas we dream up -- but ideas are not built in isolation -- everything mentioned before is part of the way we think and work, and you're not allowing us to showcase our process and talent.

Second, it says to me that clients are interested in price alone -- not the thinking that goes into the end product and could potentially determine the success of the idea.

Third, after a number of submissions that resulted in "Sorry we don't have the budget," "We're putting any agency selection on hold" or "This is great, now I just need to go to management and try and get the funding," I'm crying "Wolf!" Are these reviews even real?

Pitch schedules that suddenly stretch out an extra month, clients that stop returning e-mails about possible decision dates, an invitation to a one-week creative shoot for a prestigious client looking for an out-of-home campaign (may the best wacky idea win!). The recession can sure lead to some wacky pitches these days.

What to do? I wish we had the luxury of saying "be choosy" but that is not the reality for many of us right now. What I do recommend is that you ask the hard questions -- upfront -- before you even sign a team to the RFP.
  • Why are you holding this review?
  • What about your current agency has disappointed to you?
  • I know you are looking to us for a price but it is helpful for us to understand your expectations. Can you give us a ballpark figure? If not, does 1 million scare you?
  • What's the most important thing a new agency can do for you right now?
  • Once you hire a firm, what is your expectation in terms of timing?
I've read all kinds of forecasts in every industry and been out there talking to consultants, recruiters and clients alike. There's not a rainbow at the end of this -- yet -- but with 18 months to make an impact, we can at least reassure our friendly client CMOs that the smart thing for them to do is not hit the "easy button" in a moment of panic and frustration.
17 Comments
Subscribe to comments on: Agency Reviews During a Recession
  By DENNIS | SOMERVILLE, MA August 16, 2008 02:37:13 pm:
Noelle,

very good article. I sure feel this. As a smaller agency, we are getting invited to the parties but I feel for all the wrong reasons. It's frustrating being put through the process but in some cases you have to try.
  By JASON | FLAGSTAFF, AZ August 17, 2008 11:34:55 am:
Timely post for sure. Given that digital is projected to increase 20% this year - mostly due to is measurability - I'm seeing success on RFPs for small and mid-sized agencies that focus on how they are going to track success of the program.

I don't see budgets being but lately (certainly at the beginning of the year, but less so recently), but what I do see are clients that don't have any extra dollars to waste. Anything you can do in an RFP response or pitch to demonstrate how your agency will use tracking tools (unique phone numbers, tracking URLs, media isolation tactics) to minimize waste and maximize success, goes a long way toward putting marketing directors at ease.

Ultimately, I believe digital marketing's emphasis on tracking and reporting will be its second biggest contribution to the marketing world (in addition to interactive dialog with customers).

I have a post on my blog about this:
"5 Reasons Why Digital Marketing Will Thrive in the Recession"

http://is.gd/1nkr

Jason Baer
Convince & Convert - digital consulting for agenices
http://www.convinceandconvert.com
  By paulcrawford | Birmingham, AL August 17, 2008 11:15:01 pm:
Noelle, Great post. Not all RFPs are created equal. A month ago, we received an RFP from a company that divulged a very sizable budget to be sustained over 3 years. Even though it required some spec creative, I was excited about the prospect. Upon closer inspection of the very tedious RFP, I realized that all the "selected agency" would win was the opportunity to help this company pitch another company for funding for their 3-year campaign (a 6-month, non-billable process). Once they confirmed that this was indeed the case, I wished them luck in finding someone who would be willing to take on the risk of not being funded. Sadly, in this economy, I think there are plenty of agencies that are willing to line up for that kind of abuse.

Paul Crawford
President/Creative Director
Scout
www.scoutbrand.com
  By GREG | CAMBRIDGE, MA August 18, 2008 05:46:12 pm:
You're spot on with this post Noelle. We're attempting to be more selective of the reviews our team is participating in, but like you said,"I wish we had the luxury of being choosy" in this market, but that's not always the case". We're trying our best to get as much information upfront about the reviews to make an intelligent decision to participate or not, but when you don't have all the facts, you go on experience and gut instinct to make a decision to proceed or not. By prospects providing more detailed information about their reviews like budget, etc, the better chance both the client and agency can save time and money regarding whether the potential opportunity is a good fit for both. So asking the right questions and getting honest answers can be the difference between an agency spending zero dollars or spending six figures for a review.

Greg Straface
Vice President, Business Development
PJA Advertising + Marketing
www.agencypja.com
  By futhman | Boston, MA August 19, 2008 12:51:07 am:
Noelle,

This is a great post because I'm at a crossroads and I'd like to figure something out. Right now I'm on an unlimited unpaid leave from my agency to "do my own thing" (I have the world's best boss), which might mean working in the US for a year or two or opening up a small agency for the kind of interesting small work that working in one of Bangladesh's biggest agencies didn't really let me. Since I've had fun producing TV and radio shows and in Bangladesh the market is small enough for me to be able to do so, I was thinking of making a sort of un-agency that works with existing agencies and produces high quality creative work on a small scale. But trying to create a business model is where I'm getting stumped--should I make it clear from the outset that clients will be required to pay for the idea itself? Most agencies don't have that luxury. Or should I ask for a budget and work accordingly? Like, "I'll give you the best possible product for X dollars"? I kind of feel awkward about the latter route because the best possible product for a certain price means that it's not the best possible product period, thereby invalidating my rationale for creating an agency in the first place, and secondly, no client wants to sound like they're concerned about money, at least in Bangladesh. They all ask for the biggest ideas in the world (in terms of scope and execution as well: i.e. Big Ad knockoffs for all) and then, when you've created something specifically big just bcause they asked for it, they want to create the budget version. Which is sad because we could have produced something very nice without its necessarily having to be "big" in the first place. What's even sadder is that as a creative guy I feel like I'm betraying my professional standards by thinking in terms of "big" and "small". Oh well. Let us embiggen the smallest man.

Thanks for a great post.
  By Michael Duda | NEW YORK, NY August 19, 2008 08:42:32 am:
Noelle,

A very thoughtful post.

My one pressure test is that most agencies rely solely on agency reviews and the traditional "bake off" process. Ultimately, Agencies do hold their growth destiny in their hands and therefore, there is much more opportunity to win new business from clients not actively in review as well as current clients.

We have invested in this (the biggest investment is time) and it does truly impact the Agency's bottom line, yield clients that tend to be better culture fits and the ROI versus the traditional pitch process is incredibly attractive.

Is it easy? Absolutely not. But it's something that is paying off incredibly well for our agency. And if all else fails...keep saying "no" to processes that are not ideal. Hard to do, but if that time is allocated to highly targeted, vested prospecting you will be pleased.
  By Mark | Syracuse, NY August 19, 2008 09:12:21 am:
Hi Noelle,

As always I like your perspective but I do agree with Michael Duda that you can control your own destiny more by reaching out to companies that appear to be a good fit for the agency rather than wait for them to come calling on you. In some cases you can even side step the dreaded RFP process.

Mark Lesselroth
Brenner Business Development
http://www.brennerbd.com
  By Robert | NEW YORK, NY August 19, 2008 09:39:09 am:
Noelle –

It's been awhile since you've posted here, but clearly well worth the wait—you can always be counted on to hit the mark. Many of the agencies I work with are feeling the kind of angst you describe here (see my most recent blogpost, Coping With Tough Times, at http://pitchsupport.blogspot.com.)

As Michael Duda rightly points out, times like these reward those who take the initiative. That means stepping up prospecting and networking efforts, to keep your agency's name, face, and value proposition out there, even more than in good times. Tough as it may be for agencies to invest in self-promotion at the same time they're considering painful cuts in staff, now more than ever agencies need to invest in well-targeted prospecting. And also somewhat counter-intuitively, it's important for agencies to ensure their pitch teams are well-trained in how to present effectively, which can also mean spending some scarce $$$s.

It's also a time for agencies to triple-check that they're not siphoning off vital resources from existing business to fuel pitching—and leaving clients dangerously under-serviced.

Rob Buccino
NeoCortex Consulting Group, Inc.
www.neocortexconsult.com
  By Tom Martin | NEW ORLEANS, LA August 19, 2008 10:09:22 am:
Nicole

Timely post. One point of difference though -- you state that "you can't afford to be choosy." I disagree. Every minute of every day that you or your team spends pitching one of these wonderful "phantom" pitches is wasted energy and lost billable hours o working on prospecting real business. So being choosy just means you're being efficient. Sure, you may back off one RFP only to find out it was real and maybe you could have won, but if you save yourself a couple of goose chases in the process, you still come out ahead.

Agree with you on pre-qualifying. Our industry as a whole is pretty bad at that...but it is well worth the time. Any client that is serious about their review and your participation will take the time to answer your questions truthfully. If they hedge or can't release - good indicator the whole thing is probably better left alone. IF you're a AAAA's member, get their New Biz Questionnaire... a good starting point for the pre-qualifying phone call.

Good luck in the upcoming pitch season.
www.tommartin.typepad.com
  By jms1027 | DALLAS, TX August 19, 2008 11:28:26 am:
My experience at small shops is that it's always been like this. I've seen RFPs with ill-informed questions about creative and pricing since the early 90s when I started working on new business. They've always been there in abundance. Those questions serve as useful filters for distinguishing between sophisticated marketers and what we call "emerging marketers." Some of these emerging marketers turn out to be excellent clients in the end. Their initial questions often reflect a simple lack of experience, which can make them quite malleable.

I've ridden the big agency wave during my career and things are definitely different. How hard is it to sell a big brand name? Great RFPs flow in over the transom. The focus is on the pitch, not getting to the plate. Everybody with a budget wants to date the rock star. Small shops have been and always will be challenged for attention regardless of the economic climate. It's never an easy ride, but it's always exhilarating. I would caution any new business person to be careful to taking in a steady diet of bad news. As you say, it is a buzz kill. We need that energy for the fight. The bad news of the day too easily feeds the language of complaint and diminishes that energy.

As for the reason Farmer's is putting the account into review it's perfectly legitimate. I conducted a study a few years back and learned that 36% of all clients put their accounts into review as a normal course of business. That's life in our world.

As local ad legend Stan Richard's commented at the Dallas Ad League's 100th anniversary gala, "Advertising is supposed to be hard. And it's also supposed to be fun. The day you start thinking it's easy, quit. You're not having fun anymore."

I'm sure the fact that Stan's prized $600 million Home Depot account just went into review for the same reason Farmer's is shopping means the folks at The Richard's Group are having plenty of fun. Just like the rest of us.

Mike Sullivan
http://www.linkedin.com/pub/5/579/7AB
  By wturtle | CHICAGO, IL August 19, 2008 12:07:29 pm:
Your insight on this is almost identical to the situation that media "vendors" (I cringe when I hear that) face every day with ad agency contacts. Agency people ask me what will it look like...what is the cost? And this is the media sales person's reality every day. It doesn't take a downfall in the market for that to occur (although you do hear it just a tad more.) 'We don't have the budget' is the classic. And if you are hearing that for the first time, you probably have not overheard any of your agency people speaking to media sales reps. I take away from your post that every day business should be conducted with the big picture in mind on both the agency new business side, and on the agency to media "partner" (I prefer this) side.
  By jms1027 | DALLAS, TX August 19, 2008 03:43:17 pm:
Wendy, your observation is spot on. I got into the agency business becasue of my father, who was (and is) a great publisher's rep. Smart agency people have a ton of respect for our media partners. Maybe a few of us on the agency side are getting a little taste of the medicine we dish out all too often. Interesting.

http://www.linkedin.com/pub/5/579/7AB
  By HarryWebber.com | LOS ANGELES, CA August 20, 2008 02:01:16 pm:
Great post Noelle,

This might shed some light from a different perspective. I get called in quite a lot by friends and contacts in large and mid-sized companies to sit in on new business presentations.

By positioning myself as a post-advertising theorist these clients believe I have the kind of x-ray vision that can see through the smoke and mirrors that more and more clients are coming to believe make up the typical agency service offering these days. And generally I can.

Here are the top four "no-fly" gaffs that doom four out of six agencies from ever making the short list.

1. Realizing there is a short list. An amazing number of agency pitch teams are unaware of the way that major corporations make their decisions these days. Companies spread their risk out over as many decision makers as possible to generate plausible deniability for making the wrong decision. This means that presentations go in flights and client side participants take particular note of changing personel and diminishing energy levels.

2.Chemistry is key. What many agency pitch teams don't seem to realize is that companies will call for additional face to face meetings when they have concerns about how the agency culture will work within their company culture. These meetings will also be called if there are issues observed between agency team members. I have been in many situations where an agency has been blown out because of an aparent conflict between team members.

4. Creative work is not as important as creative process. Companies hate the idea of off-the-cuff thinking. Agencies that don't seem to have a clear-cut method of developing their work product are generally eliminated early in the game. Strategy beats concept every time. It is amazing how many times I have asked an agency ECD to outline the strategy that went into a particular campaign execution only to be faced by a blank stare, followed by an account guy trying to make it up on the spot.

4. A dragon ate my homework. More agencies have been blown out of the pitch for neglecting to do their homework on the client or brand then any other single issue. Knowledge of brand history, positioning, value prop, key channel partners, management structure, parentage, all the things that make up the company culture is essential in convincing the agency search team that your agency is the right fit. Number one criticism by far of the loosing agencies. "They just didn't seem to have a clue about who we are."

Hope this helps.

http://MadisonAveNew.com
  By michaelgass | ALABASTER, AL August 21, 2008 07:34:24 pm:
Noelle,

I can't tell you the number of hours and money wasted pursing new business the "traditional way." I think it's time for agencies to stop chasing business and have business chase them. To start thinking about how their agency is positioned in the marketplace. Take the same effort you spend chasing after business and instead invest in differentiating and marketing your brand. We can stop this insanity.

Michael
  By daryl orris | Minnetonka, MN August 23, 2008 12:03:32 pm:
Dear Noelle,

About the questions you cite: Question #12: Tell us what a creative program/campaign might look like. Question #13: Please tell us what a program such as the one you outlined above might cost.

I have always used a stock answer: 10% of your sales revenues. You should be able to look up this number, and the numbers of their category competitors as well as how they rank within the category – moreover, the client should provide you with the strategic data you require to provide a strategic RFP. So I would reverse those questions to identify their sales and their competitor's sales and category rankings. With most packaged goods manufacturers you must account for their trade promotions and ask the question "are they getting their money's worth?" The same is true with service organizations, you must know how much they spend on all promotion, not just they designated advertising budget. Knowing this I would then tell them what a creative program/campaign might look like based upon this strategic category information. We called it 'Strategic Creative Planning,' all based upon getting them to the top of their category, or how to keep them there. Brand Managers love formulas and quantifiable answers for creative strategy – not smoke and mirrors, cloak and dagger. Creative strategy that is based upon category data and designed to overtake competitors gets brand mangers to sit up and listen like a dog smelling quail – they are focused. Get the killer instinct by beating the competition, yours and theirs.

You say: " (...) It's becoming a trend. And it is a very big buzz kill for me as an agency person for several reasons. Most important, these two questions in the RFP completely devalue what we do as an agency. (...) Second, it says to me that clients are interested in price alone -- not the thinking that goes into the end product and could potentially determine the success of the idea. Third, after a number of submissions that resulted in "Sorry we don't have the budget," "We're putting any agency selection on hold" or "This is great, now I just need to go to management and try and get the funding," I'm crying "Wolf!" Are these reviews even real? (...)" Two things that you say are telling: First is it devalues you as an agency. I don't get that at all. It is exactly what you do as an agency – provide the client reasons why they should select your agency with your creative strategy and how much it will cost. If your creative isn't strategic who needs it anyway? You ask if clients are only interested in price alone – well, yes, of course they are. They are hiring an agency not as a public service or homage to your creative reputation, but instead because of your agency's ability to produce results to make them money as indicated by the RFP. About your concern of price alone – you have to make your proposed budget make sense to them. Just like a consumer they are looking for the same things, which includes quality and value for the money. Because Sales and Marketing work on quarters, I always structured campaigns likewise, with ongoing evaluations each quarter to adjust strategy. So my promotion budget was structure by quarter – accounting for their peaks and valleys. So it wasn't a big annual bite, but instead quarterly nibbles. I believe those two questions are the most important questions: the creative product and how much? No only do I NOT think it devalues an agency, I believe it does just the opposite: it defines your agency, as it is all that you do. If you win you did it right, if you get excuses, you didn't. The old Dale Carnegie sales formula of AIDA applies: Attention, Interest, Desire, and Action. If your proposal can't do that, you can't win.

You might say, we can't get that information about their sales, ad budget, or that of their competitors. Hey, guess what – they have it all. And if they really don't, include it as a part of your campaign, with an up front cost for strategic category data. You tell them that you need this strategic information to build your proposal to make it strategic. With those statistics, and other information gained about competitors that is transparent like their creative, it is much easier for your creative team to devise creative strategy. If the proposed client can't do that, you can't participate because we are a creative agency that uses strategic information to devise the creative strategy. You can't participate simply because you don't know what in the hell you are doing.

As for: "This is great, now I just need to go to management and try and get the funding," I'm crying "Wolf!" Wow, you didn't find out who the decision-makers were before proceeding. I always asked how is your company structure in management, how is it organized from plant to store? All so I can better understand your decision-making processes and business. I never, ever, went into a presentation without having it already blessed as the correct strategy for defeating his or her competition with everyone taking ownership in the proposal. It was blessed by the real decision-maker, and all the way down to my contact. Not only did this ensure my success but it also gained input from the entire organization.

I have sat through pitches where out of the blue a production guy, or someone like him, pops up and kills the entire presentation. So I now know to involve them all. If I don't know every aspect of your organization – how can I possibly provide a strategic creative proposal that will move you ahead of your competitors – or keep you on the top? Really, how could you? So if you are hearing no-deal, it is because of poor account work that didn't get the right information to your creative team. Or the account went to the President's sister's son, who is just starting out in the advertising business – and who would want that business anyway?

  By daryl orris | Minnetonka, MN August 23, 2008 12:42:16 pm:
Dear Harry,

I just read your comments; after I made my comments to Noelle. We are saying the same thing -- with yours a little more plain-speak with just a touch of smoke and mirrors because you don't identify the real decision-making process and why, just the structure. To you, advertising is just a people business, isn't it? Why do they decide one way or another – because they like you? (Read my post.) Then your comment on creative was a little loose. When I began to work in doing my fact finding I would have some general creative ideas I would begin to bound off of them. Before I walked through their door I had met with my creative team to develop ideas, strategies, and learn what questions I needed to ask; and understand what I needed to learn. The reason is because you would be amazed by how many agencies come up with same thing. And remember this isn't their first RFP. So what happened before? What kinds of ideas have you been seeing? And finally, what happened with your last agency that you decided you needed a RFP? I use to always ask for the work they have been doing, and the work that they have done in the past - even if it is a hundred years ago. History, tradition, do count. And many times did good creative or secondary ideas just need a new spin.

Harry you've done this kind of work -- why aren't you providing facts instead of platitudes? Your advice is akin to the creative development that Cary Grant used in 'Mr. Blandings Builds His Dream House,' where he pulls creative ideas out of the air or lucks into them in the end. But in the end, in the real world, clients select Strategic Creative that kills the competition – and the people who have developed the confidence in their creative strategy to win the business. Personality and chemistry as you say counts, but it isn't about you, as you seem to think. It is all about them.

  By daryl orris | Minnetonka, MN August 23, 2008 02:15:29 pm:
Noelle -- About: "When I began to work in doing my fact finding I would have some general creative ideas I would begin to BOUND off of them." "Bound off them," sounds like a mistake, but it isn't – it is a little esoteric and needs to be explained.

Bound off them as to bind. The entire RFT fact-finding goal for us is to bind the client to our agency. I do this by first learning about them and their business to develop our Strategic Creative Plan, and along the way, demonstrate to them that we are committed to their business, were are bound to them.

So the entire process is about 'Binding Them to Us." Re-read my comments and put them into the context of "binding." The end-game is to be 'bound' to the client to develop the winning creative strategy to be 'bound to them' for a long term relationship. It wasn't just my personal creed, it was what we followed throughout our agency. We were bound to our clients for mutual success.

Imagine if you would, the amount of energy committed to winning. How would a client perceive this? How would they compare it to agencies that are just going through the motions, as you seem to indicate is your method? As if it is an inconvenience and not an opportunity.




Stay on top of the news and stay ahead of the game—sign up for e-mail newsletters now!



Advertising Age: Your Online Source for Marketing and Media News