Agency reviews cost over $1 million on average, study finds

The average agency review costs a combined $1 million for marketers and agencies involved, according to a study by Advertiser Perceptions commissioned by the Association of National Advertisers and 4A’s. Also read: Sonic puts creative account in review That average is based on reviews with three agencies and no incumbent involved. Reviews with more agencies or with an incumbent likely cost more, according to the study. An incumbent agency spends on average $406,092 defending an account—which is likely why 25% of incumbents decline to participate in reviews. Check out the latest Ad Age events and award programs Marketers spend on average $408,500 to conduct an agency search and account review when an incumbent agency is not involved and slightly less when the incumbent agency participates. Average cost for an agency overall to participate in a review is $204,461. The study, based on interviews with more than 300 brand marketer, procurement and agency executives in March, also found the agency pitch process takes at least two months on average when an incumbent agency is involved. Selecting new agencies takes longer, an average of nearly three months. The estimated costs don’t include hidden costs of reviews and changing agencies. About a third of marketers reported disruptions in daily tasks and about a quarter indicated delays in launching new campaigns or products due to involvement in reviews. Consultants play a role in many, but not most, reviews, according to the survey, which found that 46% of marketers use consultants to review existing agency relationships and 39% of incumbent agencies use consultants in defending accounts in review. But consultants can also play a role in avoiding reviews. “Given the cost implications for both clients and agencies, the work disruptions and delays caused by an agency review and the potential to damage the existing client/agency relationship, it is critical to assess whether the need is really there,” said Matt Kasindorf, senior VP of business intelligence and insights for the 4A’s, in a statement. He suggested a client/agency relationship management program or engaging a relationship consultant as alternatives “given that the majority of clients retain their current agency after a review.” Ad Age Agency Report 2023 Revenue, listings and analysis for agencies and agency companies Read more here “Considering the substantial hard and soft costs that clients and agencies incur during a pitch, it would behoove most clients and agencies to identify the gaps to repair their relationships versus expending budget and time unnecessarily,” said Greg Wright, senior VP brand and media of the ANA. So why bother with reviews? Half of the marketers surveyed said motivating the incumbent agency is the main short-term benefit, while 44% identified a new strategic direction as the main long-term benefit. Not surprisingly, half of brand marketers said the performance of the incumbent was the primary reason for launching a review. But only a third of procurement people said performance was the key deciding factor, with the rest saying it was just one contributing factor.

Agency reviews cost over $1 million on average, study finds

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