Ad Age polled agency executives and consultants about the review landscape.
Creative agency reviews seemed to hit a slowdown in the first half of this year, as marketers paused to evaluate uncertainty in the economy.
There were some massive reviews, most notably Pfizer, but most creative agencies reported a sluggishness in overall new business opportunities. But now, as the second half of 2023 heats up, the agency review logjam appears to have broken.
Ad Age polled agency executives and consultants about the current state of reviews and prospects for the remainder of the year.
Media reviews have dominated new business, particularly since the start of the pandemic, which pushed marketers to put a greater emphasis on performance, according to multiple consultants Ad Age spoke to for this story.
In addition to Pfizer, which consolidated media and creative business in the largest review of 2023 to date, other brands that moved their media accounts this year include LVMH, Bristol Myers Squibb, Geico and Constellation Brands.
“Media has dominated the review space for the past two years, including fully integrated reviews and performance marketing reviews. The media budget is the largest marketing expenditure and in tight times often gets over-sized attention,” said Steve Boehler, founder of search consultancy Mercer Island Group.
Agencies are also focusing more on media as creative becomes a less lucrative part of the business for holding companies. Last week, the CEOs of Interpublic Group of Cos. and Publicis Groupe both cited cuts in “traditional advertising” in reporting results for the second quarter of the year.
IPG’s Integrated Advertising & Creativity Solutions segment, which includes agency networks such as McCann Worldgroup, MullenLowe Group and FCB, saw a 3.8% decrease in organic revenue for the quarter. Even Publicis, which outperformed Omnicom and IPG in the second quarter, reported revenue growth for its creative businesses in the low single digits.
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Consultancy R3 has tracked 117 creative reviews in the U.S. this year, down sharply from 153 at this time in 2022. On the media side, there have been 44 reviews, down from 51 last year.
But while the number of reviews is down, the budgets for those pitches have been greater. The average billing in a creative review is $19 million this year compared to $11 million last year, according to Greg Paull, R3’s co-founder and principal. On the media side, the average billing is $46 million, up from $36 million last year.
That doesn’t mean, however, that revenue from those accounts is up. In February, R3 reported that global pitches brought in 35% less revenue compared to the year prior.
Melissa Lea, founder and director of Muster Consulting, said she noticed a “little uptick” in creative reviews this year compared to last year. Meanwhile, Maggie Jennings, the chief growth officer of Tombras, said big creative opportunities “slowed a bit but [are] picking back up” to the point that it’s becoming one of the busier years she's seen.
A lot depends on the agency. Mischief @ No Fixed Address has “taken on 14 new brands since August last year—none of which have come from the traditional pitch process,” said Oliver McAteer, partner and head of development at the agency.
He added: “That’s not to say we do not pitch. We just like to keep the runway clear for opportunities we feel are right. We’re not all things to all people. And we like that.”
McAteer said that the agency turns down around 95% of all approaches it receives—which exceeded 200 this past year.
Whether pitches are up or down also depends on how you define them.
“Whether a brand is actually looking for a true complete creative AOR for their overall brand, or they're looking for a new social AOR, those things all just get called ‘a creative pitch,’” said Andrea Redniss, a managing director at MediaLink, noting that it has led to more opportunities but smaller scopes.
“We're seeing that brands are actually leveraging different companies—whether they're going for their overall anthemic brand strategy work, social, specifically for gaming in some cases, or they're going for their internal comms and PR. That's where it also gets a little bit confusing.”
Most of the people Ad Age spoke to for this story agreed there had been significant chief marketing officer turnover in the past few years, but said that hasn’t necessarily translated into more creative opportunities. This is likely due to the pandemic and economy putting pressure on CMOs to take fewer creative risks and prioritize performance and lower funnel marketing.
Launching a review is also expensive. The average agency review costs a combined $1 million for marketers and agencies involved, according to a recent study.
One agency chief growth officer cited an increased trend of brands not disclosing budgets upfront. “I'm seeing an increase of people that want things and they’re like, ‘Well, give us a proposal. We don't have a firm budget yet.’ You trust that they have a big budget or a decent budget based on the brand,” which the chief growth officer said is a way for marketers to “force competition” on price.
It’s also become a buyer’s market as more new shops open. “For some clients right now, they know that they can ask a bunch of really great agencies if they want to get excited about something. And a lot of agencies will say yes. I’m certainly seeing it’s highly competitive out there,” said Judith Carr-Rodriguez, CEO and partner of Fig.
“The last six to nine months there's been an awful lot of outreach from agencies,” Boehler said. “This is one of the things that happens when a specific segment in the marketing agency universe is soft … there isn't a day that goes by when we don't get an outreach from a creative shop.”
Boehler says he is “cautiously optimistic” about the creative review space as he has seen an uptick in the number of major U.S advertisers reaching out about potential reviews compared to the beginning of the year.
Redniss predicts that there will be a surge in creative review opportunities in the latter half of the year bleeding into the first quarter of 2024.
“This last downturn, the card that everybody played was towards optimizing the lower funnel,” Redniss said. “The fact is, this time, most companies have already optimized for that and they've already made that work. So now that we're hitting a downturn, they've got to go somewhere else. The next logical place to go is creative.”
But that will also present opportunities for agency rivals such as creators and Hollywood entertainment offerings, Redniss added.
Overall, however, it appears that budgets are loosening as marketers move from defense to offense.
“It now feels like [marketers] are doing a better job of forward planning,” the chief growth officer said. “People know there could be a recession on the horizon. So they're leaning forward into how do we market ourselves, knowing that those headwinds might be coming?”
