Make no mistake, agencies are still pressured to bring in a
steady stream of new business, particularly if the shop is owned by
a publicly traded company. But industry execs are also reporting
that RFPs are being vetted far more carefully, even among agencies
belonging to big networks.
It's a switch from the lean years of the recession when shops,
under immense pressure as clients pulled back spending, chased all
sorts of accounts -- even ones with less prestigious brands or
Agencies learned the perils of that tactic the hard way, by
breaking even or losing money on low-paying accounts. They paid the
price in other ways, too, as the accounts sapped morale. Now many
are trying to unlearn some of those bad habits by taking a page out
of Nancy's Reagan's "80s anti-drug PSA playbook and just saying no.
And that doesn't just impact agencies, but marketers, too: If they
don't adjust their RFP process, high-quality shops might just ditch
"We've had to pass a lot this year because timelines are insane and
creative asks are unreasonable," said Tom Sullivan, CEO of San
Diego-based Vitro, which is owned by MDC Partners. "It's
a lifestyle choice in this industry as much as it is a career; if
you work a lot of nights and weekends just to fulfill the work you
need to do on current clients, then where is the time to do the
[speculative] work?" Mr. Sullivan said he was stunned when two
separate RFPs came in recently that asked for an unspecified "plan"
to fix the marketers' business to be completed within 10 to 14
days. Increasingly, he said, there's "a lack of transparency"
around the fees. "If we're going to put a tremendous amount of
energy into a pitch, we can't be in the dark. We have to know the
fee potential. Some clients and consultants forget that we're a
He added: "If you are going to work with someone who's asking
you to move heaven and earth in two weeks, it's a signal of what
the relationship will be like. Even if the fees are attractive,
that's not good for morale."
All told, Vitro in 2013 has turned down an unprecedented number
of pitches. This year, the shop won four pitches and turned down
"Agencies are finding that jumping after everything can have a
negative impact," said Kristin Bloomquist, exec VP-general manager
at the Phoenix office of indie shop Cramer-Krasselt. "You have cost issues,
morale issues, and then you wind up parting ways. This is the
learning from the aftermath."
Like many shops, C-K is once bitten, twice shy. She recalls an
example where the agency pitched an account, but after winning it
found the fee didn't fit the scope of the work. Going after it was
a mistake. "In retrospect, had we been more diligent during the
recession, we wouldn't have, and it didn't last," she said. Ms.
Bloomquist has also noticed a continued lack of differentiation by
clients' procurement departments about the strategic value an
agency can bring vs. a vendor for office supplies.
"There are pitches that come through where you're treated like a
vendor, and there's no time, no respect, no information," she said.
"I'm applauding that we are starting to be a little more
discriminatory in looking at opportunities."
Agencies' increased savvy about what's financially worth their
time is driving the new dynamic, but the quality of RFPs is waning
as well, industry execs say.
One reason for that: more clients are eschewing agency-of-record
assignments for project work, buying campaigns or tactics instead
of a long-term relationship with an agency. Another reason may be
the rise of the procurement-led pitch, which is often more focused
on finding efficiencies and lowering fees rather than on finding
the best marketing partner.
Then there's the matter of pressure on chief marketing officers to
deliver numbers that satisfy shareholders and Wall Street. While
that pressure is hardly new, it's unrelenting. A CMO survey
published by Duke University's Fuqua School of Business in August
found that the majority of marketers surveyed -- more than 66% --
reported feeling increased pressure from the CEO or board to prove
the value of marketing. The survey also found that marketing
employees as a percentage of overall employees fell to 1.2%, down
from 4.2% in 2011.