New business activity plummets to ‘scary’ three-year low
The movement of accounts in Australia’s biggest advertising markets has crashed to its lowest point since 2009.
After flatlining for most of the year, a decline in the value of new business activity began in Sydney and Melbourne in April, accelerated in June and by August had reached a three-year low.
Between August 2009 and August this year, the new business market lost 21% of its value, dropping from $846.5m to $667.8m, according to figures from The Agency Register.
The value of account moves in Sydney & Melbourne: moving annual total ($) to August
The number of pitches has fallen too, although the decline has been less steep. This year, there here have been 18% fewer pitches, according to The Agency Register.
The number of account moves in Sydney & Melbourne: moving annual total to August
“When the core business is undermined, projects stop happening. Projects make up around 65% of activity. That will hurt independents and roster agencies the most,” said Peter McDonald, The Agency Register’s MD. He described the figures as “scary”.
Creative agencies will be suffering more than media. The value of creative pitches has fallen from $574m to $411m in a year, a 28% drop. Media new business has dropped from $498m to $416m, a 16% slump.
The big creative moves of the last 12 months have been Foxtel, Crysler, ANZ, Kmart and Domino’s. The biggest media pitches have been Unilever and Woolworths.
A good time for all those agencies and creative businesses that rely on project based work to be able to define their unique point of difference (many forget to do or don’t know what that actually is).
User ID not verified.
I guess agencies have reduced prices to retain clients.
User ID not verified.
Perhaps another way of looking at this, is that some clients have realised that when marketing budgets are under even greater scrutiny than ever, that the costs of calling & running a pitch may outweigh the benefits, particularly when so many agencies (creative & media) are finding it harder to differentiate their offering.
It actually maybe a smarter business decision in the current economic climate to stay with your current supplier(s) and fix any issues, than have to run the gauntlet of holding a pitch & then bring a new team up to speed. Before you know it, that’s half the year gone already. In this digital era that’s a very long time to spend changing suppliers or partners.
Just a thought….
User ID not verified.
Since it costs less to keep a client than win a new one I would have thought that lower new business activity was not scary but reassuring. Less redundancies, less money blown on pitches, better quality of life for staff. Perhaps scary for pitch consultants and headhunters but they are adjuncts to the business with few staff.
User ID not verified.