Mat Baxter blasts the ‘dog and pony show’ pitch process, urges industry to ditch it and bad clients
Ditch the pitch, the “dog and pony show” that’s a culture-killing, unsustainable model leading to the industry’s burn out and churn rate.
That’s the call to action Initiative’s global CEO, Mat Baxter, issued on stage on day two of Mumbrella360, where he also revealed that he’s registered the domain ditchthepitch.com, what will hopefully become the Glassdoor equivalent for pitches (if Initiative’s holding group IPG Mediabrands allows it), a space for agencies to hold bad clients to account.
“There is a concern in our industry, and I’m talking for both creative and media agencies here, that when you speak out publicly about what goes on in the pitch, well, there could be some form of retaliation from the client and the pitch consultant community,” he said.
“I really hope that isn’t the case today. I really hope that we can have this kind of discussion in a grown-up way and that that kind of concern about retaliation is unfounded. So fingers crossed, otherwise, I might be in some trouble.”
He also noted that industry peers could retaliate, and throw figurative tomatoes in comments sections on articles like this one. So he leant into it. He placed a literal basket of tomatoes in the centre of the stage. He challenged a room filled with colleagues and competitors to ask him tough questions. And he called on them to say no to pitches, and more radically, to scrap a process that’s costing adland time, money, and people.
The pitch is the only “enduring relic” of the Mad Men era, argued Baxter. It made sense at the time. There was less competition. It was cheaper.
“You know when you pitched 30, 40 years ago, there may be two or three competitors in a pitch,” he said.
“Now we have hundreds of agencies competing. So back then, the economics of a pitch, you can argue, made a little bit of sense. Today though, it doesn’t.”
To prove that point, Baxter assembled a team to dig through 13 years of Initiative and RECMA data.
The result? What Baxter called the “degradation of what I believe to be just fair play”, to the point where it now takes “about a year for an agency to break even after a [global] pitch” that costs, on average, $300,000.
He said that the process has gone from: presenting a strategy for eight channels to more than 70, seeing a 15% margin to 0-5%, attending three meetings to an average of six (but up to 25-30), responding to one brief to three (but regularly being expected to respond to every product or problem), and 7-30 day payment terms to 30-120.
“Now, often, these clients are much bigger than the agencies that they asked for this relief from. So, at the big end of town, 120-day payment terms has become an expectation that agencies are going to accept,” Baxter said.
“Just in this market, right now, there is a pitch going on for a CPG [consumer packed goods] client. The mandatory requirement to participate in that pitch, you’ve got to agree to 120-day payment terms and, if you don’t, you’re out. And I want to call out publicly [fellow media agencies] Omnicom, PHD, who took a stand with us on not participating in that pitch.
“The really good agencies have got to start saying no.”
He turned then to overheads – “spicy”, but not talked about often. The travel bill alone on a recent global pitch, he explained, was US$1m.
“To convert a really competitive global pitch, you’ve got to be willing to take an overhead recovery of 70%,” he said.
“Even though your real overhead might be 110, 120, 130 and you’re probably going to have to agree to take the business on at a zero to 10 margin.
“And as I said, on the really competitive pitches, clients might just say: ‘You’ve got to earn in your entire margin, you don’t get any, you’ve got to recover it all through performance.’ So you can see how, financially, it gets really hard to sustain this long-term.”
And the biggest victim of the pitch process, he claimed, is clients.
“Senior people tend to have to work on pitches because pitches are complicated and there’s a lot of top to top interaction,” he said.
“The number one problem that clients have is, ‘We don’t get enough senior resource on our account’. Well, the reason is, increasingly, because they’re constantly having to pitch to either retain your business or go for other business because the lifecycle of a client’s tenure has reduced so much that we’re in a perpetual state of pitching.”
And clients lose out further when they demand pitches run over holiday periods.
“That adds to the culture-killing nature of working in agencies and increases the churn rate because people get burned out and feel that they don’t get the time to rest and recharge,” Baxter argued.
“So again, It impacts clients negatively because clients constantly have staff churn on their accounts because the culture of the agency is getting impacted.”
He explained that the prevalence and cost of pitches is “a lot of money that’s getting taken off the table” for investment in existing clients, whose tenure is becoming shorter and shorter.
The reason for putting an account up to pitch so often, Baxter hypothesised, is cost pressure; in the last 10 global pitches Initiative was involved in, six clients expected a cost reduction of 21-25%.
“And this kind of high-speed cycle we’re in, where the minute something goes wrong in your agency relationship, you leap straight to divorce not to marriage counselling, that feels like it’s contributing to the short term-ism and to some of the marketing challenges that we all face in building brands over the long term,” he said.
Baxter split his proposed solutions into two buckets: simple and radical.
The simple:
Agencies need to say no and have a “backbone” when terms are unfair.
Clients need to deal with costs in the first round if it matters most to them (rather than forcing agencies to spend time and money through multiple rounds first, with price as a “surprise” at the end).
Clients need to fly to agencies and bear some of the cost for the free work they get.
The introduction of procurement incentives that prioritise the tenure of agency relationships.
As for the radical? “Ditch the pitch.”
Baxter wants clients to choose agencies like they would a law firm, on reputation, portfolio, client references, and a financial proposal.
He wants agencies to share pitching horror stories with the hashtag #ditchthepitch.
And, if IPG Mediabrands gives him the green light, he wants ditchthepitch.com to become a place of accountability, a space where the industry can rip itself out of an unsustainable cycle.
Baxter hopes adland responds well to his pitch.
What a smart, brave thing to do. I couldn’t agree more. And if you think those outrageous payment terms hurt you – imagine what they do to a boutique agency. Right behind you on this one!
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This bloke is the James Brayshaw of media. Never stops talking and full of hot air. I wonder how long he spends in the morning looking in the mirror.
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Sounds like a constructive and positive approach. But almost impossible to take seriously from the agency who agreed to Revlon’s terms…
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Great idea, just won’t happen.
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Love it
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He’s got his stride on back home. He’s always been more comfortable being the slightly bigger fish in the smaller pond. I don’t think he’d platform these ideas in New York. Let’s face it, i’ll be surprised if he mentions Ditchthepitch again.
He’s smart to say some of this as the subtext is that they’ve won clients based on merit and not cost which isn’t true.
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well said, it is a crazy part of the business but we are only as strong as the weakest link.
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The reason clients constantly pitch media is that it ‘works’ – procurement bashes the agencies to drop their pants on rate again, which they duly do, and my, just look at all those savings! The winning agency declares its strategic smarts have won the day, the holding company grey suits pocket another tidy bonus (which is why there will never be collective agreement to ‘ditch-the-pitch’), and the client CFO/CCO/CMO all declare victory. Meanwhile, on the agency front-lines the day-to-day teams are woefully under-resourced, the work is utterly pedestrian, the staff turn-over brutal (Payrises? Get outta here…), training non-existent, etc. Goodness, if the daily things are so bad it sounds like it’s time to put the business out to pitch again!
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The idea of no pitches has been suggested so many times I’ve lost count. I guarantee in industry forums like this we’ll still be pitch-bitching for years to come.
Yep it makes sense to ditch the pitch, but at the moment of truth, there are simply too many agencies lining up to take the brief; often seduced by, and hoping for, long term relationships with clients, who demonstrate by their actions, their transactional and/or promiscuous nature. So, as long as enough agencies comply (and they have so far) clients will keep doing what they’ve always done.
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Great for an industry leader to be having a conversation about it in an open forum.
I hope it is taken seriously, the amount of talent that is leaving the industry for more (financially) rewarding jobs is rife.
I particularly like the mention of the Xmas brief, the choice of scumbags everywhere. It was guaranteed shit secret santa every year
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This is tiresome. More whining and dissing again (first “Vanilla” and now “ditchthepitch”). Get on with it. Be better. Show your worth. Treat your people well. Have an adult conversation with your prospects and clients. Clients do it because they can and because the market will oblige. Granted, just because a client can, does not mean they should. And I agree there is abuse. From all parties. Chicken and egg story. But hey, everyone’s under pressure. Reinvent the business, earn the trust, negotiate better. But no more whining and dissing please. Your headline is seductive on the face of it but it does not stand the reality of the marketplace and the need for agencies to transform themselves. Or not, and accept being just buyers. No shame in that.
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Another male, pale and stale !
Get the point Mumbrella? Too scared to call out the industry for what it is?
Why don’t you address all these white anglo/aussie males getting jobs at the top?
Pussies.
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” The travel bill alone on a recent global pitch, he explained, was US$1m”
Anyone else smell BS?
We’re expected to believe that Initiative risked $1m of its shareholders money flying people to a pitch that it may not have won?
if Initiative can afford to take such a risk, its margins are too fat and there should be no complaints about clients seeking efficiencies
There isn’t an adviser in the top-tier of global management consultancy, or an investment banker, or a high-powered law firm, that would spend ONE MILLION DOLLARS on travel to pitch for work.
No wonder the clients are saying “enough bullshit!”
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Hard pressed to find an agency that doesn’t agree with this. But the question is – who would be willing to go against the grain? Yes you’ve mentioned a couple of other agencies who’ve said no to a particularly unreasonable brief. But we collectively need to take a stand otherwise clients will always keep getting away with this.
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Great to see Baxter back on stage with so much great insight, really transformational stuff
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I’m currently working in a mid/senior role at a big global media agency.
We all share this sentiment- but the board and senior staffers love to pocket their performance bonuses, and are only a few years from hanging up the jacket, so no rush to chamhe.
They’re on cruise control to a large pension or highly paid/low work advisory role.
Multi (in) market pitches, doing all the work for free, more of the team for less money. Accenture and other consultancies don’t do that. We’re told to do it as “that’s the way it’s done and always has been”.
Race to the bottom. Unprofitable. No pride in our work or talent.
Industry is killing itself.
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It’s at the high end but feasible. One global AU org did a pitch about 3 years ago which involved I believe 4-5 intl presentations with the same core team of 5-6 people. China/Singapore/India/Europe/us … just the presentations alone would have pushed 250k in hard cost, not to mention travel prior plus the labour plus theming.
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Noble sentiment but will agencies ditch the pitch for the media owners who incur large expenses pitching ideas for media plans?
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The media industry needs to give clients a reason to care about treating them well. As there is no demonstrable difference between the output of the major agencies, why would I care where I take my business if I can get a cheaper price? This feels to me like the leader of the peasants telling the other peasants that the king needs to treat us better, but instead of “pitchforks and guillotines” we’ll use “asking nicely then forgetting about it”.
The idea of the media industry getting a backbone on this kind of thing is laughable. For many reasons, it has shown the self restraint of a fat kid at a birthday party when it comes to dropping its pants for an easy buck, rather than build something really worthwhile.
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Maybe agencies need to get some balls and stop dropping price, so they can get paid for the great work they do and fair prices. Its not about ditch the pitch, its about taking ownership for your decision to drop the price and compromise the team. The race to the bottom is not going to help anyone in the long term, client agencies and consultants.
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Completely agree with Mat’s approach and calling out bad client pitch behavior. And for anyone who doubts the $1m pitch figure quoted… for global pitches it can definitely be true. A certain German auto group two years ago had a pitch that lasted over 12 months and the final pitch at their HQ was for 10 brands concurrently. Yes all
at the same time – each pitch team would have had say 8 people so that’s 80 people for a few days in Germany flown in from around the world. And that’s on top of the previous Germany meetings and regional and local pitches. Completely unreasonable and guess how it ended? A reverse fee auction between holding companies on a computer system… Strategy, smarts and effort had negligible impact.
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Maybe this is why Baxter didn’t get involved with the Amazon pitch. Or why Amazon didn’t want Baxter involved with it
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Will not change. As has been mentioned in part because of senior agency staff bonuses and mid level staffers who need to feel useful doing really important stuff. Reality is media is so homogenised clients should not feel guilty using procurement.
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Agree. Agencies are on the back foot because they have no negotiating power. Simple as that. Relying on goodwill, a charitable conscience or boycotting a market does not address the market forces at play. Evolve or die.
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Matt is right and I welcome his public calling out of how the abuse of the pitch process is a significant factor in killing agencies financially.
Rogue clients pitch too frequently, invite too many agencies and don’t pay them for their ideas- even when they win.
Have you noticed how great clients rarely pitch? One very long standing client once told me we have had our ups and downs but when we’ve had issues we’ve discussed them and resolved them and got to a better place.
Well done Matt. A brave and worthwhile discussion to have.
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Well said Matt & I obviously agree with Nick Cleaver’s point of view ….
I know you all would expect me to say that. As with Mandy Rice-Davis famously did…..
“When James Burge, the defence counsel in the Profumo affair that brought down the MacMillan Government in the 1960’s, pointed out that Lord Astor denied an affair or having even met her. She dismissed the denial by stating, “Well (giggle) he would, wouldn’t he?”(often misquoted “Well he would say that, wouldn’t he?”)”.
However apart from being in the agency business for thirty years with many fifteen plus year clients personally…… I have run hundreds of relationships over the past twenty two years and I can demonstrably prove that the majority of them stay in play for ten years or more, because they take the care & time to work out any areas that seem out of kilter in a very honest, straightforward, non judgemental or subjective manner.
Frankly there is very little that can’t be solved in any relationship in any category if both parties have the genuine intent make it work. Doing so provides real value for all concerned, which invariably leads to better work and far better business outcomes for clients in all categories. It is a fact.
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If you need a “reason” to treat people well, then you’re an arsehole. Regardless of the industry context.
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Business is business. Marketing clients have agencies and business partners lined up around the block, and as someone with some experience in media agencies too (albeit only 14 years in), we do not give clients a reason to prioritise us amongst the herd. Agree that people should individually not be jerks to each other, but taking a step back and looking at what Mat is calling for ie a revolutionary change in the way marketers view the media agency business based on insight, respect and a true review of our work, it simply is not going to happen unless we give them a reason to. And as long as the industry provides (in the main) a cookie cutter proposition, devaluing their own work each time through tiny profit margins, leading to understaffed and under supported teams ignoring what clients actually want, marketers will never think about their media agency more deeply than “how cheaply can I get them to do this while I set up my in house media team?”.
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Meanwhile in the USA, another ex-Naked alumni, Ivan Pollard, now CMO at General Mills, is telling agencies that if they balk at the 120 day payment terms, there are plenty of their competitors who are willing to swallow that fish milkshake. Plus ca non-change.
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No sympathy. Agencies cut the most random things and including investment into their younger staff remotely having a clue but when it comes to travel, the bunch of w*nkers in suits are booking business class flights 1-2 days prior and staying in 5 star hotels in the process.
But some rigor in travel planning, working your corporate travel agency harder or booking direct based on market deals can cut this cost by 30% overnight.
But heavens, what if the execs dont get the right frequent flyer miles?
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Anonymous is spot on here. A little over a decade ago, a very high profile Australian agency CEO was parachuted into NY to breathe life into a moribund Madison Ave global network. His fabled grip on costs was so tight that even the office’s newspaper subscriptions were cut. However, when a Friday arvo client meeting ran long and he missed his flight from JFK to London, rather than be late for a planned weekend catch up with Sir Shortest Knight, he – I kid you not – began the process of organising a private jet charter. It proceeded up the chain quite some way before it was kaiboshed by Sir SK himself. Mind you, apparently Sir SK was happy to bill the holding company for all his wife’s first class travel, despite his taking home the UK’s largest CEO salary. A pox on all their houses.
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So a) he hates pitches because of their effect on profitability, b) it messes with his agenda that the large agencies should form some sort of supplier cartel (Glassdoor for clients, give me a break the ACCC would love that) and c) he resents the cost of senior people having to work on a pitch when there’s no option of the usual tactic of farming out juniors at a high day rate. More proof the industry is disappearing up its own arse. The whole business model would work a lot smoother if we didn’t have clients, right?
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In production we are often sent a creative on a Thursday, jump on a call on a Friday, & expected to turn around a treatment & budget by Monday or Tuesday morning. Director’s treatments used to be a word document, now they are elaborate visual glossy magazine style layouts or interactive online presentations brought together by a small team consisting of a copywriter, image search & layout artist in collaboration with the Director. An average treatment / pitch costs between $2-5k (the lower end using in-house full time resources which not all production houses have these days). We’re being asked to do competitive treatments for jobs as low as $40k with margins of 10-15%. So essentially betting the margin in order to win the work. It’s clearly unsustainable.
There’s an expectation on higher-end pitches now featuring elements like animatics, edits of found footage, camera tests & 3d pre-visualisations. Previously an established Director would not be expected to treat on a lower end budget, they would be selected on the strength of their showreel & the client advised they were the right person for the job, this rarely happens now – at the very least we go through the motions of a three-way pitch even when the outcome is known at outset. If a Director loses several pitches in a row, that’s essentially equivalent to their fee on the job they win.
The average Film / TV Director salary in Australia is $75k. I know plenty that routinely earn less & have to ask their production companies for loans to survive. It’s also irregular work, so difficult to plan & secure home loans.
It’s also the case on most pitches, there’s a favorite Director already with the other two (minimum) being an outside chance of winning or quite often a “check quote”. It’d at least be nice to know if we were a third / check quote so we could invest less resources in it. We get it in production, client’s require competitive pitches as part of their procurement policies, & we’re happy to play along. But please be mindful we aren’t on retainers & only get paid if we win the gig.
The other issue with the fast-turnaround pitch / budget, is producers are no longer given the time to properly research & cost these highly unique executions (in many ways production is not a rinse & repeat proposition). Sure we can draw on experience & give you a pretty good guess, but we’re held to that guess, raising overages results in constant conflict & stress (for production, agency & clients) & gone are the days of having “fat in the budget” to cover unforeseen costs. Also, budgets often represent the scenario where EVERYTHING goes right. That’s not always the case. Things get delayed, delays cost money.
‘How much would it cost for example to source 5 million pink & blue golf for this creative I wrote & would like to shoot in three weeks (1 week of which will be spent seeking treatment & budget approval), can you tell me now I have a client meeting at 4pm?’
‘We’ve written a script that films in a volcano, what will that cost? We don’t want to do it in post by the way, we think that always looks fake.’
‘How much is it to film a jumbo jet racing a highly elite limited edition sports car that only exists in 2 countries, can I have a figure by the Monday?’
This sounds insane, & these are at the extremes. But they are all very similar to real creatives we’ve costed. But the bottom line is, it takes time & effort to properly research how to execute a given creative. Honestly, 1 week turn-around on treatments & budgets is about the best we get these days. It’s typically over the weekend. We rarely even get a heads up a request is coming, so it can be very difficult when you are in the middle of no where shooting another project or heaven forbid, had plan for the weekend.
We’re also often told the budget target, & with the loss of experienced agency producers & without consultation with production companies to sanity check creatives – you’d be amazed at how many scripts we receive that are orders of magnitude not written to budget. Combine this with client cost controllers, soaring expectations thanks to smart phone ads, agencies both creative & media doing more & more production in-house or forcing production to use vertically owned post production services, the increase of freelancing, & the push to deliver more-and-more additional content for the same number of shoot days with less crew & equipment (eg. stills shoot, social media versions, portrait versions, etc etc); it’s little wonder there are half as many top tier advertising production companies today as there were five years ago.
So yes, we’d welcome ditching the pitch in production as well. Or perhaps in the short-term, a little more collaboration & compassion.
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Fucking. Right. On.
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