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, 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.


Baxter declared that both clients and agencies share responsibility for the degradation of the pitching process

“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.

“Step right up”: Baxter challenged those who disagreed to do so publicly, placing a basket of tomatoes on stage.

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.

Baxter said comparing 2000 with 2019 shows just how much the pitch process has eroded for agencies. Click to enlarge.

“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.”

The average number of hours spent on a global pitch. Click to enlarge.

The average cost of a global pitch. Click to enlarge.

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.”

The “spicy slide”: overheads vs base margins. Click to enlarge.

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%.

The cost reductions clients expected from Baxter’s Initiative in its most recent 10 global pitches. Click to enlarge.

“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.

The average length of a client-agency relationship over time. Click to enlarge.

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.

Baxter set out a hypothetical in which architects were put through a process akin to an agency pitch. Click to enlarge.

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 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.


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