Why the new business beauty contest is bullshit

Nic ChristensenAgencyland’s relentless focus on new business and pitching is increasingly hurting both clients and agencies alike, argues Nic Christensen

If there’s one question I get from agency bosses, more than any other, it is this: “Any new gossip on what’s pitching?”

After two and half years at Mumbrella, and close to four years as a media/marketing writer, you get accustomed to the fact that agency heads – be they media or creative – always have one eye on potential new business.

But what worries me is the growing pressure on agencies to deliver a big, fat, fresh new piece of meat, (aka a major client), every couple of months.

Don’t get me wrong, I get that the marketing trade press, be it us or our rival AdNews, play a roll in fanning this. In a fiercely competitive media news market, we both eagerly report every pitch, every shortlist and every decision.

But, when we get criticism of why we are always focused on new business, and by extension fail to recognise the importance of retained business and/or organic growth, my reply is typically that we reflect our readers, and what does agencyland care most about? Oh yeah, new business.

The recently called Optus pitch for media and creative is a classic example.

Two weeks ago, our creative reporter Miranda Ward and I broke the story that Optus would shortly be looking to do a closed tender on its agencies, with a number of agencies being invited to pitch.

With Nielsen estimating that Australia’s second largest telco has a media spend of $49m the pitch is going to be one of the biggest of 2015.

In a matter of days, shortlists for media and creative quickly emerged with a field of contenders lining up for the business.

In the media space, it appears there are at least four contenders for what is unlikely to be a highly lucrative account, despite its large billings.

While many have eyes on the close to $50m account, others have noted that not only is its parent company Singtel notorious for its fierce procurement procedures but also increasingly much of the media buying for Optus is done in-house.

This is the result of Singtel subsidiary Amobee last year buying digital player Adconion meaning that increasingly the most profitable parts of media buying, such as performance buying and data, are handled by the client directly.

It’s a move that mirrors what other major clients, such as Telstra and Commonwealth Bank, are doing but means the media spend of major clients are coming down.

Indeed in media agencyland these days a really good win feels like it is $20m plus, for the market to really stand up and take notice.

For creative agencies there are similar pressures to win new clients, and then the pressure is to keep them on retainer rather than project work.

If you don’t believe me on the retainer/project creative debate then check out the comment thread on this week’s Schweppes creative pitch story where a number of readers criticised the client’s declaration that they felt the retainer model is not producing results.

The reality is that marketing lives in a world where most agencies have very clear, if not relentless, globally set targets on new business and frankly I don’t expect that to change anytime soon.

But the reality is the number of media and creative agencies just continues to grow. In the last few years we’ve seen the likes Atomic212, Havas Media, Nunn Media Sydney, Bohemia, Cummins & Partners all enter the media agency space and it wouldn’t surprise me to see more follow their lead – all of them chasing media billings in the hundreds of million.

The other reality is not all can survive.

However, my question for the industry is this: in a marketing industry worth some $12bn, with clients spending less and less in paid media, when can we agree that the collective race for new business has become unsustainable?

Nic Christensen is the deputy editor of Mumbrella 


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