Will adland ditch the pitch? Part 1: Saying no

A month ago, Mat Baxter asked the industry to join him in ditching the pitch. In this series, Mumbrella's Brittney Rigby takes that challenge to a range of media agency bosses. Part 1 zooms in on specific instances of turning down, or pulling out of, a pitch, often because of the unreasonable terms Baxter denounced.

A month ago, Mat Baxter was standing on stage, pacing behind a basket of tomatoes, challenging his colleagues and competitors to ditch the pitch. The global CEO of media agency Initiative drew upon years of internal and RECMA data to build his case that client behaviour has eroded, while expectations have continued to inflate, enabled by media agencies competing in a race to the bottom.

“Just in this market, right now, there is a pitch going on for a CPG [consumer packaged 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,” Baxter said.

“The really good agencies have got to start saying no.”

“Step right up”: Baxter challenged those who disagreed with his Mumbrella360 keynote to do so publicly, placing a basket of tomatoes on stage

Bosses across all the agencies and holding groups Mumbrella approached for comment – UM, OMD, PHD, Starcom (Toby Barbour was still CEO at the time of this interview, before recently being promoted to CEO of holding group Publicis Media), Mediacom and holding group GroupM, Nunn Media, and Hatched Media – admitted to turning down invitations to pitch.

“We’ve walked away from business we don’t see as a good fit, that asks for unreasonable terms or commercials and where it isn’t good for our people,” OMD’s CEO Aimee Buchanan says.

“We’ve also committed to not pitching when we have won big clients and want to ensure that we are focused on delivering the commitments that we promised in the pitch process.

“Where the terms and processes aren’t right, the best message we can send is to say no.”

Clockwise from top left: Fiona Johnston, Chris Walton, Toby Barbour, Willie Pang, Jack Byrne, Aimee Buchanan, Mark Coad, Mark Lollback

Willie Pang says that unreasonable terms are an “exception to the norm”, and adds that, for Mediacom, “The trick is not just to say no when you believe it unfair and unrealistic, but when it’s fair and realistic but you know it’s not a good fit for your people or for the business”.

“We aren’t perfect by any means and have, from time to time, participated when we have known that we probably shouldn’t have,” he admits.

“We’ll continue to work hard on this point, but we want to be saying yes to business that is right for us and allows us to deliver good outputs, and a good margin.”

PHD’s Mark Coad acknowledges its been a pitch-heavy start to the year for his agency – “We’ve probably had more pitches this year so far certainly than the start of any other year” – but says turning down the opportunity to pitch is something he doesn’t shy away from, such as in the case of the pitch Baxter directly called out.

“We’ve said no a couple of times actually this year, respectfully. Sometimes, it’s just bandwidth,” he explains.

“Where will we do our best work? What’s our best opportunity to win? Sometimes it’s just capacity. It’s literally capacity and we’ve done that at least twice this year that I can think of. Sometimes it’s on alignment of values … Sometimes we’ll walk out of an initial meeting and often both the client and ourselves might know that we’re not compatible. We’re not going to be liked by everybody.

“Sometimes, it’s terms. Sometimes, we will seek to get a reasonable reward for our efforts and if we don’t think we can achieve that, we won’t do it.”

And those terms can include stretched out, 120-day payment terms, like those Baxter mentioned.

“It’s worrying. It’s a bit of a one way street, isn’t it? If I was a procurement-led client, adding days to my payment terms is a fairly easy win when it comes to saving money. It’s pretty easy to push them out. It’s a long road back,” Coad says.

As Baxter acknowledges, for every bad client, there are also collaborative, mutually beneficial partnerships. Group M CEO Mark Lollback points to examples of new clients that increased spend beyond the original terms “because they want to pay us more, to enable us to staff up and do more, better work for them”, but he also agrees that, sometimes, refusing to pitch is the right move.

“There is more than one recent example of when we have reassessed a client and made a hard decision to resign the account or withdraw from a pitch. In some cases it has been reported when we’ve ended a relationship in this way. In others it hasn’t,” Lollback says.

“If the commercial terms of a piece of business malign our ability to pay our people, to do good work, invest in technology and grow our own business, we have to question what is the value of that.”

Meanwhile, Initiative’s IPG Mediabrands stablemate, UM, views pitches as a business development cost, a question of “how much is too much?”

“I applaud Mat for starting this conversation – he and I have worked on many pitches together so it’s a topical point,” CEO Fiona Johnston says.

“We always qualify our pitches and decide compassionately and professionally from there. This is why we have politely declined some and have been ‘in trial’ on others.”

Mat Baxter’s comparison of pitch terms in 2000 versus 2019. [Click to enlarge]

When asked if he says no to pitches, Hatched MD Jack Byrne replies with: “All the time. We’ve declined to take part in 10 to 15 pitches in the last two years.”

“Agencies need to also take responsibility in terms of over-promising and setting up for failure from the start, which sets unrealistic expectations for clients and procurement teams as to what the expected cost to deliver a service in the first place,” he says.

“As a small team of 35 staff, committing to a pitch for us is a big deal and one that we tend to not take lightly.”

And Nunn’s Chris Walton says he “won’t pursue a piece of business that does not deliver an acceptable margin to us”.

“Why would I? I do realise that being able to make such calls is one of the benefits of being an independent agency in Australia,” he says.

“As for 120-day payment terms, why anyone would ever agree to this is beyond me.”

However, while all bosses agree that they’ll say no, that doesn’t mean they’re willing to do so on the record.

“Would we call out bad behaviour or refuse to pitch for a client that had unsustainable commercial terms or unreasonable requests? Yes, and we’ve done so numerous times this year,” says OMD’s Buchanan.

“Would we call it out publicly? Probably not.”

Coad mirrors Baxter’s argument that responsibility for reform is split; clients should care about the transparency and integrity of the industry too.

“You can’t be a client and procure your suppliers into an unprofitable corner and expect them to conduct themselves appropriately. They have to be drawing money from somewhere,” he points out.

“I’m not for a second suggesting that anyone who wins client-side that that’s how they operate, but there’s a shared responsibility across the industry to ensure that adequate remuneration is provided for effort.”

In Part 2, we ask media agency bosses whether pitching contributes to their agencies’, and the industry’s, burn out culture and churn rate.


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