In three decades of overseeing pitches as agency head and consultant, I have tried to keep my clients from making uninformed mistakes. Yet, decisions are often made emotionally and arbitrarily. Instead of selecting the best agency, one that truly understands the client’s business, the winner is often the agency that had seduced the client with a random commercial. This unfortunate way of thinking is completely an artificial way to size up agencies and shoot for a long-term relationship. Selecting an agency based on one commercial is dangerous because there is no guarantee they can do it day in and day out. Ironically, 90% of the “winning” commercials go through endless revisions and never see the light of day after the agency is picked anyway.
I’m often asked how I put together a pitch list. I focus on agencies with high creative standards, those that attract top talent and those that have unique capabilities. But as importantly, I also steer clear of three types of objectionable agencies, which make for bad partners:
1. Fickle agencies.
Management turnover at agencies is at an all-time high. In the past 3 years, only two agencies have not changed their leadership. CEOs who used to head agencies a decade or more, last an average of only 2.5 years now. It’s a problem for clients because it obstruct agency creativity. In an environment of high turnover agencies become risk averse. Unstable agencies make bad partners, they are political, and when it comes to recruiting, good people avoid them.
When a new chief executive takes over, agencies become chaotic. He or she usually replace the senior layer of management in short order and, thus, it disrupts the organization. These agencies engage in constant reshuffling, and it is, as well, disruptive for clients. Wholesale changes and fewer familiar faces in the office tend to make people, even the people that the agency wants to keep, often consider their options to stay or to leave.
2. Merger hell.
Mergers are tricky. Remember how the mother of all advertising mergers, the $35 billion link up between Publicis and Omnicom became a nightmare in just a few months? Advertising mergers often combine two weak agencies who can’t make it on their own, but two negatives don’t make a positive. They usually make a bigger negative.
Why do mergers fail? Mostly because of a clash of cultures. Mergers are typically formulated in a conference room, where it looks like it would work. However, typically managers underestimated the depth of cultural differences between agencies. And that causes friction. Advertising does not suffer from a scarcity of egos, unfortunately, and when diverse management teams are coming together there is lots of head butting.
What’s in it for the clients? Not too much. Most mergers are done to benefit the agencies, or, in another scenario, it is their holding company that mandates it, not their clients. Often the purpose is to improve profitability. Usually that means cutting staff and cutting corners. The result is that, it usually unsettles the good people, so many start leaving the agency and quality declines.
In my view, most agency mergers take four to five years to gel, if ever.
3. Pitch junkies.
I avoid agencies that pitch more than 3 times a year. Pitching can drain an agency’s resources because the conversion rate is tiny. Stretched over many months, and staffed with high-ranking agency people, those pitches are prohibitively expensive, running into the hundreds of thousands, even millions. I know agencies where the total cost of pitching is about 30% of the overall costs of running the agency. This is basically untenable in the current economic climate. But the costs are more than just financial. There is a human cost to pitches. The endless hours into the night and weekends, the stress, the toll on mental health is enormous.
An agency that pitches incessantly will experience top talent exodus and will decline fast. Stay away from pitch junkies.
I’m shocked at how many clients invite to pitch agencies that fall into one or two of the categories mentioned above (and even, sometimes, the trifecta). Show me a client that ignores the warning signs, and I’ll show you a failed client/agency relationship and a setback for the company’s marketing, and perhaps even a catastrophic career decision as well.