Agencies, let's #DitchTheItchToPitch

As an owner of an independent digital agency, when not servicing or pitching, I often wonder which was the first advertising agency in the world, where did our clan begin, what did they offer, which client led the world’s first pitch and who won and why?

If I were to trust Google and Wikipedia, the answer seems to be William Taylor from London in 1786 who ran a media agency selling space in print and subsequently James “Jem” White started “R.F. White and Son” in London in 1800, that offered creative & design services to his clients such as Christ’s Hospital, War Office and Royal Engineers.

America joined the advertising agency bandwagon half a century later with Volney Palmer opening the first advertising agency in the US in 1843 in Philadelphia. Carlton & Smith followed suit in 1867 in New York and N.W. Ayer & Son in 1868, who innovated on the advertising business model through “open contracts”. A certain James Walter Thomson joined Carlton & Smith in 1868 and grew to be their best sales person and within 9 years he acquired the agency for US$1300 (US$500 for the business and US$800 for the furniture!) and rebranded it by his name and offered full-fledged media and creative services to his clients and his legacy still continues as JWT in the today’s world and there is good reason why he is credited as the “father of modern magazine advertising”.

With my thirst quenched about the history of advertising agencies, I began digging into the origins of the client-agency pitch process in the advertising context but did not manage to find too many reliable sources but it’s safe to say that the phenomenon was propagated and amplified by the ‘Mad Men’ post-World War II and a quick Google NGram scan attests this fact:

So, our clan has been around for over 150 years and for at least a good 50-60 years, the industry has followed and glorified the same “pitch” process to match buyers and sellers. I wonder why no Uber or Tinder equivalent has disrupted the pitch mechanism and how sustainable is this trend in the digital era?

There is enough and more literature available on why the pitch process is broken and must be fixed or eradicated given how expensive, unproductive, inefficient and ineffective it can be to both the buy and sell side. As someone who has been on the sell side for over a decade, it is clear to me that there is an over-supply of agencies and It is a buyer’s market to exploit currently.

We agencies have no one but ourselves to blame for pitching irrationally, short-changing ourselves by cutting costs and dishing out ideas, our strongest offering, and intellectual property for free in return for the slim and elusive hope of winning an odd deal or making inroads into an account. It’s bad for our business, period.

In Singapore, there are over 200 odd active agencies, big and small inclusive, who are constantly on the hunt to pitch and hence it is no surprise that for many of the open pitches conducted on GeBIZ, the government procurement portal, one can easily find at least 16-20 agencies pitching their services.

The eventual outcome? At best, one agency won the deal and most likely it is the one with one of. the lower bids and the remaining “losers” lost a few hundreds of hours of productivity and perhaps north of US$60,000 in labour and out of pocket costs, apart from some pride, morale and control over the wonderful ideas that they shared – yes, it is not uncommon to find agencies complain that clients have amalgamated and galvanized their ideas and made it their own without payment, credit or acknowledgment.

Even the winning agency may have lost in a way, as it may have made an unprofitable deal just to clinch the account with the hope that over time they would make profits by up/cross-sells. But in many cases that may just be a mirage as most clients or their procurement teams prefer to sign a 12-month deal at max with an “option” to renew and thereafter the pitching circus begins once again!

That is why I dislike the oft-quoted analogy that client-agency relationships are just like a marriage – the market out there is far more myopic, promiscuous and polygamous than that!

Talking about mirages and options, clients have a hard time too thanks to the way most procurement processes are structured. Many agencies maximize their chances of winning by bidding low and cleverly masking a lot of the basic deliverables as “optional items” just to appease the procurement Gods and getting through the door. And to the marketing team’s horror at the client side, eventually, they have to pay through their nose to activate all those additional, optional components in the contract. That can’t not strain the client-agency relationship!

Often the client and their procurement team are not aligned or incentivized to optimize for the same metric. In a recent experience, much to our potential client’s horror and our dismay, the head of procurement had just one request – “I want double the offerings for one-third the price or else I will have to look out”. The awkward silence and tension that ensued were only eased when our client requested for a private moment with the procurement team perhaps to clarify how unreasonable and untenable the demand was. Whilst I am glad that we managed to cross that hurdle and secure a win-win deal thanks to the client’s timely intervention, the incident gave us a glimpse into the potential misalignment in principles and objectives internally.

There have also been cases wherein the client has demanded agencies to pay to pitch and made unreasonable demands of “unlimited changes” for a fixed fee in their requirements!

Oh, and I didn’t even get to the worst case scenario – after months of pitching and chemistry sessions with a dozen or more agencies, sometimes the client may choose not to award the project to anyone or delay the process indefinitely. Imagine the potential frustration, confusion, and loss of productivity for the industry as a whole? 

Whilst many of the above instances are from the open pitches on GeBIZ simply because the data is publicly available for everyone to see, the inefficiencies and ineffectiveness of the pitch process apply equally to most private dealings as well – in fact things can get shadier given the potential lack of transparency involved in the process.

The above is not to rant about why and how client’s should fix the pitch process, write better briefs or treat agencies with more tender, love and care (although there is merit in clients re-evaluating the pitch process from their perspective to improve internal processes to find solid, long-term businesses partners) but to put the onus on us agencies to think strategically about what is the best way for us to operate and grow? If we want to fix this, we need to acknowledge and own the problem and the solution.

I sincerely urge most of us to #DitchTheItchToPitch at every brief that lands in your inbox. Think of alternate paths such as growing your business by deepening your existing client relationships; building an ecosystem that incentivizes client advocacy and referrals; innovating and expanding your offerings to differentiate and make them compelling enough to attract more clients; cultivating thought-leaders in your company who can express their opinions and articulate their vision – wouldn’t it be great to have clients come to you for a change with a desire to exclusively work with your agency?

Am sure as with every paradigm change, this may seem difficult or ludicrous even but maybe if we take a leaf from some other professional services industries, we may be able to learn a thing or two from borrowed wisdom!

We need not look too far but just a quick glance at the management consulting firms would suffice. We often hear in the news these days that consulting firms are eating up agencies or taking away a good share of our pie and I think their business model has a lot to do with this.

Most management consulting firms have built their practices and brands around deep domain knowledge, thought leadership through strategic frameworks applied to client’s business problems; building deep client relationships to entrench oneself in the organization beyond a single point of contact; marketing successful client case studies; negotiating hard and incentivizing for long-term, profitable deals and most importantly by putting a price on their intellectual property and not doling out ideas for free.

Seldom would you find these firms creating custom pitch proposals week after week but they would rather burn the midnight oil doing the above mentioned activities. Likewise have you ever seen a doctor, lawyer or accountant struggle with customized, 150 slide proposals to solicit your business? Perhaps no! In fact I joke with my wife, who is a doctor, that theirs is a rare industry wherein not only does one need to seek an appointment and wait to avail the service but also pay in advance, irrespective of the deliverable or the outcome!

I am not naïve to compare the criticality and impact of medical services with what we offer at agencies but then they have done well to protect the perceived value of their offerings and their business model. It, of course, helps that many of these professional services are governed by strong guilds who have shielded their members through strong policies and guidelines and that’s something our industry can learn from as well!

Agencies, let us not wait for the world to change. Let’s disrupt ourselves before we are disrupted. Let’s #DitchTheItchToPitch!