Tom Fogden, Editor at B&T, interviewed TrinityP3 founder and global CEO Darren Woolley about how marketers and procurement professionals can be more successful in managing agency pitches. The interview was based on the TrinityP3 State of the Pitch Research released earlier in the year and on Darren’s almost 25 years as a pitch consultant managing pitches for clients worldwide.
The online event saw dozens of marketers, agencies, and procurement people asking questions about how they could improve the pitching process. Tom and Darren cover everything a marketer or procurement person needs to consider to run a successful pitch to hire your next agency.
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How can the agency know what level of investment in time and effort, unless they know the size of the prize?
Transcription:
Darren:
Hi, I am Darren Woolley, founder, and CEO of TrinityP3 Marketing Management Consultancy, and welcome to Managing Marketing, a weekly podcast where we discuss the issues and opportunities facing marketing, media, and advertising with industry thought leaders and practitioners.
If you are enjoying the Managing Marketing podcast, please either like, review or share this episode to help spread the words and wisdom from our guests each week.
I was recently interviewed by Tom Fogden, Editor at B&T on a webinar titled “How to run a successful pitch in 2024”. The feedback on this webinar has been incredible and so we present it here on the Managing Marketing podcast for marketers and their procurement teams about to embark on running and managing their own pitch process for a new agency. We hope you enjoy it.
Tom:
My name’s Tom Fogden. I’m the editor of B&T, and it’s a great pleasure to welcome you all today to this webinar as I said just a moment ago, but for those of you that have just joined this is all being recorded. So, please do not swear.
Just as a kind of introduction, pitching continues to be a problem for agencies even though it’s an essential part of business growth, as I’m sure you all know.
Earlier this year, TrinityP3 released a research project called the State of the Pitch, which looked to kind of quantify the problems and issues with the ways that pitches are currently run and managed in Australia.
This was released in April and the second issue of this report is currently in market. A couple of key stats from that first report. The average score from agencies rating the pitches that they’ve been involved with was 3.13 out of 5, which is, as I’m sure you’ll all agree, not great.
But agencies were also reporting a lack of table stakes and basically the minimum requirements of, of clients pitching for business and making sure there’s a clear and reasonable process that everyone kind of sticks to and works towards.
It was also found that too many marketers are applying a kind of one size fits all approach. And the report highlighted and quantified many of the issues facing agencies during pitches whether these are directly influenced by marketing leads or from their procurement departments.
As well as answering your questions and the questions that I’m going to be putting to him today. Darren will be sharing his perspective on the report, and he’s almost 25 years of managing pitches for marketers down here in Australia and around the world. So, Darren.
Darren:
Thanks, Tom.
Tom:
Thank you very much for joining me.
Darren:
Well, thank you, and thanks for hosting this. Look, this is a really important conversation to have because I think there’s a lot of discussion happening with agencies, but the people that can have the biggest impact on the way pitches are run are actually marketers and procurement teams, because ultimately, they set the rules for the way they run pitches.
And agencies have only two options. They either play by those rules or they choose not to play. And both of those are quite big decisions to make.
More agencies are objecting to the way that pitches are being run.
Tom:
Yeah. Well, I mean, let’s kind of dive into this kind of straightaway. You said that the choice for agencies is to play along or to not play ball. But it seems like more agencies are objecting to the way that pitches are being run. Why do you think that is?
Darren:
Well, we’ve seen three big trends over the past few years, and some, as many as 10 years ago. The first one is increasingly marketers and procurement teams are using pitching to review a contract, review the incumbent.
And so, what we’re seeing is instead of long-term relationships, every three to four years, when the contract’s up, they go to pitch. And pitching’s not the ideal way of measuring your incumbent’s performance. It’s the best way of selecting a new agency, which is what’s happened.
The second thing is the pitches are still the same way as they’ve always been. The idea of the speculative creative or the massive media buying exercise is still the way, and yet a lot of pitches are increasingly for very small projects, 50 to 100,000. And yet an agency can spend that sort of money just winning the pitch. And yet they’re put through this onerous and elaborate and laborious process.
And the third one, and we’ve seen this since COVID, is the increased awareness, particularly within agencies of the impact that pitching’s having on the mental, physical, and psychological health of their staff.
Because you have to remember, agencies don’t have resources sitting there waiting to respond to your RFP, and this is largely unpaid overtime for the agency to respond to that invitation to pitch. So, they’re the three big drivers, I think, that are making agencies more vocal about what they see as the inequity of the pitch process.
Tom:
And did they all come through kind of loud and clear in the State of Pitch report?
Darren:
The first two did. The third one about the mental health, I think is well and truly documented through things like the Pitch Positive Pledge, which we saw in the UK with ISBA and the IPA and the general conversation around the stress that that’s putting on agency staff, but the other two were definitely in the research.
Tom:
On that, not kind of being in the research, do you think that’s because people kind of don’t want to say that sort of quiet part out loud, perhaps?
Darren:
I think the opportunity in the research, the agencies were more focused on going deeper into where they see the process being inequitable, and the behaviors that are driving the sense of it’s a loaded deck, and so why are we participating and why can’t it be fixed was where they focused.
I think the mental health issues are something that every agency is grappling with in different ways, and probably they didn’t feel that it was to be raised in that particular forum.
Why should marketers and procurement actually care about those issues that are uniquely faced by agencies?
Tom:
So, those are the kind of problems on the agency side. I suppose the other side of this is why should marketers and procurement actually care about those issues which are uniquely faced by agencies?
Darren:
Well, look, there’s two reasons. The first is, and this is one that marketers should be very aware of, is when you run a pitch that leaves a bad feeling, it has an impact on your personal reputation. And there are marketers in the Australian market that have become known for running pitches just to appoint them friends or have run pitches badly or done things that have felt like it’s wasted everyone’s time.
And so, what happens over time, one is it’s a reputation damage. The second is that, and a bigger issue is that it means the really good agencies stop pitching for that client. And it’s interesting because it seems to impact more the individual from personal experience than it does the brand. Particular marketer individuals are the ones that are tied with that brush more than the brand.
Tom:
With that reputational kind of damage following, in some instances, marketers around, do you think that makes it kind of up the chain at clients that this sort of thing can lead to not appointing the best agencies, ergo not producing the best work, ergo diminishing market returns?
Darren:
Well, I don’t think it’s even made it to many marketers because the relationship is very one-sided. You can see the power is in the hands of the marketers and procurement team in that they invite the agencies to participate.
The agencies don’t get a lot of voice in it. They get to participate, but they don’t get a lot of voice. And so, one of the things I think State of the Pitch research provides is for agencies albeit anonymously to be able to voice the inequities in the process.
I mean, one of the things that we do at TrinityP3 is make sure that every agency gets detailed feedback, but we also ask them and welcome them to provide feedback on what could have been done better.
Because it’s the only way, perhaps if more marketers did that as part of the pitch process. But what we saw in the research is sometimes the agencies don’t get any feedback. In fact, in some cases, the agencies are not informed that they didn’t win until they read about it in B&T.
What can marketers and procurement teams do about the issues blighting the pitch process?
Tom:
Well, or one of the other esteemed trade press titles. So, apart from giving feedback, what can kind of marketers and particularly procurement teams do about the issues that are kind of blighting the pitch process?
Darren:
Well, there’s actually two parts to that, Tom, the first is, what can marketers do? Marketers don’t get a big opportunity to really hone their skills as managing pitches, because, if you think the average marketer may run a pitch every two to three years if they’re lucky. So, how do you become an expert at that?
And they’re also dealing in a world which is becoming increasingly more complicated and complex with multitude of agencies with very different skills. There are some really basic things that don’t appear to always be done.
One is don’t go to pitch until you have a very clear idea of why you’re going to pitch and what success would look like. This idea of going into market just to see what’s around, it’s not a shopping expedition. It’s actually a process to select a vendor or supplier that’s going to help drive your marketing activity. The second is-
Tom:
And it takes a lot of time for people as well. Right?
Darren:
Of course.
Tom:
A lot of time and money and effort expended.
Darren:
And not just for the agencies, though, there’s the multiple of the more agencies you invite, the more time that’s going to be expended on their part. But even for marketers, marketers will say they’ve already got more than a full-time job.
But a pitch process will add hundreds of hours to the marketing team to actually manage that process. Well, this is not something that you can just throw out to the marketplace. You actually have to manage it to make sure that you get the best possible outcome.
On the procurement side, the problem is that procurement often thinks that they’re procuring something like travel or accommodation or any number of the other indirects. But marketing, procurement, and particularly when you’re choosing a strategic partner or a creative partner of some sort, requires a lot more focus on relationship assessment than it does simply on capabilities.
Capabilities in many ways is a table stake. Does the agency have the ability to do what we need done?
The very next one, and most important is can we work with them, collaborate with them to produce not just a good idea today, but good ideas and good executions for the next two to three years? If you’re looking for a long-term relationship.
Tom:
How often are those kind of personal aspects overlooked in your experience? I know we’ve spoken off air about similar things in the past.
Darren:
Yeah. I think that for marketers, they’re very top of mind, but they’re very rarely captured or discussed because people are inclined to focus on the, let’s say, rational aspects of evaluating agencies.
But marketers definitely know, and I would say if you’re looking to appoint an agency for, say, a three-year contract, testing them by doing a speculative campaign is not the right way to do it.
You actually want to get a sense of what it would be like working with them, and can you work with them? It’s far better to choose an agency that you can work with than necessarily the one that happened to fluke an idea that you like because, believe me, fluking that another 20 times is a high-risk strategy.
How can you objectively evaluate the softer bit, the relationships?
Tom:
Yeah. We’ve actually just had a question come in from the from the Q&A which is kind of on this topic. How, how can you actually objectively evaluate the softer bit, the relationships? Is that possible?
Darren:
Absolutely. And you can even give people the opportunity to quantify. We’ve done it in the State of the Pitch. We’ve asked agencies to give an overall score of how they think the pitch was run. Whether they’re highly pleased by it, or they thought it was badly run.
There is ways of measuring or getting people to be able to quantify what they feel instinctively, and so questions around who do you intrinsically trust and how much, even on the first meeting as human beings, we make and evaluate each other within the first 60 to 90 seconds.
Then we spend the rest of the time gathering evidences why our gut instinct was somehow right. And, and that’s part of what you want to capture is what, how do people feel about the possibility of which agency could you work best with, is an important consideration and should be captured in the process.
Tom:
I suppose it probably seems slightly unusual to put scores on who you intrinsically trust, but that’s probably the only way to do it, isn’t it?
Darren:
Absolutely. Particularly increasingly the need for governance to be able to justify why you selected a particular agency. For instance, you could be appointing a media agency that will be managing tens of millions of dollars of your marketing budget.
Then when someone asks you, why did you appoint them? You can give them all the rational reasons, but to actually say they developed the highest level of trust amongst the largest group of people on the selection team is just as valid as they happen to have very good planning process.
Tom:
Yeah. I suppose it’s almost like fielding someone for a job interview. You have to work with this person, particularly on a big media account as you gave us an example, you have to work with them every single day. You need to know that they’re going to pick up the phone.
Darren:
There are a lot of similarities between recruiting individuals and recruiting an agency, except that it’s at scale and it’s more complex because you’ve got more people involved.
Tom:
The procurement side of pitching is often spoken about whether it’s kind of off the record or on a background to me or not, as a kind of anchor in the process. And they kind of drag things down with bureaucracy and overly kind of exacting demands for objectivity and rationality. What can procurement teams do to actually kind of alleviate the issues within pitching, do you think?
Darren:
Yeah, so it’s interesting because a lot of the anecdotal evidence is that procurement have a big role to play in pitching, yet the state of the pitch shows that it was only around 30% of pitches were actually run by procurement.
So, and they did score lower than both marketers and pitch consultants for level of satisfaction. So, there definitely is issues around that. Some of the issues are that procurement’s role is more about governance and risk and financial cost than it is about the actual quality of the agencies.
And so, what procurement need to do is to become more involved in the overall selection process, and not just coming into it as part of ticking the boxes to make sure they’ve covered all the governance and then negotiating the lowest possible fee.
If procurement are playing a role, they need to be involved in the whole process and be able to balance out the needs of all the stakeholders, the marketers, the agencies, and then get the right solution at the end of it, but not just take a financial or governance risk approach.
What’s the role of pitch consultants in all this? How do you make pitching better?
Tom:
Moving on slightly we’ve taken a look at, at marketers, we’ve taken a look at procurement teams. I suppose TrinityP3 is probably the third side of that, of the trinity when it comes to pitching and other sort of pitch consultants. What’s your role in all this? How do you guys actually make pitching better?
Darren:
Well, the first thing that I have to point out is that the industry seems to think that we’re running the majority of pitches. So, again, from the research, it’s actually less than 10%. And I’m talking about TrinityP3 is that we inclined to get the most high-profile pitches because the larger the pitch, the more at risk, the more likely a marketer is to then engage with us to help them get the desired outcome.
But our role is really to make sure that both parties, the agencies that are involved and the marketers are fully informed at every step of the way. Because our measure of success of a pitch process is not that they select just the right agency for them, but that leads to a long-term, high performing, sustainable relationship.
And some of the pitches that we have run a decade or more ago that are still in market today as some of our, dare I say, humble brags, if I was on LinkedIn, that I’m very humble that this this particular agency and client are still working together.
Because really that’s the measure of success, and that’s what pitch consultants should be working towards, is those long-term sustainable high performing relationships.
Tom:
So, it’s almost like success to you is not being invited back in three or four years’ time?
Darren:
Not at all. I mean, in some ways, getting that phone call is, well, why are you going to pitch? And if the relationship’s still a good one, is pitching necessarily the best solution, which is often not something that’s discussed, because there’ll be some policy in the organization that at the end of every contract they have to go to pitch again.
And here again, not from the State of the Pitch, but just looking at the numbers, the chances of an incumbent keeping the business when going to open tender is one in four. Now, many marketers are surprised by that because they think the incumbent’s got a better chance of winning because they know the business.
But in actual fact, it’s the opposite because they are so well known. It’s the new agencies promising the world that become more attractive.
Tom:
I suppose that that’s kind of what I saw of here as well, you hear about accounts going to pitch, agencies work really hard, and then it goes to the incumbent, and everyone that has been invited is annoyed. But that’s not as common a phenomenon as-
Darren:
Not at all. And often the danger is, and what’s associated with that very storyline, Tom, is that oh, they kept the business because they dropped their pants on the fee. And that just disheartens the whole industry because it becomes all about the money and not the quality that the agency’s bringing to the relationship.
Tom:
We’ve had a comment on pricing and a question on pricing. So, we will come to that in a second because we’ve got a few more already in. But this one has just caught my eye. Someone said it’s a self-fulfilling prophecy. Usually, when marketing teams want to go to pitch, they’ve already made up their mind that they want to move away from the incumbent. Darren, I put it to you, is that true?
Darren:
Look, it is true in some circumstances, but not all. I mean, a lot of marketers come to us and say, “We’ve been told we have to go to pitch because it’s three years,” and we’ll ask how the incumbent is. They’re doing a great job, but we have to go to market.
If the relationship is broken down and they’re going to market, then that’s a good reason. But then the conundrum is why include the incumbent in that process if you’ve decided that it doesn’t work anymore?
And so, the question would be, if you’ve made up your mind not to work with the incumbent anymore, you want a new agency, don’t include the incumbent in the pitch process. And I’ve heard all sorts of rationales as to why they’re included.
We don’t want them to lose heart. Well, you’re just dragging them along with false hope. There’s some important work for them to do. These are all fallacies that marketers have to, why they should include the incumbent. And it really is a waste of time in the cases where the relationship is now over.
What is the role of the industry associations whether it’s the AANA, MFA or the Ad Council?
Tom:
The kind of final piece of this jigsaw puzzle, I guess, are the industry associations whether it’s the AANA, MFA or the Ad Council. Do you think they have a role to play in this, Darren, and if they do, are they playing enough of a role?
Darren:
Okay. So, one of the things that we did before we decided to do State of the Pitch research was we started looking at how does the industry talk about pitching. The MFA and the AANA have their pitch guidelines. And not just in Australia, we look globally, almost every single case, the pitch process is defined as a traditional one size fits all model.
And it’s the same type of model that you saw 20 years ago. Go and meet with a whole lot of agencies, select a handful, give them a brief, get them to work on it. If it’s media, get them to do a buying exercise.
There could be six, eight or more agencies in this process, then choose one or two and negotiate fees. It’s reinforcing that there’s only one model for selecting agencies, and yet the number of different requirements of a pitch from a project fee to a longer-term relationship, from media and creative to influencer to technology. It’s just so much more diverse that one pitch style doesn’t work anymore.
And so, I think the role of the industry bodies is to stop reinforcing that one pitch model and start educating marketers particularly, and procurement, that there are a number of ways of selecting an agency that still fulfills all of the needs for governance and due diligence, but makes it easier for agencies and more aligns the level of effort to the rewards for agencies to participate in it.
Tom:
And you also said at the top of the show that the nature of work is changing as well. Agencies are being asked to pitch on smaller, often more projects rather than retained pieces of work. Is the whole market just finding it tougher and shrinking, and that’s finding its way into the pitching process?
Darren:
The market has always been complex, and it’s becoming increasingly complex. Marketers are also less able or appear to be less able to make long-term commitments to particular agencies. So, we need to develop a better way of selecting agencies.
One of the things we do is often have a marketer come to us wanting to select an agency for a project. Rather than running a pitch, we’ll provide them with a list of four or five agencies that fit their needs and say, “Go and meet with them and choose one.”
Because after all, it’s just a project. Who do you think? Don’t put them through a full pitch, do some due diligence on their ability to deliver it and their capabilities, but don’t do a full RFP/RFT as a way of selecting them for a project. And that’s what we need to do. We need to become more flexible in the pitching process.
Tom:
So, what should smart marketers do when they’re looking for potential agencies, whether that’s for a big project or a big retainer or a small medium sized project?
Darren:
Yeah. Well, the first thing to do is to define what it is you’re trying to achieve and what success looks like. Then actually plan it out. What’s the process going to be to get there? And do you have the resources and capabilities?
One of the biggest problems that marketers have is how do you put your list together? How do you work out? So, they’ll often end up going to 20 or 30 agencies looking to get a list of five or six, and that’s not an efficient way of doing it. There are ways, I mean B&T’s agency, scorecards could be a good starting point, couldn’t it, Tom?
Tom:
They could, they could.
Darren:
Yeah. But do some research to better understand the marketplace before you actually go to market. And this is just before you’ve even engaged with an agency. There’s a lot more that can be done for marketers to set themselves up for success and not be effectively a nuisance to the industry.
How many agencies is too many to kind of have on a pitch?
Tom:
How many agencies is too many to kind of have on a pitch and should marketers kind of pre preference specialist or generalist agencies or look to have a kind of mix on the pitch list? Or does it depend?
Darren:
Yeah. There’s some variability. But let’s just say you’re choosing a single agency. You want a media agency, or a creative agency or whatever you …
You would start with doing research as wide as possible. What’s available to me in the market. And you may consider 20 or 30 in that research. You may google searches looking at directories, asking colleagues, friends of who they’ve worked with, get as much information as possible.
Look at who’s getting media coverage, trade media press, who’s doing good work. That gives you the long list. Then what you do is go through it and shortlist that to no more than six or perhaps eight at the very most.
And here’s the danger, if you don’t go through this filtering process, you’ll end up with getting a very average outcome. Because the danger is, and we’ve seen this with clients that have gone to pitch with eight agencies and got all of them to do a response, they then have trouble choosing one because there’s so much variation. It’s the old problem of paralyzed by indecision.
Tom:
Yeah. The tyranny of choice.
Darren:
Yeah. So, filter down, start as wide as possible, select six, maybe eight to meet with and get an understanding of their capabilities and whether you could work with them. But we would say three is the optimal number to really start doing a deep dive into how you’d work together, what it is that they’d bring to the party and start talking about financials.
Does it all come down to price at the end of the day?
Tom:
Let’s come on to pricing. We’ve had a number of questions come in on the Q&A about this. And we’ve got some from the registration as well. This first one, do you think there’s an education piece required on evaluating only for price? And is that something that TrinityP3 is leading on?
Darren:
Yeah, it’s interesting. A lot of agencies feel that price is the only differentiator, and it’s actually not true. It’s often left to last because the marketers will want to choose who they want to work with, and then procurement will be trying to get the best price out of that person, to really justify their role in the whole process.
Price is an important part of value, but it has to be balanced out. And we’ve had a number of pitches where an agency has been the preferred agency, but they’re also been the more expensive agency. The question is not how far can I screw them down on price, but does that represent value for the client? If you’re going to pay more, I had a situation where the incumbent came in heavily discounting their fee to almost half of what everyone else was doing.
And the client was excited by how much more that would buy them until I pointed out you’ve been driving a Holden Gemini, beaten up Holden Gemini, you’ve test driven a BMW, and now you’re telling me you want to go back to the beaten-up Gemini. It’s that type of the value decision that needs to be reinforced.
So, I think price is important, but it’s not the differentiator. I’ve never met a marketer that’s chosen an agency that they thought was lesser and had a lesser price. So, you don’t buy on price, but price is an important part of the decision-making process.
Tom:
So, I suppose the kind of follow up from that, why does that perception exist among agencies? That it all comes down to price at the end of the day.
Darren:
Because it’s left to the very end for the negotiation. And some people will prey on the agencies insecurity by saying, “I’ve got someone else here that’ll do it for 10% less,” which is just a really crappy negotiation style. Okay, we’ll get them to do it for 10% less, but this is what it costs.
And that’s the other thing is that that style of negotiation works because agencies are fearful that they’ll miss out if they don’t cut it by 10 or 15% to match it. Very rarely are you comparing, like for like, every agency has a nuance of benefit that they bring to the equation.
So, if someone’s trying to get you to match it, then it’s up to you to decide whether you’re going to play that game. But it is a technique that many people use to negotiate, and it’s a really poor technique.
Tom:
So, another question that’s come from the Q&A concerns media agency pitches specifically. In your view, is it better for marketers and agencies to discuss the financials and pricing upfront rather than leave it to the end? Does that happen?
Darren:
Yeah, look procurement are dead against price setting. So, they refuse to give an agency and a sense of what’s the offer is. And we disagree with it as a company, because how can the agency know what level of investment in time and effort, unless they know the size of the prize?
Now, I’m not talking about necessarily saying what is the fee you’ve budgeted for, but certainly give them a sense of the scope of appointment. Yes, we’ll be appointing you for three years with the option for two more rollover. Yes, it’ll be doing this. And yes, we’ll probably be spending X dollars on marketing over that time.
This is enough for the agency to at least evaluate whether this is something that they want to participate in. And I think that’s really important.
I think where we get into trouble is where procurement particularly, and sometimes marketers will say, we want you to pitch. And no one actually defines for what, you go through the whole process, and they go, “Surprise, it’s a $50,000 project. You are the winner.” That doesn’t work and shouldn’t be done.
I say to agencies all the time, if someone is not willing to give you an indication of what you’re actually pitching for, don’t pitch.
Should clients pay agencies to pitch?
Tom:
Yeah, absolutely. There are also kind of a couple of different models suggested when it comes to pricing. The first being whether clients should pay agencies to pitch. What are your kind of views on that? Would that be beneficial for the market?
Darren:
And there’s a lot of talk about it. Again, the State of the Pitch research showed that less than 10% of pitches were paid, and then when they were paid, it was less than $10,000. We’re talking about a token amount for out of pockets.
Interestingly, those same pitches then required the agency to assign their IP because they were being paid. And so, there’s two issues there.
But let’s go back to should they pitch for an agency to turn up present their credentials and have a chemistry meeting, that’s pretty much part of business and it’s cost of doing business. It’s when you go into the next stage, if it becomes particularly onerous, if there’s an expectation, you’ll produce highly refined creative work and animatic and the things like that, then there should be a payment for that.
Because you can’t expect agencies to participate to that level and incur those sort of out-of-pocket costs without compensation. But I’m talking about tens of thousands of dollars, possibly up to 50,000 or more in some cases, depending on the level of expectation that the client has.
When it comes to buying IP, and this is an additional issue there. We’ve had a situation where in the pitch process, one agency came up with a terrific line that the client loved, but they didn’t like their thinking on the campaign.
And so, we went back with the client to buy the rights and negotiated and paid a reasonable commercial amount for the rights to buy that line. But this idea of just stealing it or trying to pay someone five grand, and I own everything, it’s immoral if not unethical.
Tom:
It may be immoral, it may be unethical, but how can you stop that happening? Because this is not a new problem. This has been going on for decades.
Darren:
So, there was a pitch last year where three of the agencies that were asked to pitch contact me, wasn’t a pitch we’re running and they’ve asked me to sign a copyright transfer or sign all of our IP, and they’ll pay me $5,000.
And I said, then that’s your commercial decision. You have to make a decision as to whether you are willing to have all of your IP taken for $5,000.
Now, two of the three participated, one chose not to, but that’s a commercial decision. Is it fair? No, it’s not fair. But the only way it will stop is for people … because they were also, by even talking to me, they’d breached their non-disclosure agreements because of course, the client had them sign NDAs before they even entered into this.
So, yeah, it is an issue. Agencies have to either make a call themselves because I don’t think the industry will crack down on it.
Tom:
Is there a way to do that without seeing your name missing from the next big pitch list?
Darren:
Look, that’s the other thing — sorry, it’s a slightly different question. Just because you turned down a pitch doesn’t mean you won’t get invited to future pitches. Saying no is a legitimate response. You have to remember that when a marketer or a procurement team are inviting someone to a pitch, it’s an invitation. It’s okay to say no.
And marketers and procurement people have to be mature enough to go, “Okay, I accept that,” they should be able to handle rejection. If they’re not, then they probably need to get some help because yeah, it is business, and no is a legitimate word to use in business.
Tom:
Switching back to kind of procurement as well. We’ve had slightly an interesting question, I suppose saying that what we’ve been kind of discussing and how procurement has been described is sounding pretty unprofessional.
And if it is widespread, it’s no wonder that procurement gets a bad name. This attendee is saying that they’ve worked in procurement for 20 years and they’ve never seen the kind of the bad practice that you’ve been describing.
Darren:
No. And look, all it takes is one bad apple in the barrel to cause the whole industry to have a poor view of procurement. And believe me, there are bad apples. I’ve had personal experience because we also tender for business, and we regularly turn down opportunities to tender for projects because of the approach.
Some of the things that agencies have said that they don’t like about procurement run pitches is the lack of communication. Please fill out this Excel spreadsheet, please answer all these questions. And then they get ghosted. I know these things happen. Do all procurement people do it? No. But those that do are the ones that are doing a disservice to the profession.
Tom:
I mean, where would, where would you say the kind of — is that more commonplace? Are there more bad apples in your world that not?
Darren:
No. Look, there’s many good procurement people that we work with, but then the ones that are not, are not changing if you understand. What I’m saying is that there are good procurement people, of course there are. But the ones that are taking a hard line on the process, and not open to flexibility or customizing their process, and not willing to provide the information.
Don’t follow up with vendors that are unsuccessful or provide non-constructive and often incorrect feedback if they provide feedback at all. These are all the things that are the reason why agencies are increasingly complaining about the pitch process. So, if we want to improve the pitch process, we need to improve the way these players and 70% of pitches are run by marketers.
So, marketers and their procurement teams have a lot to say, to think that pitch consultants are running most of the pitches, I only wish, but it’s not true.
Tom:
You’re not quite the kingmaker that you would like to be, Darren.
Darren:
Well, I never thought of myself as that, Tom.
How can marketers know that they’re getting good value for money?
Tom:
We’ve covered clients paying for pitches and paying for IP in pitches. I suppose the other bit we haven’t touched on is value-based pricing. So, if the focus is on the outputs rather than the head hours during a pitch, how can marketers know that they’re actually getting good value for money?
Darren:
Well, this requires a fundamental shift in the way we think about marketers engaging agencies. So, there was a time when there was a commission system when media and content were together and there was a media commission that paid for all this.
Then we moved to head our rates and retainers. And what marketers have particularly liked about that is that they get to choose the people working on their business. They feel that if they’re retaining certain individuals, those people be working on their business. We’ve seen a shift from retainers now to project fees.
And one of the things that marketers often complain about is the agency says, “Well, if you’re paying project fees, I can’t have people sitting there waiting to work on your business when a project comes in.” So, you won’t have those people, and marketers would like to have those people.
The big thing that’s moving us towards value-based pricing or output-based pricing is actually the rise of AI and automation. And the fact that soon agencies, and even in-house agencies, will be able to do things faster and cheaper, I won’t say better, but faster and cheaper due to technology.
So, if you are getting paid by the hour to do something and suddenly technology’s making it much more efficient to do it faster and cheaper, then you’d probably want to start getting paid for the output, not the number of hours it takes. And that’s what’s actually driving it.
So, how do marketers … to get to your question, sorry, roundabout way, but to get to your question, how do marketers know if output-based pricing is cheaper? They need to start looking at what their agency’s currently producing for them and what that actually costs.
Because retainers and even project fees hide an infinite array of uncertainties we’ve seen situations where agencies have provided services that the client didn’t even know they were getting as part of a retainer just to justify the level of the retainer.
So, we need to move our thinking from retaining an individual. I’ve got a hundred percent of Tom, to what did Tom actually produce during the last 12 months that I can value? And that’s basically how we do it. That’s the approach we take, is being able to value the productivity of Tom rather than just the number of hours Tom spent on my business.
Tom:
Well, yeah, I mean it’s very pleasing for me that no one’s quite assessing my performance in those sorts of terms because I wouldn’t make the next pitch list.
Darren:
Well, no, actually that, that’s a good point. Because for instance, in your role, for you to do a story, there’s a certain amount of thinking time. This is one of the things that I never understood, but it is important to come up with a big brand idea. How many hours does that take? And why do we pay by the hour?
It’s just a crazy way if it’s doing manual labour or process work. Absolutely. But when we’re talking about creating intellectual property, it’s not an hourly based system. That’s one of the reasons why I think value-based pricing is going to take the industry in the right direction.
Tom:
Is TrinityP3 recommending value-based pricing to its clients?
Darren:
We have, and we do, to our clients and to agencies. And there’s a number of obstacles that both struggle with in that approach. But recently we’ve had some very significant pitches where value-based pricing was something that we’re able to benchmark for the procurement team so that they could make decisions around value for that.
What can marketers do to fix a broken relationship rather than going straight to pitch for a new agency?
Tom:
One of the things you mentioned earlier on in the show was marketers choosing the right time to go to pitch or the right reasons to go to pitch. One of the questions we had during the kind of signup was what should, or what can marketers do to try and fix a broken relationship rather than necessarily going straight to pitch for a new agency if it’s kind of not working out?
Darren:
Yeah, absolutely. There’s so much that can be done that is often not done. And many marketers are doing this. The first is have regular reviews of the performance of the current relationship. Depending on the volume and intensity of that relationship, you could do them quarterly, six monthly, or annually.
As you’re approaching the end of a contract period, you should start looking at the more commercial, not the performance of it, but the commercial realities. Are you actually getting what you’re paid for? Are you getting the quality of work? Is the agency being paid in a fair way?
Should the contract be updated, particularly in media, but also in creative? The role of AI is having impacts on contracts. These are all things that should be considered before you go to pitch.
This idea that every three years when the contract’s up, you should go to pitch is actually flawed thinking. And it’s actually driven the average tenure of agencies down from, I think it was seven and a half years, a decade ago, to around three to four years today, because of that sort of pacing, that frequency of going to pitch, there are a lot of things that can be done, not just relationship wise.
I mean, I know there’s some methodologies that many agencies use, and they tell me I was getting scores of 9 and 10 from my client and they still went to pitch.
Relationship alone is not the reason not to go to pitch. You need to go deeper into looking at the commercial realities of that relationship, because ultimately that’s the question the CFO, the legal team, they all want to make sure that they’re minimizing risk and still delivering best value.
And that’s not, “Gee, I like working with my agency.” It’s, they are delivering the value to market all better because of X, Y, and Z.
How frequently should 360-degree reviews take place?
Tom:
One of the questions that we’ve had during the registration as well, with that in mind wanting to assure that clients are getting value for money, how frequently should they go out and test the market? And how frequently should kind of 360-degree reviews take place in your view?
Darren:
Yeah, so 360, I think I mentioned just a minute ago. Depending on the intensity, the minimum would be 12 months, but I would recommend doing it every six months in most cases, particularly in high volume like retail, financial services, telcos where there’s a high volume, I’d do it every six months.
As far as testing the market, I think marketers should always be open to meeting with other agencies and just getting an understanding of what else is in the marketplace.
I’m not talking about a formal pitch. I’m talking about an agency calls up and asks about your business, and you say to them, “Great, come in and meet with me, whether it’s under an NDA or not, and get a sense of what else is in the market without going to a formal review.”
Because one of the crazy things, and I’ve had marketers say this, “Oh, we went to tender, we met with half a dozen agencies and decided to stay with the incumbent because there was nothing better.”
Well, they’ve just discombobulated the incumbent by telling them they’re going to pitch. They’ve had half a dozen agencies waste their time. Which they could have done by just casually and noncommittally meeting with agencies on ad hoc basis to know what’s happening.
Tom:
On the kind of wasting of time, this is a question we had in kind of earlier in the webinar. I’m sorry it’s taken us so long to get around to this. And also, any of the questions that haven’t been answered, we’ll write a piece to go on B&T probably tomorrow or maybe Friday. So, look out for that one.
What’s the best approach for an agency to talk to their employees about whether they would like to take part in a pitch? Is it worth them having a stable core team that only does pitches? Or is it better to chop and change, get people who might know the business better? What’s your view on that?
Darren:
Look, I think as agencies are getting selected more for their ability to align with the client and bring good thinking, you need a combination. You need people that present really well. You need properly, dare I say, salespeople that can actually help get there.
But showing off the skill sets in your agency are really important as well. And bringing people in that are not necessarily the pitch team, because there’s a huge level of cynicism amongst marketers about the pitch team.
Now, we always explain to marketers that it’s unlikely the agency’s going to have a team ready for your business. They’re not just sitting on a bench waiting for you to appoint the agency. But definitely you should get the agency to bring at least someone that will be possibly working on your business. And most agencies can do that.
What’s more important in a pitch for the marketer selecting the winning agency? Is it the solution or the team?
Tom:
We are coming to the end of our time here. So, I think there’s probably two that I want to get over the line now. The first one, I think what’s more important in a pitch for the winning agency and for the marketer from their view? Is it the solution or the team.
Darren:
Okay. So, if I’m a government department, and I’m going to tender for a solution, obviously it’s the solution. And you’ll probably find that they’ll use some sort of consumer research to validate the chosen solution.
For everyone else, I would say it’s the team, because there’s been a number of occasions where, against our recommendation, they’ve asked for a creative expression and they’ve fallen in love with a creative idea from an agency that they don’t have great chemistry with. And it causes such angst because they love the idea, they don’t love the people.
And I think to the point that you made earlier, you’re going to be working with them, if not daily, weekly, marketers will be more inclined to go with the team that has better chemistry, better alignment of values than they will the person that came up with an idea.
And we support that because the number of times agencies have done creative work using freelance teams, high profile freelance teams that are very good, but you’re not appointing them to your business, you’re appointing the agency. So, we say better to appoint the winning team than the winning idea.
Tom:
And then obviously pay for the idea.
Darren:
Of course. Pay for the idea.
Tom:
Again, from the Q&A box, one that we had was: In your experience, Darren, are there any common themes or things that stand out among winning agencies, whether that’s what gets them initially onto the list or gets them over the line with the client?
Darren:
A lot of agencies think that the client has a preconceived idea about who they want or appoint. And they’ll often have one or two agencies that are very high profile. They’ll come to us and say, “We want to run a pitch, but we would like you to consider agency A and B.” Usually someone that’s got quite a high profile in the marketplace.
As we go through the process, that gets them onto the list. It’s not the winning thing. The winning thing in most cases, and this is obviously a generality because it’s not a formula. There is no formula for success.
But as an observation, the team that is as quickly as possible, able to build trust and align values and engage the client, and most importantly, listen and respond to what they’re saying, will be the one that’s ultimately successful.
Now, sounds easy, but there’s a whole lot of unknowns in there. Probably another way of answering that, Tom, is the agency that talks the most and listens the least is the one that’s not going to win.
Tom:
That’s kind of a good rule for life, isn’t it?
Darren:
Yeah.
Tom:
One final one because we’re rapidly approaching the end, in fact, according to my computer, we’ve just crossed it. You’ve been doing this for a number of years, Darren, what’s one thing that is kind of totally blown you away in a pitch situation whether for good or bad?
Darren:
Okay.
Tom:
You don’t have to name names.
Darren:
No, no, this has happened twice. Is once where the agency CEO started a fight with the client, blown me away for a bad reason, or started a fight between themselves in another case, which was also a bad reason.
The best example was the use of theater. And I can’t unfortunately explain it because it’ll give away who it was. But imagine if you are presenting a positioning for a client that you were then able to demonstrate in the meeting, like create a new piece of content while they were sitting there before their very eyes.
It completely changed the whole process because it was like the ultimate test, the ultimate demonstration of the way the agency thought. And for a retail client, the speed and ease of which they did it would blew them away. So, I think theater has its place, but only when it’s demonstrating the benefits that you want to demonstrate.
If there were three key takeaways from this for marketers or agencies what would they be?
Tom:
Perfect. I’ll say thank you all for coming and listening in, everyone that joined. Any of the questions that we didn’t get to, and we certainly didn’t get to all of them in this hour, we’ll answer in a piece on B&T.
Thank you, Darren. If there were three key takeaways from this for marketers or agencies what would they be?
Darren:
Well, the first thing is that change is going to happen when marketers and procurement educate or inform themselves about what makes a high performing pitch process. And it is not doing what you’ve always done, but actually customizing that.
The second is that agencies really don’t have a lot of sway at the moment because of the power imbalance, but they certainly have a say in whether they play or not. And I know that’s a big ask in the current economic situation, but you need to protect your people and your reputation. So, don’t participate in everything if it doesn’t feel right.
And the third is that as an industry, we need to learn to adapt to the changing world that we live in. And so, pitching, while it may be a low consideration for many marketers, when they do actually think about going to pitch, they need to go through a lot more thinking and a lot more consideration before they make that decision. They’d be the three things that I hope people take out of this.
Tom:
Brilliant. Darren, thank you very much.
Darren:
Thanks very much Tom.
