Stephen Wright is TrinityP3’s Media Business Director. For more than a decade, he has managed and facilitated some of this country’s most high-profile media pitches. Based on the State of The Pitch Australia Research results, he is here to discuss the implications for media agencies and their pitches.
Since the pandemic, agencies worldwide have been increasingly vocal about ditching the pitch, and trade media have run headlines and opinion pieces claiming it is broken and even dead.
As Australia and APAC’s leading pitch consultancy, we noticed that while there were plenty of opinions, there was very little data on this topic, so we undertook our own research called The State of the Pitch in Australia. From June to December last year, the report makes it interesting to read what is going on and what is going wrong with pitching. You can download your copy of the State of the Pitch Australia Report for free here.
You can listen to the podcast here:
Follow Managing Marketing on Soundcloud, Podbean, Google Podcasts, TuneIn, Stitcher, Spotify, Apple Podcast and Amazon Podcasts.
Competitive pricing is not really your primary concern. You need to find the environments that resonate with your target audience and buy those at a market-appropriate price. And that’s how you deliver media value.
Transcription:
Darren:
Hi, I’m 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’re enjoying the Managing Marketing Podcast, please either like, review, or share this episode to help spread the words and wisdoms from our guests each week.
Now, since the pandemic, there’s been an increasingly vocal call from agencies around the world to ditch the pitch, and trade media have run headlines and opinion pieces claiming the pitch is broken and even dead.
As Australia’s and APAC’s leading pitch consultancy, we noticed, while there were plenty of opinions, there was very little data on this topic, so we undertook our own research called The State of the Pitch in Australia. Run from June to December last year, the report makes interesting reading on what’s going on and what is going wrong with pitching.
Well, my guest today is responsible for managing and facilitating some of the most high-profile media pitches in this country for more than a decade and is here to discuss the implications for media agencies and their pitch.
Please welcome to the Managing Marketing Podcast, TrinityP3 media’s business director Stephen Wright. Welcome, Steve.
Stephen:
Good morning, Darren.
Darren:
Look you’ve had a chance to read the report and I imagine like me, there wasn’t anything sort of that rocked your world, but it did reinforce a lot of what we do know, doesn’t it?
Stephen:
Yeah, absolutely. I mean, I think what we saw in the report is where pitches are at which is lagging behind the needs of the clients from their media agency at this point in time. A lot of the pitches, because they’re driven by procurement, are a little too focused on the numbers.
And more and more in with the current media marketplace, the client gets value from the qualitative aspects of the media service rather than the quantitative. So, pitches have far more focus on trading and trading pricing and a focus on remuneration as well, where really, it’s about finding a quality service and a market appropriate price.
And in terms of trading, I mean, the trading marketplace has become far less able to be benchmarked precisely. So, clients chasing definitive trading pricing based on promises in a pitch are not doing themselves a great service.
Darren:
It was interesting how many of the media pitches or pitches that had media as a component also in the agencies indicated that they were asked to undertake a media trading exercise, which is pretty much what you’re talking about there in regards to media pricing. How much would we expect to pay for X, Y, and Z if we’re investing A, B, and C levels of investment, wasn’t it or isn’t it?
Stephen:
Well, it is, and the trading exercise has long been a nightmare for the agency. You are sitting there and it’s almost less about what you know you can deliver. It’s about what you feel other people are going to put in for that trading exercise and how low you need to go.
And the truth is that there’s always an agency there, perhaps on the outer in terms of other aspects of the review that will put in some low pricing, sometimes as a last-ditch attempt to try and get noticed.
And if you are an agency that has got a high-quality product, you are forced at times into putting in pricing that might be below what he might reasonably expect to deliver, so-
Darren:
And it’s … sorry, Stephen. But it’s amazing how powerful that is because you and I have both been involved where we’ve recommended them not doing a media trading exercise. And agencies have come back with, as you say, sometimes unbelievably low media rates that we have said cannot be delivered.
There’s no way these rates can be delivered. And yet they’ve often gone ahead and appointed the agency because they believe they can be delivered only to be disappointed later. So, it shows the power and the way these exercises actually distort good decision making, doesn’t it?
Stephen:
Yeah. And as a pitch consultant, there’s nothing worse than an agency putting in a completely unrealistic global trading price because we then have to manage procurement away from that. And managing procurement away from a low price is very difficult. You can tell procurement that it’s potentially undeliverable until the cows come home, but they’ll struggle to put it aside and not consider a waiving value in that process.
But as you know, Darren, we’ve had several clients come to us over the last sort of four or five years who have bought into an agency based on a global price and are then in a position where the agency isn’t delivering, couldn’t ever possibly deliver the pricing that was put on the table.
And the question to us is, “What can we do about it?” The answer is absolutely nothing. I mean, if they can’t deliver it, they’re not going to deliver it however much pressure you put on them. Your options are very limited.
You can go back to the market with egg on your face and you run a review very quickly, or you can ride out the three-year contract term on the basis that they’re doing decent work in other areas, and you’re just not going to get the value that you were promised.
Darren:
Yeah, of course, there’s that sort of dodgy, opaque area of media arbitrage that seems to have risen yet again, where agencies can sort of make available very low-cost media to try and hit those numbers. But it’s often at the expense of actually having your advertising appear in quality environments, both in the digital world and the more mainstream area.
Stephen:
The whole area of agencies making additional commission, I mean, it all came to light with the A&A report back in 2017. And the agencies largely corrected some of the errant behaviors after all of that became widely discussed but it is creeping back in.
And one of the ways in which it’s creeping back in is in a way that’s legitimized through the non-transparent trading entities that clients are increasingly signing up to as a function of the contractual arrangement.
And that does give license to the agencies and authority to the agencies to make additional commissions. It’s supposed to be a win-win, whereby the clients gets better value. But it’s very hard if there’s zero transparency as a client to understand that you’re truly getting better value.
Darren:
Yeah, exactly. Look, the other thing that was interesting in the research was the fact that we asked a range of different disciplines and for the agencies to indicate for the pitch, what were they asked for? Because this was for all pitches. It wasn’t just for media.
But media planning and buying, including programmatic, was the only single discipline that was actually pitched for in its own right. And what I mean by that is it was either media planning and buying, including programmatic, or it had other things added to it, in which case it was almost like a full service.
But nothing else. There was no other discipline that stood alone like that. There is still a need, isn’t there for media planning and buying to be in some ways, specialist function for an agency?
Stephen:
Well, it remains the largest part of the paid, earned, shared own spectrum. Paid is for, I would say the vast majority of clients still the major expenditure. So, on the basis of that, in its own right, it has the capacity to deliver more or less value than other disciplines.
The other thing that’s happened is, I mean, digital used to be more of a standalone discipline, but obviously digital is very much intertwined within the media process as well. So, I would say, media has blurred into all forms of digital now, search, social, and so it’s less one dimensional because media in itself has become a sort of multi-dimensional arc.
And the average across clients might be 30% in digital, 70% in mainstream, but there’s an awful lot of clients that we work with now that will spend more than 50% of their money in digital. And that is increasing the way money is going based on performance, media findings and the fact that digital is far more accountable than some of those non-digital media.
So, funds are gravitating towards the digital area. So, I think that’s the reason why media in its own right it’s quite complex within media with those balances between traditional and non-traditional and the blurred areas.
Darren:
So, one of the other questions we asked was obviously, what did the agency expect to be the annual revenue that this account would bring them? And when I compared media alone versus media as part of a full-service agency against that revenue, what I found was that the bigger the revenue, the more likely it was for media to standalone.
It seems to me that perhaps advertisers are only looking at bundling media in with all the other, let’s say content related disciplines when they have a relatively small budget. Would that resonate with you?
Stephen:
Yeah, absolutely. I mean, to get value across the paid, earned, shared earned spectrum, you need to coordinate a lot of disciplines outside of media as well, sponsorships, PR and then there’s content which sits above all of those disciplines.
So, if you have a relatively small budget then to have a single arrangement whereby content and all forms of communication are delivered and coordinated for you by single agency has to be the most efficient way to operate.
So, if you are smaller agency, looking at a single agency group that can deliver all the disciplines makes a lot of sense. And if you’re a larger agency, then that might not work for you in all areas, and you might end up with various different entities.
And then there is a role for marketing in terms of coordinating and managing all of that to ensure that everything is integrated and delivers holistically. And that’s not a simple thing to do.
Darren:
Because yeah, there is a lot of discussion around media agencies particularly offering additional services, but yeah, what do they call it? Non-media related income or non-media services and moving into more of that content creation.
But it didn’t seem to be reflected in the type of pitches that most of them agencies that were pitching for a media account were only pitching for media. There wasn’t a either need, want, or desire by the client for them to offer these other services that we know media agencies have been building out for at least the last decade.
Stephen:
Well, creative agencies still deliver the best content. And if you want to stand out in your category, you want work that’s going to resonate with your audiences, then you need high quality creative thinking to deliver that.
And media agencies have become quite adept at creative adaptation or content adaptation in terms of the many forms of delivery requests, particularly in digital. But in terms of delivering high quality, creative, groundbreaking, award-winning creative, there’s no media agency that would lay claim to that.
So, a media agency that’s looking to deliver as creative as well would only be looking to offload that onto the creative specialists within the group. There are some small independents that lay claim to delivering well across all areas, and there are some very good products out there. But I would say there are more people pretending to be able to do both well than are actually delivering it well.
Darren:
I wonder also, if it’s not that focused from the client, that they have a media need, so they go and look for a media agency so that they’re not really open in the selection process to know what else the media agency can do unless they’re looking for a full-service agency could be driving that behavior.
Stephen:
Well, we still do tend to put things in boxes. There’s media, there’s creative, and it’s like the old terms above and below the line that for many years we were using long pass use by date.
So, yeah, it is convenient in thinking terms to put things in boxes, but with regard to your communications, I mean, if you are a client, every customer contact is delivering your brand and every customer contact is delivering the capacity to leverage a sale just in varying amounts.
So, the more you seamlessly integrate the thinking, the delivery of all of those, the better you are in terms of aligning to make sure your funds are working seamlessly and holistically together. So, yeah, the boxes and the definitions we use, don’t help us move on to the realities of the way the consumer looks and considers your product.
Darren:
Stephen, the other thing was, we specifically asked the agencies about what their perceived or projected revenue would be from the client, and there was still crept in that old horny thing about billings, media billings versus revenue.
That some of the media, clearly media agencies were reporting revenue as if it was billings. You would’ve thought that would’ve died by now, but clearly, it’s a slow, painful death.
Stephen:
Well, I think a lot of them would love to have a hundred percent commissions and commissions that equal billings, but unfortunately the market operates far closer to the 10% than a hundred percent. So, yeah, look if they’re reporting that they maybe have misinterpreted the question in the survey or they’re living a delusion where-
Darren:
Living in the 20th century, not the 21st century. Look, the other thing of interest was across the board, but also particularly for media was the fact that we had pitches for very small amounts of revenue right through to very large amounts of revenue.
We had pitches for very local, almost project-based activity right through to regional and a global pitch as well. And yet largely the same methodology was mapped out and the agencies taken through. What do you think is driving this sort of belief that one size pitch fits all, and what do we need to do about it?
Stephen:
Look, I think it’s a lack of understanding of the pitch process and the outcomes that are required. And one of the things a good consultancy will do is ensure that every pitch is absolutely customized to delivering and revealing the relative merits of the agencies with regard to your specific needs and the way your needs to operate.
And I think sometimes there’s a lack of upfront thinking in terms of how a pitch is structured and what it’s asked for. And that’s a slight against anyone using an external pitch consultant, but for marketing and procurement who aren’t used to running pitches and would run a pitch very infrequently it’s just a lack of understanding of how to get the best out of a pitch process.
So, it’s certainly something, obviously at TrinityP3 we’re very aware of, and the upfront discovery and scoping component of a pitch should never be shortchanged.
Darren:
Because when you look around most of the guidelines, most of the articles, most of the resources seem to map out the very traditional pitch process. The one that gets made famous in films and television shows about advertising where there’s a brief and everyone goes away and works on it and comes back and presents their idea and then the client chooses.
And yet there’s quite a few different ways of doing that, isn’t there, depending on what the actual needs and dimensions of that pitch are. For instance, global pictches of very different to a single market pitch, aren’t they?
Stephen:
Well, global pitches tend to be far more focused on price. And it’s almost like service delivery and the quality of strategic thinking are almost given, are almost sort of dumbed down in the overall decision-making process.
They’re very often collating price templates both remuneration and trading pricing across multiple markets to see how value can be delivered. And then with those global pitches, it then comes back down to days of credit that 60/90-day terms can often then come in.
So, it’s very price focused, but the more local you get and the more you move down from the $50 million pitch into the 15, 10, $5 million pitch, the more it’s about customized needs. And the more it’s about the thinking, if you are a challenger brand then you are not the main one in the market.
Competitive pricing is not really your primary concern. You need to find the environments that resonate with your target audience and buy those at a market appropriate price. And that’s how you deliver media value. It’s about differentiating yourself and standing out to create elevated level of noise around your brand.
Darren:
And you mentioned remuneration or agency fees. It was interesting that retainers and project fees, probably project fees for the more creative and content side of the business, but retainers are still holding up as being very popular, particularly for media agencies. Do you think that performance and commissions and that are largely now gone by the wayside?
Stephen:
Look, it’s very difficult for clients to be able to set performance accurately. The majority of clients are sort of living result by result. They don’t have a solid base of how their sales are tracking. There’s high degrees of volatility, and there’s also so many variables that come into play.
So, we would never advocate more than 20% wrapped up in a performance remuneration scheme because there’s too many things that can affect it adversely. And if you have a high proportion wrapped up in performance, you’ll end up with winners and losers.
Sometimes the agency will end up getting a massive performance bonus when other things have happened. There may be price things happen in the marketplace which deliver the great sales, so they won’t have deserved it.
Now, other times they’d be penalized, but things that were totally outside of the control supply line issues. And so, it doesn’t make sense in the media era to move beyond perhaps a 20% framework. The interesting thing is nearly everyone now has a hybrid form of remuneration, which is a mix of retainer and commissions.
And it’s a lot of the digital disciplines, the majority of people are operating on commissions with all sorts of cost markups for technologies and DSPs. So, that very much the norm now is something that’s a sort of hybrid and there’s very few people now that would’ve all commission or all retainer models.
So, yeah, the marketplace is evolving, it is getting more complicated, but it is still possible to do all the sums and work out what it amounts to based on how the funds are split up.
Darren:
Interesting. The last area that really stood out for me was the area of just getting the basic pitch process right. The treating agencies with professional courtesy and respect during the process in that often when that didn’t happen, the agencies had quite an adverse reaction. And I’m just wondering if this is what’s driving a lot of the dissatisfaction with the pitch process.
Stephen:
There are two things that we consistently come across that agencies dislike enormously with the pitch process. The first one is a lack of communication.
So, obviously it’s important to tie down a tight timeline and a framework of how the pitch is going to run with the client, so that that can be communicated upfront with the agency so they can allocate and resources and understand that they’re going to be able to put their best foot forward on the pitch and participate fully.
The second thing is asking for excessive amounts of information and paperwork up front. One of the things that procurement will always do is want a massive document with all sorts of financial information done upfront for anyone who has any remote chance of participating in the pitch.
They operate in the majority using tenders and things that are in personal that lack face-to-face contact, and they just ask for reams and reams of information. And when they extend that into the advertising and media area, they don’t realize how off-putting that is for media agencies.
If you’ve got 5, 7, 8, $10 million and you want a massive upfront document with heaps of financial questions and you want that from 10 agencies, those agencies, if they’re aware of having to complete that to be 1 of 10 or 1 of 8, or even one of six might be inclined to turn you down.
There are a lot of pitches out there. No one is running with a team of new business people sitting, waiting in the wings. And agencies pick and choose to an extent now whether they participate in a pitch or not, and the best ones are always the busiest ones as well.
So, you end up creating too much work up front, you might find the stronger options and the stronger candidates are the one that say, “This is too much. I’ll put my pitch resources elsewhere.”
Darren:
Well, there was an example of that because we gave the agencies not only asked them to score the pitch from one to five, but also provide any commentary that they wanted. And there was a classic example.
They said upfront, they were asked to complete a form online, which was an extensive form, took several hours and days to complete that, and then heard nothing more, nothing more until they read in the trade press that someone else had been appointed to that client.
And you think to yourself that couldn’t possibly happen, but clearly it does. It’s almost like it when people get the most basic human decency gets thrown out as part of the pitch process. Agencies get really upset as they should. But I’m wondering if this is driving that very vocal, anti-pitch call?
Stephen:
Well, almost certainly that would be in a pitch where procurement, they’re driving the process. Now, the way in which procurement operate with a tender is people submit the tender, no one hears anything until the decision is being made after the event.
And so, almost certainly they were just following the standard protocol and principles whereby everyone’s in the dark and you read about who’s appointed in the trade press, or you find out on a website where tenders are announced.
And when you extend that into the media agency pitch process, it’s not a way that the media agencies like to operate. It’s not a way that is courteous and pays them the respect that they do. So, I think it’s a largely function of that. I think you’ll almost certainly find that that pitch was run in-house by procurement, and they were treating it more as a tender than a pitch.
Darren:
It was run by procurement. I can confirm that because I went and checked, particularly some of the more adamant ones. It was also shown in the score, procurement pitches generally got a much lower score than those run by marketers and consultants.
Interestingly, the marketers got a better score than the consultants did, but then when I dug into that a bit more, there’s quite a few who were marked as consultants who were actually procurement consultants.
So, yeah, when we talk about consultants, there were pitch consultants, and then there’s procurement consultants. It’ll be interesting if we can find a way of separating those two in future.
Stephen:
Look, what is really important is that you give the media agencies a good feel and access to the clients, but then you do have to temper and balance this because when you send out a detailed stage two brief, and you ask for questions that will be fielded at a Q&A, the agencies will come back with 30 or 40 questions and they’ll be asking everything and for reams of new information and data.
And if you’ve done a really comprehensive brief with a lot of background information, you simply have to say no, use what you have. Or agents or the client will end up having to spend weeks fielding all the questions and responding to all the questions from agencies.
And the other thing that agencies will invariably try to do is to have interim tissue sessions with the client. And the majority of clients are simply too busy to do that with three agencies. And if they provide a comprehensive brief with lots of background information, they have a decent one-hour Q&A to respond to all those questions, then an agency should be able to demonstrate their skills.
And we do always say to the agency, it’s less about the definitive detail of your responses, it’s more about how you think and your process that we’re scoring. And if you have to make assumptions, make up dummy data on the way through, do that. We’re interested in the process, not the outcomes.
Darren:
And what you’ve just shared there is a good reason for everyone to rethink the pitch process because really to go to that level of detail and commitment of putting an agency through some sort of strategic process that requires that much question, Q&As, tissue sessions, huge amounts of research data, you would have to say there must be a big reward at the end of that to do the same thing for a relatively small amount because there’s a lot of other ways of testing an agency on that without actually putting them through that amount of work, isn’t there?
Stephen:
Yeah, there is, but I think what you do is you are very upfront about the size and scale of the business with the agencies. You get them all to firmly commit to participating fully in the process. And then it’s almost like the more information you give them, the more work you create.
So, saying, use what information you have, make assumptions where you have to, we’re not penalizing you if you don’t get things right, we are interested in you demonstrating how you work and all you just view tools and systems. So, I think there’s the right balance in pitches.
And you do often ask for a little bit more at stage two with a larger client because there are more questions to answer with regard to capability. But I think in general agencies when a pitch is well run and they feel like they’ve been given enough information, they feel like it’s been a level playing field they are happy even when they’re unsuccessful with the process.
And then obviously what we do, and good pitch consultants do is give them extensive feedback on how, why they came a close second or a close third-
Darren:
Look, I’m laughing because that was one of the main comments on feedback is that almost every agency was told they were close second. The ones that were unsuccessful were close second, in fact, it’s become such a joke that the satirical website, AdWeak, recently had a post of a new business person sitting there looking quite anxious.
And the caption said, “It’s been eight weeks since the end of the pitch. But they are still hopeful that they’re going to be successful.” And I feel like when they do get that phone call, it’ll be, “You are unsuccessful, but you came a close second.”
Because it seems to be the way that bad news is delivered with this sense of, “Oh, well, you were almost there.” It’s still bad news. You’re lost and coming a close second doesn’t really help.
Stephen:
When it comes to pitches, silence is never golden.
Darren:
No, silence is never golden. And yet it seems to be something that happens quite regularly because another bug bear was when pitches ran late. So, there was an expectation set up front that it was going to take X number of weeks or months, and that these were the stages.
And then somewhere along the line there’d be just radio silence from the client, and it dragged on and on and on, which immediately creates all sorts of conspiracy theories in the minds of the agencies on the other end.
Stephen:
Well, as we know, I mean, getting an agreed timeline and getting clients to understand their role and what they need to deliver and when is absolutely critical upfront. And the majority of pitches that are run by clients at faulter and end up dragging on because they hadn’t thought through the internal approval processes that were required.
I mean, we’ve heard of pitches where everything’s on hold for two months because the board have to endorse a decision and they’re not meeting for the next two months and things like that completely throw a pitch process. A media pitch can be run in six to eight weeks, even the large ones. And anything beyond that is entirely … they’re not unforeseen, they’re just not-
Darren:
They’re not planned well.
Stephen:
They’re not planned. And they’re normally around processes and approvals. So, and a stage two brief is a comprehensive brief that might reflect real campaign needs of a client. And you need to get a client thinking about that before you’ve even had your credentials meetings, because those briefs often take a couple of weeks to put together.
So, if you’re going to have credentials meetings, and make a quick decision, you need to already have a framework of what you’re going to ask the successful agencies to deliver. If you stop and then start thinking about it, there’s a two-week delay almost immediately.
So, it’s about through understanding the pitch base, this is about having a timeline and making sure upfront the clients understand and operate to that timeline.
Darren:
So, Stephen, we’re running out time. The state of the pitch in advertising in Australia is available as a download from the TrinityP3 website. We’re going to put the link in the show notes. But as a sort of parting thought, what would you recommend to marketers, procurement, and agencies when they start thinking about going to pitch for a media agency?
Stephen:
Don’t sort of do it on a whim, don’t make a fast decision. Really think about the process. Be fully aware of the enormous amount of time it would take from marketing. Make sure you are not planning it at a time when you are really busy with a whole load of day-to-day needs that are going to get in the way.
And then engage with internal resources or external consultants to really talk through the process and exactly what’s required of the process, the outcomes are required upfront. That discovery, those pre-discussion are absolutely critical.
If you suddenly just decide you want to pitch or you’ve spoken to a couple of agencies and you suddenly think, “Oh, throw a few more in the mix,” that’s probably not the best way to progress. And that’s where you’re going to end up with a pitch process that drags on for far longer than it should. So, planning, preparation, and an extensive discovery.
Darren:
And without those, you get poor performance, as they said in the British Army. Stephen Wright, thank you for an amazing piece of wisdom and insight. And thank you for joining me on Managing Marketing.
